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)
Arthur Lev 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, 2011
Date of reporting period:		December 31, 2011

Item 1 - Report to Shareholders

MORGAN STANLEY
VARIABLE INVESTMENT SERIES

Annual Report

DECEMBER 31, 2011

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	19
Portfolios of Investments:
Money Market	23
Limited Duration	26
Income Plus	33
Global Infrastructure	43
European Equity	46
Multi Cap Growth	49
Aggressive Equity	51
Strategist	53
Financial Statements:
Statements of Assets and Liabilities	66
Statements of Operations	68
Statements of Changes in Net Assets	70
Notes to Financial Statements	78
Financial Highlights	106
Report of Independent Registered Public Accounting Firm	114
Trustee and Officer Information	115
Federal Tax Notice	120

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited)

Dear Shareholder:

Investors faced a number of disappointments in 2011 but the year closed with some encouraging signs. During the year, the global economy looked less robust than many had hoped given the path of past recovery cycles. Investor confidence was further eroded by the deepening European debt crisis and policy makers' struggle to craft a truly decisive solution. Natural disasters and nuclear crisis in Japan disrupted global supply chains, and political strife in the Middle East drove oil prices higher. Political wrangling in the U.S. nearly derailed an increase to the nation's borrowing limit (failure to do so would have resulted in default) and also factored into Standard & Poor's (S&P) decision to downgrade the U.S.'s credit rating. While recession risk in developed markets seemed to be increasing, investors also worried about the potential for aggressive monetary tightening in China to slow its economy too much. Later in the year, however, signs of improvement in some U.S. economic data, a well-received plan for the euro zone, and monetary easing in the emerging markets helped risk assets to rally in the fourth quarter of 2011.

Domestic Equity Overview

The U.S. stock market (as represented by the S&P 500^® Index) showed a measure of resiliency despite highly volatile conditions, recovering from earlier losses to finish the year ended December 31, 2011 with a 2.11% gain. In the first half of the year, the U.S. economy was posting disappointing numbers, the European debt crisis was intensifying, and politics became yet another element of uncertainty in an already fragile recovery, as investors worried about the ability of policy makers in the U.S. and Europe to do what was necessary to put their respective economies back on the right track.

Nevertheless, many corporations posted another year of strong profits and better-than-expected earnings. Corporate balance sheets also continued to be healthy with high levels of cash on the books. The S&P 500^® Index hit its low for the year in October, but rallied to a stronger finish by year's end. Economic data improved in the fourth quarter of the year, bolstering investor confidence and supporting expectations that the fourth quarter Gross Domestic Product (GDP) growth rate could be above 3 percent (annualized).

In the U.S. equity market, large-cap stocks outperformed mid- and small-cap stocks, and growth stocks surpassed value stocks (as measured by their respective Russell indexes) for the year ended December 31, 2011.

Fixed Income Overview

Investors' preference for the relative safety of bonds helped bonds outperform equities for the year ended December 31, 2011 (as measured by the Barclays Capital U.S. Aggregate Index, which was up 7.84%, and

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

the S&P 500^® Index, which rose 2.11%). The Federal Reserve's second round of quantitative easing (QE2), an asset purchase program intended to stimulate the economy by encouraging banks to lend, ended in June. Amidst renewed weakness in economic indicators, the Federal Open Market Committee (FOMC) announced in September that it would extend the maturity of its Treasury holdings to put downward pressure on longer-term interest rates, in an attempt to keep borrowing costs down. In addition, to provide support to the mortgage market, the Fed will re-invest principal payments from its mortgage and agency holdings into mortgages instead of Treasuries.

Treasury bonds performed strongly during the period as risk-averse investors continued to prefer the relative safety of Treasuries, even with default fears intensifying during the debt ceiling debate in Congress and S&P's downgrade. The agency mortgage sector underperformed Treasuries with similar durations. The sector came under pressure as the Federal Housing Finance Agency (FHFA) and the government-sponsored entities (Fannie Mae and Freddie Mac) announced changes to the Home Affordable Refinance program (HARP) to help borrowers re-finance. After spreads versus Treasuries narrowed earlier in the year, the investment-grade corporate sector suffered in the second half of the year amid the increased risk aversion due to the European debt crisis and signs of slowing economic growth. Conditions for the money markets remained challenging, as yields on the short end of the curve remained anchored by the Fed's near-zero interest rate policy. The Fed indicated in its August 2011 statement that it may continue to maintain its federal funds target rate near zero through mid-2013. The money markets were also disrupted during the period by concerns about U.S. money funds' exposure to European banks' commercial paper.

International Equity Overview

While the U.S. equity market finished the year essentially flat, many international markets posted declines for the year ended December 31, 2011. The MSCI EAFE Index, a measure of developed market equities (excluding the U.S.), fell 12.14% and the MSCI Emerging Markets Index, declined 18.42% for the year ended December 31, 2011.

European markets were hurt by headlines coming out of the debt crisis. Greece appeared on the verge of insolvency and some feared that Italy would be next. Exposure to euro-zone debt made European banks, particularly those in France (a so-called "core" country) look vulnerable, and S&P warned in December of a potential downgrade of all euro zone member countries. Summits throughout the year yielded some quick fixes and the plan announced later in the year was especially well received, but still fell short of addressing some of the major issues. Elsewhere, emerging markets felt the impact of problems in the developed world

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

and heightened risk aversion among investors contributed to volatility in emerging market asset prices. In Japan, the earthquake, tsunami, and nuclear disaster, coupled with a strong yen, kept share prices depressed.

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, 2011, Variable Investment Series – Money Market Portfolio had net assets of approximately $107 million with an average portfolio maturity of 18 days. For the seven-day period ended December 31, 2011, the Portfolio's Class X shares provided an effective annualized yield of 0.01% (subsidized) and – 0.43% (non-subsidized) and a current yield of 0.01% (subsidized) and – 0.43% (non-subsidized), while its 30-day moving average yield for December 31, 2011 was 0.01% (subsidized) and – 0.43% (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, 2011, 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, 2011, the Portfolio's Class Y shares provided an effective annualized yield of 0.01% (subsidized) and – 0.68% (non-subsidized) and a current yield of 0.01% (subsidized) and – 0.68% (non-subsidized), while its 30-day moving average yield for December 31, 2011 was 0.01% (subsidized) and – 0.68% (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, 2011, the Portfolio's Class Y shares returned 0.01%. 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.

We remained cautious in our management of the portfolios throughout the period. We remain quite comfortable in our conservative approach to managing our money market funds. We believe our investment process and focus on credit research and risk management, combined with the high degree of liquidity and short maturity position of our funds has put us in a favorable position to respond to market uncertainty. We expect to maintain conservative, liquid and short weighted average maturity (WAM) and

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

weighted average life (WAL) portfolios, and continue to selectively, and prudently, look for opportunities in the market to take advantage of the positioning of our portfolios. With the continued volatility and uncertainty in the market we believe we remain positioned extremely well for this environment.

With the market continuing to focus on events in Europe and the health of European banks, wholesale funding conditions remained challenged and LIBOR levels continued to increase. As such, we focused most of our investment activity on the short end of the money market curve, primarily in the one through three month 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 nDecember 31, 2011 (unaudited) continued

Limited Duration Portfolio

For the 12-month period ended December 31, 2011, Variable Investment Series – Limited Duration Portfolio Class X shares produced a total return of 2.75%, underperforming the Barclays Capital U.S. Government/Credit Index (1-5 Year) (the "Index"), which returned 3.14%. For the same period, the Portfolio's Class Y shares returned 2.45%. 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.

The Portfolio was overweight the credit sector, which detracted from relative performance. Short maturity corporate spreads versus Treasuries widened by almost 80 basis points. The financial sector (in which the Portfolio had exposure) was the worst performing sector, with spreads ending the year about 150 basis points wider.

The Portfolio was positioned to benefit from an anticipated flattening (a reduction in the difference of yield spreads) between the short and intermediate points of the yield curve. This trade was unwound profitably in the third quarter. The Portfolio's allocation to asset-backed securities, which are not represented in the Index, also helped performance as spreads in the sector narrowed during the year.

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		2.75	%		–0.52	%		1.11	%		1.98	%
Class Y		2.45	%		–0.74	%		0.86	%		1.62	%

(1)  Ending value on December 31, 2011 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2)  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.

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

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

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.

Income Plus Portfolio

For the 12-month period ended December 31, 2011, Variable Investment Series – Income Plus Portfolio Class X shares produced a total return of 5.01%, underperforming the Barclays Capital U.S. Corporate Index (the "Index"), which returned 8.15%. For the same period, the Portfolio's Class Y shares returned 4.71%. 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.

The Portfolio began the year overweight investment grade corporate bonds, and with exposure to high yield corporates and convertible bonds as well. These positions were initiated to benefit from a continuing global economic recovery and rally in risky assets. These overweight positions, particularly in investment grade corporate bonds, contributed positively to performance during the first half of 2011. Most of the outperformance came from the financial sector (banking, insurance, finance and real estate investment trusts), which collectively represented the Portfolio's largest overweight relative to the Index. Our preference for owning these positions remains predicated on the belief that

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		5.01	%		6.31	%		5.97	%		7.26	%
Class Y		4.71	%		6.05	%		5.70	%		6.45	%

(1)  Ending value on December 31, 2011 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 nDecember 31, 2011 (unaudited) continued

these companies will continue to increase capital while working to reduce balance sheet risks.

However, these overweight positions hurt the Portfolio in the second half of 2011 as risky assets responded negatively to the deteriorating European sovereign debt crisis and slower global growth. Volatility and spread widening was especially notable in the banking sector, the Portfolio's largest overweight position, as the sector faced a particularly challenging environment. Investors were concerned about banks' exposure to European sovereign debt and the regulatory requirements for holding such debt in their portfolios, as well as the broader backdrop of slower economic growth. The Portfolio benefited from underweights to select non-financial sectors, such as railroads and health care; although gains made by these positions did not offset underperformance from other holdings in the Portfolio. While volatility is likely to continue in 2012, we believe strong credit fundamentals should ultimately lead to tighter corporate credit spreads as macro concerns subside and global economic growth stabilizes.

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, 2011, Variable Investment Series – Global Infrastructure Portfolio Class X shares produced a total return of 16.07%, outperforming the Dow Jones Brookfield

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		16.07	%		3.51	%		5.99	%		7.72	%
Class Y		15.82	%		3.25	%		5.73	%		2.42	%

(1)  Ending value on December 31, 2011 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2)  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.

(3)  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 26 developed and 20 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 nDecember 31, 2011 (unaudited) continued

Global Infrastructure Index (the "Index"), which returned 13.75%, and the S&P Global BMI Index, which returned – 7.72%. For the same period, the Portfolio's Class Y shares returned 15.82%. 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.

Infrastructure shares appreciated 13.75% during the period, as measured by the Index. Among the major infrastructure sectors, the gas midstream, pipeline companies, and transmission and distribution sectors exhibited relative outperformance, while the toll road, European regulated utilities, and communications sectors underperformed the Index. Gas distribution utilities performed in-line with the Index for the year. Among the smaller sectors, the water sector exhibited modest relative underperformance, and the ports and airport sectors exhibited meaningful relative underperformance.

For the year ended December 31, 2011, the Portfolio realized favorable performance from both bottom-up stock selection and top-down allocation, with bottom-up stock selection being the more significant driver of outperformance. From a bottom-up perspective, stock selection was particularly favorable in the toll roads, gas distribution utilities sectors, and European regulated utilities, and stock selection in all sectors was favorable or neutral aside from slight underperformance in the communications sector. From a top-down perspective, our positioning was favorable in all sectors except for underweights to the gas midstream and transmission and distribution sectors.

Concerning the broader equity markets, 2011 was characterized by significant equity market (and credit market outside North America) volatility brought on by investor uncertainty over the health of credit/lending markets, national banking systems, and government fiscal balance sheets across the globe, and the potential for credit market and balance sheet weakness to put significant pressure on various national economies. While no region was spared entirely, the U.S. equity markets outperformed their regional counterparts, with meaningful declines in the European and Asia Pacific stock markets.

Despite broader macroeconomic uncertainty, operating trends within infrastructure remained quite resilient in 2011 and were the primary cause for infrastructure stock outperformance relative to the broader global equity markets, as measured by the MSCI World Index. Favorable operating fundamentals spanned most infrastructure sectors in 2011 but were most readily apparent in the energy infrastructure category in North America, where the buildout of new long-haul pipelines for crude oil transportation and gathering and processing networks associated with natural gas and natural gas liquids (NGLs) continued to be robust.

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

Backlog for projects associated with this area of infrastructure extends out for the next several years, and the medium to longer-term attractiveness of this sector was underscored by a number of merger and acquisition (M&A) transactions that occurred within the sector in 2011. Another area of robust growth in 2011 was communications, where wireless phone providers struggled to keep up with the ever-increasing demand brought on by incremental smartphone usage. While this increased demand did not translate into stock outperformance for our wireless tower companies in the past year, this incremental demand has only reinforced what is already a multi-year backlog of equipment enhancements and new tower builds needed to meet wireless carrier needs. It is worth pointing out that despite significant share price underperformance in 2011 of companies in the ports and airport infrastructure sectors, operating trends even for these companies were favorable, with most companies reporting year-over-year volume growth and price/tariff increases.

We remain committed to our core investment philosophy as an infrastructure value investor. As value-oriented, bottom-up driven investors, our investment perspective is that over the medium and long-terms, the key factor in determining the performance of infrastructure securities will be underlying infrastructure asset values. Given the large and growing private infrastructure market, we believe that there are limits as to the level of premium or discount at which the public sector should trade relative to its underlying private infrastructure value. These limits can be viewed as the point at which the arbitrage opportunity between owning infrastructure in the private versus public markets becomes compelling. In aiming to achieve core infrastructure exposure in a cost-effective manner, we invest in equity securities of publicly listed infrastructure companies we believe offer the best value relative to their underlying infrastructure value and intrinsic value growth prospects. Our research currently leads us to an overweighting in the Portfolio (amongst the largest sectors) to a group of companies in the communications, gas distribution, toll roads, and pipeline companies sectors, and an underweighting to companies in the transmission and distribution, gas midstream, and European regulated utilities sectors.

Looking toward 2012, we are most positive regarding our positions in Asia in the utility (particularly gas distribution) and toll road sectors, which we believe have the most favorable risk-return characteristics in our investment universe and possess a compelling combination of meaningful discounts to intrinsic value and strong growth outlooks. We believe operating results for companies in these two sectors should remain favorable despite the potential for a more moderate growth trajectory in China. We are also favorable on companies within the communications sector, which while trading at more modest discounts than our overweight positions in Asia, in our view continue to possess very resilient secular fundamental trends and may produce sustainable cash flow growth that is not currently fully reflected in share prices. For energy

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

infrastructure, while we believe fundamental trends will remain strong in the coming year, we are more cautious on valuations, in particular in the midstream sector, where we believe near-term valuation levels are stretched relative to historical levels. Due to these stretched near-term valuation levels and operating fundamentals that are more sensitive to volume and end-product pricing relative to the pipeline sector, our preference is to favor pipelines. For electricity transmission and distribution and gas distribution utilities in North America, we find current valuations less favorable, but acknowledge the appeal of these companies among certain investors looking for safety in an uncertain macroeconomic environment. Finally, we expect to remain selective in the European regulated utility sector due to ongoing regulatory risk, in particular for those utilities in continental Europe.

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, 2011, Variable Investment Series – European Equity Portfolio Class X shares produced a total return of – 9.64%, outperforming the MSCI Europe Index (the "Index"), which returned – 11.06%. For the same period, the Portfolio's Class Y shares returned – 9.85%. Past performance is no guarantee of future results.

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		–9.64	%		–3.90	%		2.87	%		8.11	%
Class Y		–9.85	%		–4.13	%		2.62	%		–0.14	%

(1)  Ending value on December 31, 2011 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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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.

In the 12-month period, the European market was turbulent, with shifting investor sentiment driving sharp swings in sector performance. Nevertheless, we can identify a clear trend of outperformance among more defensive (or less economically sensitive) sectors, such as health care equipment and food, beverage and tobacco, along with some of the more cyclical (or economically sensitive) industries such as energy and luxury goods. The latter were driven mainly by demand from emerging markets, as the developed western economies continued their long-term deleveraging process.

On an industry level, key contributors included both stock selection and an overweight allocation to energy. In particular, performance was bolstered by a position in a U.K. oil and drilling company, which delivered promising exploration results in new fields off the coast of Brazil and in West Africa. Stock selection in capital goods; food, beverage and tobacco; commercial services; and telecommunications also aided relative returns. Notable positions within these industries included two U.K. tobacco companies, whose stable cash flow generation, earnings visibility and emerging markets exposure helped boost both sales and prices. Positive relative performance was also driven by exposure to a U.K. industrial company with a high proportion of recurring revenues from maintenance and services, which provided some stability to the company's revenue stream. A U.K. food supermarket chain that successfully expanded its distribution efforts in southeast England and gained market share against larger competitors was also a top contributor to performance during the period. In addition, underweight positions in diversified financials and technology, along with an overweight allocation to pharmaceuticals, were additive.

Detractors from performance included stock selection in automobiles and components, retailing, consumer services, and materials. Among the weakest performers within these industries were a Luxembourg-based global steel producer, a U.K. diversified mining company, a German consumer retailer and a France-based worldwide hotel chain operator. These holdings underperformed during the period due to concerns about the global economic recovery.

Although the financials sector overall was a positive contributor to performance during the period, not surprisingly, some of the Portfolio's weakest performing holdings included two French banks with exposure to Italy, which has been under scrutiny from institutional investors recently due to its lack of economic growth and high level of debt, and a U.K. bank. It will take a while before the sovereign debt crisis and deleveraging can be considered behind us. In the second half of the year, we selectively continued

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Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

to add to our position in financials, where the Portfolio is still underweight — although within the sector it is now overweight retail banks.

On a country level, key contributors to performance included both stock selection and an overweight allocation to the U.K. along with stock selection in Switzerland and Finland. In addition, the Portfolio's underweight allocation to two troubled peripheral countries (Italy and Greece) was positive for the overall performance. On the contrary, the primary detractors from performance were stock selection in France, Germany and Sweden.

The outlook for the European economy worsened in the second half of 2011. Economists now do not exclude the chance of a mild temporary recession in Europe in the first half of 2012. We acknowledge a slowdown in the economy and we believe that a mild recession is already priced in the current valuations. Concerns remain on sovereign debt for some peripheral countries, but we believe that the current scenario provides opportunities in the market. We expect that the European economy should be a major beneficiary of a global recovery, with its high exposure to emerging markets. We see recent weakness in the market as an opportunity to selectively add stocks to the Portfolio, as European valuations are cheap compared to historical levels, in our view. We believe that European equities are well positioned to be a positive surprise for the years to come, especially once we have more visibility from politicians on the outcome of the euro crisis. Our investment approach remains the same. We continue to seek high quality companies that we believe have 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.

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Multi Cap Growth Portfolio

For the 12-month period ended December 31, 2011, Variable Investment Series – Multi Cap Growth (formerly Capital Opportunities) Portfolio Class X shares produced a total return of – 6.74%, underperforming the Russell 3000^® Growth Index (the "Index"), which returned 2.18%. For the same period, the Portfolio's Class Y shares returned – 6.97%. 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.

Stock selection in the consumer discretionary sector detracted the most from relative performance during the period. A video streaming service, an online retailer, and a South African diversified media company (not represented in the Index) were among the weakest-performing holdings. Stock selection in the financial services sector also dampened performance, with negative performance driven by a holding in an independent investment bank and out-of-benchmark exposures to a Brazilian securities exchange operator and a global property, power and infrastructure asset management company based in Canada. Stock selection and an overweight allocation in the materials and processing sector were disadvantageous as well. Two mineral mining companies were the main detractors.

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		–6.74	%		5.03	%		5.40	%		10.71	%
Class Y		–6.97	%		4.76	%		5.14	%		1.26	%

(1)  Ending value on December 31, 2011 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 March 9, 1984 for Class X and June 5, 2000 for Class Y.

13

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

However, the technology sector was the main positive contributor to performance. The sector was led by a personal computer, mobile communications, and media devices manufacturer and a Chinese internet search provider (which is not represented in the Index).

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.

Aggressive Equity Portfolio

For the 12-month period ended December 31, 2011, Variable Investment Series – Aggressive Equity Portfolio Class X shares produced a total return of – 7.33%, underperforming the Russell 3000^® Growth Index (the "Index"), which returned 2.18%. For the same period, the Portfolio's Class Y shares returned – 7.59%. 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.

Stock selection in the consumer discretionary sector detracted the most from relative performance during the period. A video streaming service, an online retailer, and a South African diversified media company (not represented in the Index) were among the weakest-performing holdings. Stock

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		–7.33	%		3.90	%		5.87	%		4.83	%
Class Y		–7.59	%		3.64	%		5.60	%		1.59	%

(1)  Ending value on December 31, 2011 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.

14

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

selection in the financial services sector also dampened performance, with negative performance driven by a holding in an independent investment bank, and out-of-benchmark exposures to a Brazilian securities exchange operator and a global property, power and infrastructure asset management company based in Canada. Stock selection and an overweight allocation in the materials and processing sector were disadvantageous as well. Two mineral mining companies were the main detractors.

However, the technology sector was the main positive contributor to performance. The sector was led by a personal computer, mobile communications, and media devices manufacturer and a Chinese internet search provider (which is not represented in the Index).

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.

Strategist Portfolio

For the 12-month period ended December 31, 2011, Variable Investment Series – Strategist Portfolio Class X shares produced a total return of – 7.96%, underperforming the S&P 500^® Index (the "Index"), which returned 2.11%, and underperforming the Barclays Capital U.S. Government/Credit Index, which returned 8.74%. For the same period, the Portfolio's Class Y shares returned – 8.13%. Past performance is no guarantee of future results.

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, 2011

	1 Year			5 Years			10 Years			Since Inception*
Class X		–7.96	%		–0.56	%		4.28	%		7.46	%
Class Y		–8.13	%		–0.81	%		4.02	%		2.49	%

(1)  Ending value on December 31, 2011 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.

15

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

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.

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.

Portfolio returns over the course of 2011 did not match our historic track record or the underlying performance of our benchmarks. While the portfolio management team's research and portfolio construction disciplines did not change, the market's appetite for risk remained quite low, creating an unfavorable environment for most value plays. Additionally, our view that economic growth would resume in early 2011, supported by the rise in U.S. government bond yields and the improvement in a number of macroeconomic indicators (such as consumer confidence, corporate profits, survey data, etc.), fell short as oil prices spiked in the first quarter and the Japanese earthquake and tsunami disrupted an already fragile global supply chain.

After outperforming our Lipper Variable Annuity Flexible Portfolio Underlying Funds category peer group in the first quarter of 2011, the Strategist Portfolio underperformed those same peers over the balance of the year. While the economic recovery finally took hold in the U.S. during the fourth quarter, our pivot back to a defensive, cash-rich asset allocation during the summer prevented our investors from fully capitalizing on the "risk rally" that ensued.

In November, we shifted our asset allocation relative to an average balanced fund to an equal weight position in equities (55% percent of total Portfolio assets), a slight overweight position in cash (19%), and an underweight position in fixed income (26%), and in turn outperformed our category peer group for the month ended December 31, 2011. At year-end, the Portfolio's asset allocation stood at approximately 56% equities (versus an average balanced fund's weight of 55%), 26% fixed income (versus an average balanced fund's weight of 35%) and 18% cash equivalents (versus an average balanced fund's weight of 10%).

16

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited) continued

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,

Arthur Lev
President and Principal Executive Officer

17

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2011 (unaudited)continued

For More Information About Portfolio Holdings

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q and monthly holdings for each money market fund on Form N-MFP. Morgan Stanley does not deliver these reports to shareholders, nor are the first and third fiscal quarter reports posted to the Morgan Stanley public web site. However, the holdings for each money market fund are posted to the Morgan Stanley public web site. You may obtain the Form N-Q filings (as well as the Form N-CSR, N-CSRS and N-MFP filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-1520.

Proxy Voting Policy and Procedures and Proxy Voting Record

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

You may obtain information regarding how the Portfolios voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our web site at www.morganstanley.com. This information is also available on the SEC's web site at http://www.sec.gov.

18

Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2011 (unaudited)

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 07/01/11 – 12/31/11.

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.

19

Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2011 (unaudited)continued

Money Market

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.40
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.66	$	1.42
Class Y
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.40
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.66	$	1.42

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.28% and 0.28% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.60% and 0.85% for Class X and Class Y shares, respectively.

Limited Duration

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (0.79% return)	$	1,000.00	$	1,007.90	$	3.19
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.03	$	3.21
Class Y
Actual (0.66% return)	$	1,000.00	$	1,006.60	$	4.45
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.77	$	4.48

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.63% and 0.88% 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@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (1.37% return)	$	1,000.00	$	1,013.70	$	3.05
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.18	$	3.06
Class Y
Actual (1.19% return)	$	1,000.00	$	1,011.90	$	4.31
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).

20

Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2011 (unaudited)continued

Global Infrastructure

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (3.56% return)	$	1,000.00	$	1,035.60	$	4.52
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.77	$	4.48
Class Y
Actual (3.45% return)	$	1,000.00	$	1,034.50	$	5.79
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.51	$	5.75

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.88% and 1.13% 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@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Actual (-16.58% return)	$	1,000.00	$	834.20	$	4.62
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.16	$	5.09
Class Y
Actual (-16.69% return)	$	1,000.00	$	833.10	$	5.78
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).

Multi Cap Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Actual (-11.23% return)	$	1,000.00	$	887.70	$	2.62
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.43	$	2.80
Class Y
Actual (-11.33% return)	$	1,000.00	$	886.70	$	3.80
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.17	$	4.08

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.55% and 0.80% 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).

21

Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2011 (unaudited)continued

Aggressive Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (-11.49% return)	$	1,000.00	$	885.10	$	5.18
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.71	$	5.55
Class Y
Actual (-11.60% return)	$	1,000.00	$	884.00	$	6.36
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.45	$	6.82

  @  Expenses are equal to the Portfolio's annualized expense ratios of 1.09% and 1.34% 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@
	07/01/11		12/31/11		07/01/11 – 12/31/11
Class X
Actual (-8.93% return)	$	1,000.00	$	910.70	$	2.89
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.18	$	3.06
Class Y
Actual (-9.04% return)	$	1,000.00	$	909.60	$	4.09
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). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.63% and 0.88% for Class X and Class Y shares, respectively.

22

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2011

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE	VALUE
		Repurchase Agreements (52.8%)
$	20,000	Bank of Nova Scotia, (dated 12/30/11; proceeds $20,000,067; fully collateralized by U.S. Government Obligations; U.S. Treasury Bond 8.00% due 11/15/21; U.S. Treasury Note 1.75% due 03/31/14; valued at $20,400,125)		0.03	%	01/03/12	$	20,000,000
	11,655	BNP Paribas Securities Corp., (dated 12/30/11; proceeds $11,655,039; fully collateralized by a U.S. Government Obligation; U.S. Treasury Note 4.50% due 11/15/15; valued at $11,888,156)		0.03		01/03/12		11,655,000
	5,000	Credit Agricole CIB, (dated 12/30/11; proceeds $5,000,017; fully collateralized by a U.S. Government Obligation; U.S. Treasury Bond 3.38% due 04/15/32; valued at $5,100,044)		0.03		01/03/12		5,000,000
	5,000	ING Financial Markets LLC, (dated 12/30/11; proceeds $5,000,008; fully collateralized by U.S. Government Agencies; Federal Home Loan Mortgage Corporation 2.34% due 10/01/33; valued at $5,159,524)		0.03		01/03/12		5,000,000
	15,000	TD Securities USA LLC, (dated 12/30/11; proceeds $15,000,017; fully collateralized by a U.S. Government Obligation; U.S. Treasury Bond 3.88% due 04/15/29; valued at $15,300,158)		0.01		01/03/12		15,000,000
		Total Repurchase Agreements(Cost $56,655,000)						56,655,000
		Commercial Paper (26.1%)
		Domestic Bank (2.6%)
	2,730	HSBC Bank USA		0.24		02/21/12		2,729,053
		International Banks (23.5%)
	4,705	ABN Amro Funding USA LLC (a)		0.52 - 0.61		01/26/12 - 01/31/12		4,702,837
	5,000	Deutsche Bank Financial LLC		0.25		01/05/12		4,999,826
	5,000	ING US Funding LLC		0.15		01/05/12		4,999,896
	3,000	Nordea North America, Inc.		0.52		03/15/12		2,996,781
	3,000	Oversea Chinese Banking		0.43		01/17/12 - 01/19/12		2,999,367

See Notes to Financial Statements
23

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE	VALUE
$	1,000	UOB Funding LLC		0.41	%	01/09/12	$	999,899
	3,500	Westpac Securities NZ Ltd. (a)		0.43		02/03/12		3,498,612
								25,197,218
		Total Commercial Paper(Cost $27,926,271)						27,926,271
		Certificates of Deposit (9.3%)
		International Banks
	4,000	Skandin Ens Banken		0.38		02/03/12		4,000,000
	4,000	Sumitomo Mitsui Banking Corp.		0.21		01/12/12		4,000,000
	2,000	Svenska Handelsbanken AB		0.39 - 0.55		02/06/12 - 04/16/12		2,000,020
		Total Certificates of Deposit (Cost $10,000,020)						10,000,020

		COUPON RATE(b)			DEMAND DATE(c)
	Floating Rate Notes (9.3%)
	International Banks
2,000	ANZ National International Ltd. (a)		0.61	%	03/12/12	06/12/12	2,000,000
4,000	Barclays Bank PLC		0.48		02/06/12	11/05/12	4,000,000
3,000	Royal Bank of Canada		0.51		02/27/12	02/27/12	3,000,000
1,000	Westpac Banking Corp.		0.62		04/05/12	07/05/12	1,000,000
	Total Floating Rate Notes(Cost $10,000,000)						10,000,000
	Tax-Exempt Instruments (2.8%)
	Weekly Variable Rate Bonds
3,000	Miami-Dade County, FL, Professional Sports Franchise Facilities Tax Ser 2009 E (Cost $3,000,000)		0.09		01/06/12	10/01/48	3,000,000

Total Investments(Cost $107,581,291)	100.3	%		107,581,291
Liabilities in Excess of Other Assets	(0.3	)		(301,183	)
Net Assets	100.0	%	$	107,280,108

See Notes to Financial Statements
24

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2011 continued

  (a)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

  (b)  Rate shown is the rate in effect at December 31, 2011.

  (c)  Date of next interest rate reset.

SUMMARY OF INVESTMENTS

MATURITY SCHEDULE†

1 - 30 Days	74	%
31 - 60 Days	19
61 - 90 Days	5
91 - 120 Days	2
	100	%

†  As a percentage of total investments.

See Notes to Financial Statements
25

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (57.6%)
		Basic Materials (3.5%)
$	350	Anglo American Capital PLC (United Kingdom) (a)		9.375	%	04/08/14	$	399,747
	190	ArcelorMittal (Luxembourg)		9.00		02/15/15		210,205
	230	Barrick Gold Corp. (Canada)		1.75		05/30/14		232,404
	350	Dow Chemical Co. (The)		5.90		02/15/15		389,733
	115	Ecolab, Inc.		3.00		12/08/16		119,093
	260	Kinross Gold Corp. (Canada) (a)		3.625		09/01/16		253,582
	350	Potash Corp. of Saskatchewan, Inc. (Canada)		5.25		05/15/14		384,340
								1,989,104
		Communications (5.7%)
	375	AT&T, Inc.		2.50		08/15/15		388,637
	300	Comcast Corp.		6.50		01/15/15		340,328
	215	COX Communications, Inc.		4.625		06/01/13		226,723
	220	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		4.75		10/01/14		237,790
	290	NBC Universal Media LLC		2.10		04/01/14		294,939
	145	News America, Inc.		5.30		12/15/14		158,031
	375	Telecom Italia Capital SA (Italy)		5.25		11/15/13		360,375
	200	Time Warner Cable, Inc.		8.25		02/14/14		225,542
	250	Verizon Communications, Inc.		1.25		11/03/14		251,411
	350	Viacom, Inc.		4.375		09/15/14		375,177
	340	Vodafone Group PLC (United Kingdom)		5.00		12/16/13		364,990
								3,223,943
		Consumer, Cyclical (2.4%)
	305	Best Buy Co., Inc.		3.75		03/15/16		300,758
	280	Daimler Finance North America LLC (a)		1.875		09/15/14		278,666
	220	Home Depot, Inc.		5.40		03/01/16		254,333
	420	Marriott International, Inc.		4.625		06/15/12		425,536
	135	Wesfarmers Ltd. (Australia) (a)		2.983		05/18/16		136,213
								1,395,506
		Consumer, Non-Cyclical (6.6%)
	250	Altria Group, Inc.		4.125		09/11/15		271,633
	165	Anheuser-Busch InBev Worldwide, Inc. (Belgium)		4.125		01/15/15		178,024
	205	Anheuser-Busch InBev Worldwide, Inc. (Belgium)		5.375		11/15/14		227,934
	200	Aristotle Holding, Inc. (a)		2.75		11/21/14		202,564
	265	Bacardi Ltd. (Bermuda) (a)		7.45		04/01/14		298,836
	260	Bunge Ltd. Finance Corp.		5.35		04/15/14		272,848
	330	Delhaize Group SA (Belgium)		5.875		02/01/14		358,350
	350	Gilead Sciences, Inc.		3.05		12/01/16		358,627
	300	Kraft Foods, Inc.		6.75		02/19/14		333,569

See Notes to Financial Statements
26

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	225	Kroger Co. (The)		7.50	%	01/15/14	$	251,575
	370	McKesson Corp.		3.25		03/01/16		391,961
	320	Quest Diagnostics, Inc.		3.20		04/01/16		331,661
	250	Stryker Corp.		2.00		09/30/16		256,122
								3,733,704
		Energy (2.3%)
	225	Enterprise Products Operating LLC, Series O		9.75		01/31/14		260,032
	380	Marathon Petroleum Corp.		3.50		03/01/16		387,171
	320	Plains All American Pipeline LP/PAA Finance Corp.		4.25		09/01/12		326,474
	305	Spectra Energy Capital LLC		5.90		09/15/13		324,869
								1,298,546
		Finance (31.1%)
	265	ABB Treasury Center USA, Inc. (Switzerland) (a)		2.50		06/15/16		266,745
	255	Abbey National Treasury Services PLC (United Kingdom)		2.875		04/25/14		237,854
	575	Abbey National Treasury Services PLC (United Kingdom) (a)		3.875		11/10/14		539,997
	110	Aflac, Inc.		3.45		08/15/15		113,614
	475	American Express Co.		7.25		05/20/14		530,763
	260	American International Group, Inc.		3.65		01/15/14		252,639
	230	Banco Bradesco SA (Brazil) (a)		4.125		05/16/16		233,105
	620	Bank of America Corp., Series 1		3.75		07/12/16		574,654
	405	Bank One Corp.		5.25		01/30/13		418,878
	315	Barclays Bank PLC (United Kingdom)		2.50		01/23/13		313,737
	330	BBVA Bancomer SA (Mexico) (a)		4.50		03/10/16		325,050
	200	BBVA US Senior SAU (Spain)		3.25		05/16/14		189,551
	320	BNP Paribas SA (France)		3.60		02/23/16		300,435
	205	BP Capital Markets PLC (United Kingdom)		3.875		03/10/15		219,065
	390	Canadian Imperial Bank of Commerce (Canada)		1.45		09/13/13		390,154
	300	Capital One Financial Corp.		7.375		05/23/14		329,795
	500	Cie de Financement Foncier (France) (a)		2.25		03/07/14		491,755
	475	Citigroup, Inc. (See Note 6)		4.587		12/15/15		478,467
	575	Commonwealth Bank of Australia (Australia) (a)		2.75		10/15/12		581,718
	340	Credit Suisse (Switzerland)		5.50		05/01/14		353,596
	355	Deutsche Bank AG (Germany)		2.375		01/11/13		352,457
	975	General Electric Capital Corp.		2.95		05/09/16		1,003,792
	300	Genworth Life Institutional Funding Trust (a)		5.875		05/03/13		304,992
	425	Goldman Sachs Group, Inc. (The)		3.625		02/07/16		411,030
	250	Harley-Davidson Funding Corp. (a)		5.25		12/15/12		257,641
	200	HCP, Inc.		2.70		02/01/14		199,809
	350	HSBC Finance Corp.		5.25		04/15/15		357,438

See Notes to Financial Statements
27

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	120	Intesa Sanpaolo SpA (Italy) (a)		3.625	%	08/12/15	$	99,486
	75	Jefferies Group, Inc.		3.875		11/09/15		67,125
	135	JPMorgan Chase & Co.		3.15		07/05/16		135,773
	500	Lloyds TSB Bank PLC (United Kingdom) (a)		2.80		04/02/12		502,250
	230	Macquarie Group Ltd. (Australia) (a)		7.30		08/01/14		239,593
	325	Metropolitan Life Global Funding I (See Note 6) (a)		2.00		01/10/14		327,079
	350	Monumental Global Funding III (a)		5.25		01/15/14		367,983
	270	Nationwide Building Society (United Kingdom) (a)		4.65		02/25/15		267,940
	30	Nissan Motor Acceptance Corp. (Japan) (a)		3.25		01/30/13		30,395
	365	Nordea Bank AB (Sweden) (a)		2.50		11/13/12		367,499
	270	Principal Financial Group, Inc.		7.875		05/15/14		301,203
	320	Prudential Financial, Inc., MTN		4.75		09/17/15		338,173
	2,300	Royal Bank of Scotland PLC (The) (United Kingdom) (a)		2.625		05/11/12		2,315,093
	110	Societe Generale SA (France) (a)		3.10		09/14/15		96,358
	300	Standard Chartered PLC (United Kingdom) (a)		3.85		04/27/15		302,172
	95	SunTrust Banks, Inc.		3.50		01/20/17		95,600
	225	Svenska Handelsbanken AB (Sweden) (a)		2.875		09/14/12		227,167
	365	TD Ameritrade Holding Corp.		2.95		12/01/12		369,645
	365	UBS AG (Switzerland)		3.875		01/15/15		364,254
	330	US Bancorp		2.20		11/15/16		333,547
	470	Wells Fargo & Co.		3.676		06/15/16		491,652
								17,668,718
		Industrials (1.3%)
	385	Agilent Technologies, Inc.		4.45		09/14/12		392,604
	90	Danaher Corp.		1.30		06/23/14		91,348
	250	Waste Management, Inc.		2.60		09/01/16		254,034
								737,986
		Technology (1.4%)
	160	Applied Materials, Inc.		2.65		06/15/16		163,970
	285	Hewlett-Packard Co.		3.30		12/09/16		291,345
	330	Texas Instruments, Inc.		1.375		05/15/14		334,302
								789,617
		Utilities (3.3%)
	300	Commonwealth Edison Co.		1.625		01/15/14		302,326
	350	EDF SA (France) (a)		5.50		01/26/14		373,971
	350	Enel Finance International N.V. (Italy) (a)		3.875		10/07/14		340,942
	215	FirstEnergy Solutions Corp.		4.80		02/15/15		229,634

See Notes to Financial Statements
28

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	265	NextEra Energy Capital Holdings, Inc.		5.35	%	06/15/13	$	279,644
	320	Sempra Energy		2.00		03/15/14		324,228
								1,850,745
		Total Corporate Bonds(Cost $32,491,413)						32,687,869
		Asset-Backed Securities (22.3%)
		Ally Master Owner Trust
	100	(a)		2.028	(b)	01/15/15		101,240
	200			2.15		01/15/16		202,260
	225	(a)		2.88		04/15/15		228,782
	800	American Express Credit Account Master Trust		1.528	(b)	03/15/17		823,318
	72	ARI Fleet Lease Trust (a)		1.728	(b)	08/15/18		71,689
	807	Capital One Multi-Asset Execution Trust		0.358	(b)	09/15/15		806,012
	225	CarMax Auto Owner Trust		1.29		09/15/15		226,236
	87	Chesapeake Funding LLC (a)		2.278	(b)	12/15/20		87,641
	600	Citibank Credit Card Issuance Trust (See Note 6)		2.25		12/23/14		609,013
		CNH Equipment Trust
	551			1.17		05/15/15		551,250
	256			1.54		07/15/14		256,624
	850	Discover Card Master Trust		1.578	(b)	12/15/14		855,066
		Ford Credit Floorplan Master Owner Trust
	775			1.828	(b)	09/15/14		780,981
	375	(a)		4.20		02/15/17		403,364
	1,150	GE Capital Credit Card Master Note Trust		2.378	(b)	04/15/15		1,156,904
	330	GE Dealer Floorplan Master Note Trust		0.885	(b)	07/20/16		329,790
	425	GE Equipment Midticket LLC (a)		0.94		07/14/14		424,840
		Harley-Davidson Motorcycle Trust
	625			1.16		02/15/15		626,535
	174			1.87		02/15/14		174,348
	26	Huntington Auto Trust (a)		3.94		06/17/13		25,934
	310	Hyundai Auto Lease Securitization Trust 2011-A (a)		1.02		08/15/14		309,414
	535	Hyundai Auto Receivables Trust		1.50		10/15/14		536,797
	525	Macquarie Equipment Funding Trust (a)		1.21		09/20/13		524,948
	240	MMAF Equipment Finance LLC (a)		2.37		11/15/13		240,897
		MMCA Automobile Trust
	225	(a)		1.22		01/15/15		225,412
	326	(a)		1.39		01/15/14		326,591
	13	Navistar Financial Corp. Owner Trust (a)		1.47		10/18/12		12,999
	575	Nissan Auto Lease Trust		1.12		12/15/13		576,477
	200	Nissan Master Owner Trust Receivables (a)		1.428	(b)	01/15/15		201,528

See Notes to Financial Statements
29

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		North Carolina State Education Assistance Authority
$	277			0.868	(b)%	01/25/21	$	277,010
	225			1.218	(b)	07/25/25		217,748
	100	Panhandle-Plains Higher Education Authority, Inc.		1.322	(b)	07/01/24		97,894
	270	Toyota Auto Receivables Owner Trust		1.27		12/16/13		270,414
	89	Wheels SPV LLC (a)		1.828	(b)	03/15/18		89,140
		Total Asset-Backed Securities(Cost $12,568,783)						12,649,096
		U.S. Treasury Securities (8.5%)
		U.S. Treasury Notes
	2,315			1.25		08/31/15		2,376,855
	2,275			2.25		03/31/16		2,426,963
		Total U.S. Treasury Securities(Cost $4,730,500)						4,803,818
		Non-U.S. Government - Guaranteed (5.8%)
	900	Commonwealth Bank of Australia (Australia) (a)		2.50		12/10/12		915,432
	1,545	Swedbank AB (Sweden) (a)		2.90		01/14/13		1,582,117
	810	Westpac Securities NZ Ltd. (New Zealand) (a)		2.50		05/25/12		815,034
		Total Non-U.S. Government - Guaranteed(Cost $3,249,897)						3,312,583
		Sovereign (1.0%)
	577	Societe Financement de l'Economie Francaise (France) (Cost $574,767) (a)		3.375		05/05/14		591,810
		Agency Fixed Rate Mortgages (0.8%)
		Federal National Mortgage Association, Conventional Pools:
	281			6.50		01/01/32 - 11/01/33		319,221
	126			7.00		08/01/29 - 06/01/32		146,757
		Total Agency Fixed Rate Mortgages(Cost $424,874)						465,978
		Agency Adjustable Rate Mortgages (0.7%)
	88	Federal Home Loan Mortgage Corporation, Conventional Pools		5.462	(b)	01/01/38		94,326
	271	Federal National Mortgage Association, Conventional Pools		2.396	(b)	05/01/35		286,018
		Total Agency Adjustable Rate Mortgages (Cost $378,208)						380,344

See Notes to Financial Statements
30

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Collateralized Mortgage Obligation - Agency Collateral Series (0.6%)
$	307	Federal Home Loan Mortgage Corporation, REMIC (Cost $328,119)		7.50	%	09/15/29			$	356,141
		Municipal Bond (0.5%)
	300	New Jersey Economic Development Authority (Cost $300,000)		1.546	(b)	06/15/13				300,066
		Commercial Mortgage Backed Security (0.4%)
	190	Wachovia Bank Commercial Mortgage Trust (Cost $193,399)		5.316	(b)	07/15/41				204,468
		Short-Term Investments (1.4%)
		U.S. Treasury Security (1.2%)
	675	U.S. Treasury Bill (Cost $674,973) (c)(d)		0.018		03/22/12				674,978
NUMBER OF SHARES (000)
		Investment Company (0.2%)
		111Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $110,511)								110,511
		Total Short-Term Investments (Cost $785,484)								785,489
		Total Investments (Cost $56,025,444)(e)					99.6	%		56,537,662
		Other Assets in Excess of Liabilities					0.4			239,786
		Net Assets					100.0	%	$	56,777,448

  MTN  Medium Term Note.

  REMIC  Real Estate Mortgage Investment Conduit.

  (a)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

  (b)  Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2011.

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

  (d)  Rate shown is the yield to maturity at December 31, 2011.

  (e)  Securities are available for collateral in connection with open futures contracts and swap agreements.

See Notes to Financial Statements
31

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2011 continued

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2011:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	48	Long	U.S. Treasury 2 yr. Note, Mar-12	$	10,586,250		$	5,778
	42	Long	U.S. Treasury 5 yr. Note, Mar-12		5,176,828			23,953
	2	Short	U.S. Treasury 10 yr. Note, Mar-12		(262,250	)		(2,133	)
Net Unrealized Appreciation							$	27,598

ZERO COUPON SWAP AGREEMENTS OPEN AT DECEMBER 31, 2011:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank PLC	$	1,153	3 Month LIBOR	Pay	11/15/19	$	213,184
Barclays Bank PLC		973	3 Month LIBOR	Receive	11/15/19		(383,383	)
Deutsche Bank		626	3 Month LIBOR	Receive	11/15/21		(256,907	)
Deutsche Bank		733	3 Month LIBOR	Pay	11/15/21		156,113
Net Unrealized Depreciation						$	(270,993	)

  LIBOR  London Interbank Offered Rate.

LONG TERM CREDIT ANALYSIS++
AAA	35.6	%
AA	25.8
A	20.5
BBB	17.9
Not Rated	0.2
	100.0	%+

  +  Does not include open long/short futures contracts with an underlying face amount of $16,025,328 and net unrealized appreciation of $27,598. Also does not include open swap agreements with net unrealized depreciation of $270,993.

  ++  The ratings shown are based on the Portfolio's security ratings as determined by Standard & Poor's, Moody's or Fitch, each a Nationally Recognized Statistical Ratings Organization ("NRSRO").

See Notes to Financial Statements
32

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (94.7%)
		Basic Materials (6.5%)
$	820	ArcelorMittal (Luxembourg)		9.85	%	06/01/19	$	913,235
	1,570	CF Industries, Inc.		6.875		05/01/18		1,801,575
	550	Ecolab, Inc.		3.00		12/08/16		569,576
	215	Ecolab, Inc.		4.35		12/08/21		230,061
	540	FMG Resources August 2006 Pty Ltd. (Australia) (a)		6.375		02/01/16		526,500
	205	FMG Resources August 2006 Pty Ltd. (Australia) (a)		6.875		02/01/18		197,313
	440	Georgia-Pacific LLC		7.75		11/15/29		555,228
	595	Georgia-Pacific LLC		8.875		05/15/31		820,051
	203	Goldcorp, Inc. (Canada)		2.00		08/01/14		249,436
	535	Incitec Pivot Ltd. (Australia) (a)		4.00		12/07/15		546,434
	580	Kinross Gold Corp. (Canada) (a)		5.125		09/01/21		570,293
	545	Lubrizol Corp.		8.875		02/01/19		749,901
	164	Lyondell Chemical Co.		8.00		11/01/17		179,990
	110	LyondellBasell Industries (Netherlands) (a)		6.00		11/15/21		114,675
	1,325	MeadWestvaco Corp.		7.375		09/01/19		1,541,566
	1,075	Reliance Steel & Aluminum Co.		6.85		11/15/36		1,076,281
	605	Teck Resources Ltd. (Canada)		4.75		01/15/22		651,615
	705	Teck Resources Ltd. (Canada)		6.25		07/15/41		817,378
	195	Vale Overseas Ltd. (Brazil)		6.875		11/21/36		222,993
	210	Vale Overseas Ltd. (Brazil)		6.875		11/10/39		241,584
								12,575,685
		Communications (12.3%)
	1,700	AT&T, Inc.		5.35		09/01/40		1,919,710
	875	AT&T, Inc.		6.30		01/15/38		1,078,042
	310	Cablevision Systems Corp.		7.75		04/15/18		330,150
	655	CenturyLink, Inc.		6.45		06/15/21		657,356
	325	CenturyLink, Inc., Series Q		6.15		09/15/19		326,981
	700	Comcast Corp.		5.15		03/01/20		797,408
	820	Comcast Corp.		6.40		05/15/38		988,593
	100	Comcast Corp.		6.45		03/15/37		121,636
	505	Corning, Inc.		7.25		08/15/36		610,662
	110	COX Communications, Inc. (a)		8.375		03/01/39		147,752
	195	CSC Holdings LLC (a)		6.75		11/15/21		206,213
	315	Deutsche Telekom International Finance BV (Germany)		6.75		08/20/18		376,142
	300	Deutsche Telekom International Finance BV (Germany)		8.75		06/15/30		419,578

See Notes to Financial Statements
33

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	500	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		5.875	%	10/01/19	$	563,697
	175	Expedia, Inc.		5.95		08/15/20		176,771
	75	Frontier Communications Corp.		8.50		04/15/20		77,156
	381	Liberty Interactive LLC		3.125		03/30/23		428,149
	1,045	NBC Universal Media LLC		4.375		04/01/21		1,104,937
	510	News America, Inc.		6.40		12/15/35		560,633
	165	News America, Inc.		6.65		11/15/37		187,546
	375	Omnicom Group, Inc.		0.00		07/01/38		397,500
	260	Qwest Corp.		6.875		09/15/33		259,555
	430	Sable International Finance Ltd. (United Kingdom) (a)		7.75		02/15/17		432,150
	351	SBA Communications Corp.		1.875		05/01/13		397,946
	305	SBA Telecommunications, Inc.		8.25		08/15/19		333,213
	350	Symantec Corp., Series B		1.00		06/15/13		391,563
	1,280	Telecom Italia Capital SA (Italy)		7.175		06/18/19		1,201,181
	1,330	Telefonica Europe BV (Spain)		8.25		09/15/30		1,466,368
	640	Telstra Corp., Ltd. (Australia) (a)		4.80		10/12/21		680,083
	1,200	Time Warner Cable, Inc.		6.75		07/01/18		1,427,174
	610	Time Warner, Inc.		6.50		11/15/36		738,459
	1,295	Time Warner, Inc.		7.70		05/01/32		1,694,429
	980	Verizon Communications, Inc.		4.75		11/01/41		1,059,041
	150	Verizon Communications, Inc.		6.40		02/15/38		191,084
	715	Verizon Communications, Inc.		8.95		03/01/39		1,148,864
	335	Vivendi SA (France) (a)		6.625		04/04/18		381,234
	555	WPP Finance 2010 (United Kingdom) (a)		4.75		11/21/21		552,032
								23,830,988
		Consumer, Cyclical (4.5%)
	1,105	Chrysler Group LLC/CG Co-Issuer, Inc. (a)		8.00		06/15/19		1,016,600
	395	Daimler Finance North America LLC (Germany)		8.50		01/18/31		553,794
	164	DR Horton, Inc., Series DHI		2.00		05/15/14		192,290
	925	Gap, Inc. (The)		5.95		04/12/21		883,806
	405	Hyatt Hotels Corp. (a)		6.875		08/15/19		452,623
	105	Ingram Micro, Inc.		5.25		09/01/17		108,291
	208	International Game Technology		3.25		05/01/14		247,260
	210	JC Penney Co., Inc.		5.65		06/01/20		206,850
	455	JC Penney Corp., Inc.		6.375		10/15/36		382,769
	285	Levi Strauss & Co.		7.625		05/15/20		292,481
	620	QVC, Inc. (a)		7.125		04/15/17		660,300
	227	RadioShack Corp. (a)		2.50		08/01/13		218,204
	315	Whirlpool Corp., MTN		8.60		05/01/14		351,768

See Notes to Financial Statements
34

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	800	Wyndham Worldwide Corp.		5.625	%	03/01/21	$	827,526
	365	Wyndham Worldwide Corp.		5.75		02/01/18		386,892
	590	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.		7.75		08/15/20		657,850
	1,040	Yum! Brands, Inc.		6.875		11/15/37		1,332,160
								8,771,464
		Consumer, Non-Cyclical (7.5%)
	245	Amgen, Inc.		3.875		11/15/21		247,737
	416	Archer-Daniels-Midland Co.		0.875		02/15/14		420,160
	795	Boston Scientific Corp.		6.00		01/15/20		888,922
	580	Bunge Ltd. Finance Corp.		8.50		06/15/19		707,008
	995	Cigna Corp.		2.75		11/15/16		993,943
	740	ConAgra Foods, Inc.		8.25		09/15/30		941,280
	165	Constellation Brands, Inc.		7.25		09/01/16		182,119
	1,185	Delhaize Group SA (Belgium)		5.70		10/01/40		1,220,831
	420	Gilead Sciences, Inc.		1.00		05/01/14		462,000
	180	Gilead Sciences, Inc.		5.65		12/01/41		200,039
	490	Grupo Bimbo SAB de CV (Mexico) (a)		4.875		06/30/20		521,065
	700	Kraft Foods, Inc.		6.875		02/01/38		930,136
	400	Kraft Foods, Inc.		6.875		01/26/39		534,771
	300	Life Technologies Corp.		1.50		02/15/24		301,500
	415	Life Technologies Corp.		6.00		03/01/20		464,662
	835	Lorillard Tobacco Co.		8.125		06/23/19		996,085
	330	Molson Coors Brewing Co.		2.50		07/30/13		351,038
	300	Mylan, Inc.		1.25		03/15/12		302,250
	365	Quest Diagnostics, Inc.		6.95		07/01/37		455,308
	800	Sigma Alimentos SA de CV (Mexico) (a)		5.625		04/14/18		820,000
	665	Teva Pharmaceutical Finance IV BV (Israel)		3.65		11/10/21		677,789
	520	TreeHouse Foods, Inc.		7.75		03/01/18		564,200
	630	Verisk Analytics, Inc.		5.80		05/01/21		679,421
	280	Vertex Pharmaceuticals, Inc.		3.35		10/01/15		295,050
	235	Viropharma, Inc.		2.00		03/15/17		373,062
								14,530,376
		Energy (7.2%)
	356	Alpha Natural Resources, Inc.		2.375		04/15/15		332,860
	85	Alpha Natural Resources, Inc.		6.00		06/01/19		82,875
	370	Alpha Natural Resources, Inc.		6.25		06/01/21		360,750
	600	Anadarko Petroleum Corp.		6.95		06/15/19		717,362
	175	Anadarko Petroleum Corp.		8.70		03/15/19		223,736
	394	Chesapeake Energy Corp.		2.75		11/15/35		387,105

See Notes to Financial Statements
35

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	150	Concho Resources, Inc.		7.00	%	01/15/21	$	161,812
	745	Continental Resources, Inc.		7.125		04/01/21		812,050
	1,320	Energy Transfer Partners LP		9.00		04/15/19		1,572,261
	275	Enterprise Products Operating LLC		5.25		01/31/20		304,140
	850	Enterprise Products Operating LLC		5.95		02/01/41		956,207
	625	EQT Corp.		4.875		11/15/21		632,130
	360	EQT Corp.		8.125		06/01/19		422,872
	400	Gazprom OAO Via Gaz Capital SA (Russia) (a)		6.51		03/07/22		408,000
	885	Kinder Morgan Finance Co. ULC		5.70		01/05/16		909,337
	325	Marathon Petroleum Corp.		5.125		03/01/21		340,139
	775	Marathon Petroleum Corp.		6.50		03/01/41		881,294
	325	MarkWest Energy Partners LP/MarkWest Energy Finance Corp.		6.25		06/15/22		341,250
	410	Petrobras International Finance Co. (Brazil)		5.75		01/20/20		440,799
	1,095	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		1,305,145
	675	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		863,532
	225	Spectra Energy Capital LLC		8.00		10/01/19		283,570
	485	Transocean, Inc. (Cayman Islands)		6.375		12/15/21		516,453
	700	Valero Energy Corp.		6.125		02/01/20		779,884
								14,035,563
		Finance (42.6%)
	1,125	Aegon N.V. (Netherlands)		4.625		12/01/15		1,167,327
	700	Ally Financial, Inc.		6.25		12/01/17		677,845
	1,285	American Financial Group, Inc.		9.875		06/15/19		1,496,661
	720	American International Group, Inc.		6.40		12/15/20		727,872
	432	Ares Capital Corp. (a)		5.75		02/01/16		417,960
	1,150	Banco de Credito del Peru (Peru) (a)		4.75		03/16/16		1,158,625
	990	Banco Votorantim SA (Brazil) (a)		5.25		02/11/16		1,005,840
	1,865	Bank of America Corp.		5.75		12/01/17		1,763,689
	780	Barclays Bank PLC (United Kingdom) (a)		6.05		12/04/17		708,726
	700	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		777,177
	1,135	BBVA Bancomer SA (Mexico) (a)		4.50		03/10/16		1,117,975
	900	BBVA US Senior SAU (Spain)		3.25		05/16/14		852,979
	610	Bear Stearns Cos. LLC (The)		5.55		01/22/17		645,600
	540	BNP Paribas SA (France)		5.00		01/15/21		520,676
	950	Boston Properties LP		3.70		11/15/18		971,493
	1,025	Brandywine Operating Partnership LP		4.95		04/15/18		1,010,332
	490	Brookfield Asset Management, Inc. (Canada)		5.80		04/25/17		520,625
	780	Capital One Bank, USA NA		8.80		07/15/19		893,567

See Notes to Financial Statements
36

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	800	Capital One Capital VI		8.875	%	05/15/40	$	834,313
	1,735	Citigroup, Inc. (See Note 6)		5.875		05/29/37		1,738,531
	1,230	Citigroup, Inc. (See Note 6)		8.50		05/22/19		1,449,856
	700	CNA Financial Corp.		7.35		11/15/19		781,332
	260	Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (Netherlands) (a)		11.00	(b)	06/30/19(c)		305,530
	1,455	Credit Agricole SA (France) (a)		8.375	(b)	10/13/19(c)		1,098,525
	765	Credit Suisse (Switzerland)		5.40		01/14/20		722,671
	280	Credit Suisse (Switzerland)		6.00		02/15/18		276,493
	800	Dexus Diversified Trust/Dexus Office Trust (Australia) (a)		5.60		03/15/21		814,426
	775	Digital Realty Trust LP		5.25		03/15/21		777,854
	425	Discover Bank		7.00		04/15/20		445,363
	715	Discover Bank		8.70		11/18/19		816,419
	270	ERP Operating LP		4.625		12/15/21		275,869
	750	Farmers Insurance Exchange (a)		8.625		05/01/24		931,019
	600	Ford Motor Credit Co. LLC		5.00		05/15/18		603,056
	545	General Electric Capital Corp.		5.30		02/11/21		583,636
	75	General Electric Capital Corp., MTN		5.875		01/14/38		79,740
	6,350	General Electric Capital Corp., Series G		6.00		08/07/19		7,305,103
	1,195	Genworth Financial, Inc.		7.70		06/15/20		1,139,284
	2,215	Goldman Sachs Group, Inc. (The)		6.15		04/01/18		2,289,025
	1,565	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		1,460,511
	950	Goodman Funding Pty Ltd. (Australia) (a)		6.375		04/15/21		968,329
	550	Harley-Davidson Funding Corp. (a)		6.80		06/15/18		643,620
	600	Hartford Financial Services Group, Inc.		5.50		03/30/20		609,956
	1,675	HBOS PLC, Series G (United Kingdom) (a)		6.75		05/21/18		1,344,638
	250	HCP, Inc.		5.625		05/01/17		265,441
	300	Health Care REIT, Inc.		4.75		07/15/27		343,500
	600	Health Care REIT, Inc.		6.125		04/15/20		622,676
	595	Huntington Bancshares, Inc.		7.00		12/15/20		675,476
	915	International Lease Finance Corp.		5.75		05/15/16		849,498
	945	International Lease Finance Corp.		6.25		05/15/19		874,234
	510	Intesa Sanpaolo SpA (Italy) (a)		6.50		02/24/21		419,238
	200	Jefferies Group, Inc.		3.875		11/09/15		179,000
	710	Jefferies Group, Inc.		6.875		04/15/21		646,100
	2,610	JPMorgan Chase Capital XXVII		7.00		11/01/39		2,652,412
	745	Lincoln National Corp.		8.75		07/01/19		907,479
	260	Lloyds TSB Bank PLC (United Kingdom)		6.375		01/21/21		260,998
	505	Lloyds TSB Bank PLC, MTN (United Kingdom) (a)		5.80		01/13/20		480,189

See Notes to Financial Statements
37

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	710	Macquarie Bank Ltd. (Australia) (a)		6.625	%	04/07/21	$	655,687
	705	Macquarie Group Ltd. (Australia) (a)		6.00		01/14/20		662,321
	930	Merrill Lynch & Co., Inc.		7.75		05/14/38		886,010
	3,625	Merrill Lynch & Co., Inc., MTN		6.875		04/25/18		3,578,535
	965	MetLife, Inc. (See Note 6)		10.75		08/01/39		1,276,994
	165	NASDAQ OMX Group, Inc. (The)		5.25		01/16/18		173,384
	1,665	Nationwide Building Society (United Kingdom) (a)		6.25		02/25/20		1,654,584
	525	Nationwide Financial Services (a)		5.375		03/25/21		516,605
	1,100	Nordea Bank AB (Sweden) (a)		4.875		05/13/21		931,401
	370	Platinum Underwriters Finance, Inc., Series B		7.50		06/01/17		389,829
	1,025	Principal Financial Group, Inc.		8.875		05/15/19		1,277,970
	925	Protective Life Corp.		7.375		10/15/19		1,028,039
	635	Prudential Financial, Inc., MTN		6.625		12/01/37		697,574
	775	QBE Capital Funding III Ltd. (Australia) (a)		7.25	(b)	05/24/41		683,526
	1,240	Regions Financial Corp.		5.75		06/15/15		1,196,600
	775	Reinsurance Group of America, Inc.		6.45		11/15/19		872,034
	925	Royal Bank of Scotland Group PLC (United Kingdom)		6.40		10/21/19		867,269
	360	Santander Holdings USA, Inc. (Spain)		4.625		04/19/16		346,042
	1,300	Santander US Debt SA Unipersonal (Spain) (a)		3.724		01/20/15		1,181,245
	700	Simon Property Group LP		4.125		12/01/21		733,459
	1,060	SLM Corp., MTN		6.25		01/25/16		1,031,734
	495	SLM Corp., MTN		8.00		03/25/20		501,188
	885	Standard Chartered Bank (United Kingdom) (a)		6.40		09/26/17		912,359
	525	SunTrust Banks, Inc.		3.50		01/20/17		528,313
	800	UBS AG (Switzerland)		4.875		08/04/20		795,922
	450	Ventas Realty LP/Ventas Capital Corp.		4.75		06/01/21		435,128
	300	Vornado Realty LP		3.875		04/15/25		307,500
	600	Vornado Realty LP		5.00		01/15/22		606,158
	975	WEA Finance LLC (Australia) (a)		4.625		05/10/21		958,753
	900	Wells Operating Partnership II LP		5.875		04/01/18		924,804
	900	Willis Group Holdings PLC		4.125		03/15/16		914,949
	1,000	XL Group Ltd. (Cayman Islands)		5.75		10/01/21		1,057,352
								82,489,577
		Industrials (5.8%)
	1,060	BAA Funding Ltd. (United Kingdom) (a)		4.875		07/15/21		1,092,752
	540	Ball Corp.		7.375		09/01/19		594,000
	500	Bemis Co., Inc.		4.50		10/15/21		530,710
	255	Bombardier, Inc. (Canada) (a)		7.50		03/15/18		274,125
	505	Bombardier, Inc. (Canada) (a)		7.75		03/15/20		552,975

See Notes to Financial Statements
38

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	820	CRH America, Inc.		6.00	%	09/30/16	$	876,843
	480	CRH America, Inc.		8.125		07/15/18		548,392
	585	Crown Americas LLC/Crown Americas Capital Corp. III		6.25		02/01/21		614,250
	510	DISH DBS Corp.		7.125		02/01/16		552,075
	217	General Cable Corp.		0.875		11/15/13		200,725
	545	Holcim US Finance Sarl & Cie SCS (Switzerland) (a)		6.00		12/30/19		562,493
	430	Joy Global, Inc.		5.125		10/15/21		459,894
	915	L-3 Communications Corp.		4.95		02/15/21		908,464
	670	Lafarge SA (France) (a)		6.20		07/09/15		682,378
	615	Meccanica Holdings USA, Inc. (Italy) (a)		7.375		07/15/39		462,938
	750	Odebrecht Finance Ltd. (Brazil) (a)		6.00		04/05/23		755,625
	286	Orbital Sciences Corp.		2.438		01/15/27		288,860
	374	Owens-Brockway Glass Container, Inc. (a)		3.00		06/01/15		349,690
	135	Sonoco Products Co.		4.375		11/01/21		140,103
	470	Sonoco Products Co.		5.75		11/01/40		504,014
	275	Stanley Black & Decker, Inc.		0.00	(b)	05/17/12		305,766
								11,257,072
		Technology (1.7%)
	845	Hewlett-Packard Co.		4.65		12/09/21		893,320
	234	Intel Corp.		2.95		12/15/35		244,823
	905	KLA-Tencor Corp.		6.90		05/01/18		1,044,965
	255	Lam Research Corp. (a)		1.25		05/15/18		240,338
	434	Microsoft Corp. (a)		0.00		06/15/13		441,595
	350	SanDisk Corp.		1.00		05/15/13		342,562
								3,207,603
		Utilities (6.6%)
	1,610	AES Corp. (The)		8.00		06/01/20		1,779,050
	775	CMS Energy Corp.		6.25		02/01/20		817,715
	750	EDP Finance BV (Portugal) (a)		4.90		10/01/19		579,600
	1,175	Enel Finance International N.V. (Italy) (a)		5.125		10/07/19		1,051,312
	2,100	Exelon Generation Co., LLC		4.00		10/01/20		2,162,746
	975	FirstEnergy Solutions Corp.		6.05		08/15/21		1,083,952
	975	FirstEnergy Solutions Corp.		6.80		08/15/39		1,095,374
	875	Iberdrola Finance Ireland Ltd. (Spain) (a)		5.00		09/11/19		855,946
	900	PPL WEM Holdings PLC (a)		3.90		05/01/16		903,057

See Notes to Financial Statements
39

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	1,150	Puget Energy, Inc.		6.50	%	12/15/20	$	1,229,947
	1,200	UIL Holdings Corp.		4.625		10/01/20		1,246,002
								12,804,701
		Total Corporate Bonds(Cost $175,228,497)						183,503,029
		Asset-Backed Securities (1.8%)
	850	America West Airlines 2001-1 Pass-Through Trust, Series 011G (AMBAC)		7.10		04/02/21		790,567
		CVS Pass-Through Trust
	1,461			6.036		12/10/28		1,524,030
	115	(a)		8.353		07/10/31		140,925
	1,060	FUEL Trust (a)		4.207		04/15/16		1,070,038
		Total Asset-Backed Securities(Cost $3,491,189)						3,525,560
		Municipal Bond (0.4%)
	600	State of California, General Obligation Bonds (Cost $603,036)		5.95		04/01/16		676,788
		Sovereign (0.2%)
	395	Korea Development Bank (Korea, Republic of) (Cost $393,219)		3.875		05/04/17		391,044
		Agency Fixed Rate Mortgage (0.0%)
	1	Federal Home Loan Mortgage Corporation, Gold Pools (Cost $1,440)		6.50		12/01/28		1,588
NUMBER OF SHARES
		Convertible Preferred Stocks (0.3%)
		Diversified Financial Services (0.2%)
	350	Bank of America Corp., Series L						275,807
		Electric Utilities (0.1%)
	4,430	PPL Corp.						247,327
		Total Convertible Preferred Stocks(Cost $585,890)						523,134
		Preferred Stock (0.2%)
		Consumer Finance
	22,725	GMAC Capital Trust I (Cost $574,065)						439,501

See Notes to Financial Statements
40

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Short-Term Investments (0.3%)
		U.S. Treasury Security (0.2%)
$	475	U.S. Treasury Bill (Cost $474,981) (d)(e)		0.018	%	03/22/12			$	474,984
NUMBER OF SHARES (000)
		Investment Company (0.1%)
		208Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $208,270)								208,270
		Total Short-Term Investments (Cost $683,251)								683,254
		Total Investments (Cost $181,560,587) (f)					97.9	%		189,743,898
		Other Assets in Excess of Liabilities					2.1			4,080,052
		Net Assets					100.0	%	$	193,823,950

  MTN  Medium Term Note.

  REIT  Real Estate Investment Trust.

  (a)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

  (b)  Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2011.

  (c)  Perpetual — Security does not have a predetermined maturity date. Rate for this security is fixed for a period of time then reverts to a floating rate. The interest shown is the rate in effect at December 31, 2011.

  (d)  Rate shown is the yield to maturity at December 31, 2011.

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

  (f)  Securities are available for collateral in connection with open futures contracts and swap agreements.

Bond Insurance:

AMBAC  AMBAC Assurance Corporation.

See Notes to Financial Statements
41

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2011 continued

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2011:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	101	Long	U.S. Treasury 2 yr. Note, Mar-12	$	22,275,234		$	12,202
	103	Long	U.S. Treasury 5 yr. Note, Mar-12		12,695,555			58,742
	63	Long	U.S. Treasury Ultra Long Bond, Mar-12		10,091,813			54,141
	40	Short	U.S. Treasury 30 yr. Bond, Mar-12		(5,792,500	)		(36,594	)
	298	Short	U.S. Treasury 10 yr. Note, Mar-12		(39,075,250	)		(297,289	)
Net Unrealized Depreciation							$	(208,798	)

CREDIT DEFAULT SWAP AGREEMENT OPEN AT DECEMBER 31, 2011:

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	$	315		1.00	%	June 20, 2014	$	(10,900	)	$	16,985	$	6,085	BBB-

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

LONG TERM CREDIT ANALYSIS++
AAA	0.6	%
AA	8.0
A	27.5
BBB	50.7
BB	10.2
B or Below	2.2
Not Rated	0.8
	100.0	%+

  +  Does not include open long/short futures contracts with an underlying face amount of $89,930,352 and net unrealized depreciation of $208,798. Also does not include open swap agreements with total unrealized depreciation of $10,900.

  ++  The ratings shown are based on the Portfoio's security ratings as determined by Standard & Poor's, Moody's or Fitch, each a Nationally Recognized Statistical Ratings Organization ("NRSRO").

See Notes to Financial Statements
42

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2011

NUMBER OF SHARES			VALUE
		Common Stocks (97.0%) Australia (5.2%)
		Airports
	36,500	Australian Infrastructure Fund (Stapled Securities) (a)(b)	$	72,051
	301,513	Sydney Airport (Stapled Securities) (a)		820,311
				892,362
		Diversified
	271,480	DUET Group (Stapled Securities) (a)(b)		487,311
		Oil & Gas Storage & Transportation
	122,600	APA Group (Stapled Securities) (a)(b)		563,025
		Toll Roads
	74,800	Macquarie Atlas Roads Group (Stapled Securities) (a)(c)		103,283
	229,100	Transurban Group (Stapled Securities) (a)		1,316,898
				1,420,181
		Transmission & Distribution
	318,106	Spark Infrastructure Group		447,368
		Total Australia		3,810,247
		Brazil (0.6%)
		Water
	7,800	Cia de Saneamento Basico do Estado de Sao Paulo ADR (c)		434,070
		Canada (13.6%)
		Oil & Gas Storage & Transportation
	108,500	Enbridge, Inc.		4,056,702
	130,310	TransCanada Corp.		5,695,906
				9,752,608

NUMBER OF SHARES			VALUE
		Ports
	10,150	Westshore Terminals Investment Corp. (Stapled Securities) (a)(b)	$	227,958
		Total Canada		9,980,566
		China (13.9%)
		Oil & Gas Storage & Transportation
	705,000	Beijing Enterprises Holdings Ltd. (d)		4,230,036
	5,968,000	China Gas Holdings Ltd. (d)		2,743,255
	277,000	ENN Energy Holdings Ltd. (d)		888,072
	1,693,000	Sichuan Expressway Co. Ltd., H Shares (d)		680,112
				8,541,475
		Ports
	223,529	China Merchants Holdings International Co., Ltd. (d)		649,007
		Toll Roads
	1,150,000	Jiangsu Expressway Co., Ltd., H Shares (d)		1,058,700
		Total China		10,249,182
		France (3.4%)
		Communications
	6,387	Eutelsat Communications SA		249,231
	92,580	SES SA		2,222,094
		Total France		2,471,325
		Germany (0.3%)
		Airports
	4,073	Fraport AG Frankfurt Airport Services Worldwide		200,316
		Hong Kong (2.3%)
		Oil & Gas Storage & Transportation
	739,800	Hong Kong & China Gas Co., Ltd.		1,714,573

See Notes to Financial Statements
43

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES			VALUE
		Italy (4.0%)
		Oil & Gas Storage & Transportation
	294,296	Snam Rete Gas SpA	$	1,297,321
		Toll Roads
	30,590	Atlantia SpA		489,742
	135,245	Societa Iniziative Autostradali e Servizi SpA		1,018,738
				1,508,480
		Transmission & Distribution
	31,700	Terna Rete Elettrica Nazionale SpA		106,836
		Total Italy		2,912,637
		Japan (0.4%)
		Oil & Gas Storage & Transportation
	64,000	Tokyo Gas Co., Ltd.		294,348
		Netherlands (0.9%)
		Oil & Gas Storage & Transportation
	12,788	Koninklijke Vopak N.V.		675,689
		Spain (3.3%)
		Diversified
	47,640	Ferrovial SA		574,962
		Oil & Gas Storage & Transportation
	28,172	Enagas SA		521,037
		Toll Roads
	58,405	Abertis Infraestructuras SA		932,789
		Transmission & Distribution
	10,060	Red Electrica Corp. SA		430,511
		Total Spain		2,459,299
		Switzerland (0.7%)
		Airports
	1,440	Flughafen Zuerich AG (Registered)		499,776

NUMBER OF SHARES			VALUE
		United Kingdom (11.5%)
		Transmission & Distribution
	657,200	National Grid PLC	$	6,378,948
		Water
	32,900	Pennon Group PLC		364,809
	31,700	Severn Trent PLC		736,482
	99,100	United Utilities Group PLC		932,648
				2,033,939
		Total United Kingdom		8,412,887
		United States (36.9%)
		Communications
	70,750	American Tower Corp., Class A		4,245,708
	53,950	Crown Castle International Corp. (c)		2,416,960
	29,290	SBA Communications Corp., Class A (c)		1,258,298
				7,920,966
		Diversified
	93,220	CenterPoint Energy, Inc.		1,872,790
		Oil & Gas Storage & Transportation
	7,790	AGL Resources, Inc.		329,205
	5,250	Atmos Energy Corp.		175,088
	38,154	Enbridge Energy Management LLC (c)		1,326,233
	14,208	Kinder Morgan Management LLC (c)		1,115,612
	47,250	NiSource, Inc.		1,125,023
	3,270	Northwest Natural Gas Co.		156,731
	14,410	Oneok, Inc.		1,249,203
	18,100	PG&E Corp.		746,082
	46,670	Sempra Energy		2,566,850
	9,580	Southwest Gas Corp.		407,054
	102,166	Spectra Energy Corp.		3,141,604
				12,338,685
		Transmission & Distribution
	23,860	ITC Holdings Corp.		1,810,497
	39,390	Northeast Utilities		1,420,797

See Notes to Financial Statements
44

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES					VALUE
	21,180	NSTAR			$	994,613
	12,860	Pepco Holdings, Inc.				261,058
						4,486,965
		Water
	15,810	American Water Works Co., Inc.				503,707
		Total United States				27,123,113
		Total Common Stocks (Cost $59,339,593)				71,238,028
NUMBER OF SHARES (000)
		Short-Term Investment (2.7%)
		Investment Company
	1,993	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,993,348)				1,993,348
Total Investments (Cost $61,332,941)			99.7	%		73,231,376
Other Assets in Excess of Liabilities			0.3			239,448
Net Assets			100.0	%	$	73,470,824

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 classes of securities traded together as a unit; stocks with attached warrants.

  (c)  Non-income producing security.

  (d)  Security trades on the Hong Kong exchange.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil & Gas Storage & Transportation	$	35,698,761		48.7	%
Transmission & Distribution		11,850,628		16.2
Communications		10,392,291		14.2
Toll Roads		4,920,150		6.7
Water		2,971,716		4.1
Diversified		2,935,063		4.0
Investment Company		1,993,348		2.7
Airports		1,592,454		2.2
Ports		876,965		1.2
	$	73,231,376		100.0	%

See Notes to Financial Statements
45

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2011

NUMBER OF SHARES			VALUE
		Common Stocks (98.6%) Belgium (1.5%)
		Chemicals
	19,693	Umicore SA	$	812,292
		Finland (1.5%)
		Machinery
	15,525	Kone Oyj, Class B		805,739
		France (10.4%)
		Commercial Banks
	25,527	BNP Paribas SA		1,002,713
	25,712	Societe Generale SA		572,544
				1,575,257
		Electrical Equipment
	17,640	Schneider Electric SA		928,748
		Hotels, Restaurants & Leisure
	23,048	Accor SA		584,218
		Media
	29,687	SES SA		712,544
		Metals & Mining
	42,044	ArcelorMittal		768,891
		Multi-Utilities
	33,111	GDF Suez		905,075
		Total France		5,474,733
		Germany (13.7%)
		Automobiles
	24,953	Daimler AG (Registered)		1,095,461
		Food & Staples Retailing
	15,061	Metro AG		549,694
		Health Care Providers & Services
	11,749	Fresenius SE & Co. KGaA		1,086,936
		Industrial Conglomerates
	17,933	Siemens AG (Registered)		1,716,132
		Insurance
	6,934	Muenchener Rueckversicherungs AG (Registered)		850,587
		Machinery
	8,811	MAN SE		783,430

NUMBER OF SHARES			VALUE
		Pharmaceuticals
	18,143	Bayer AG (Registered)	$	1,159,991
		Total Germany		7,242,231
		Netherlands (1.9%)
		Media
	86,794	Reed Elsevier N.V.		1,011,785
		Portugal (1.2%)
		Oil, Gas & Consumable Fuels
	42,135	Galp Energia SGPS SA, Class B		620,588
		Spain (3.7%)
		Commercial Banks
	131,533	Banco Bilbao Vizcaya Argentaria SA		1,137,181
		Information Technology Services
	51,168	Amadeus IT Holding SA, Class A		830,120
		Total Spain		1,967,301
		Switzerland (14.5%)
		Food Products
	46,903	Nestle SA (Registered)		2,696,435
		Insurance
	5,122	Zurich Financial Services AG (a)		1,158,762
		Pharmaceuticals
	34,000	Novartis AG (Registered)		1,943,788
	11,028	Roche Holding AG (Genusschein)		1,869,113
				3,812,901
		Total Switzerland		7,668,098
		United Kingdom (50.2%)
		Aerospace & Defense
	112,059	Rolls-Royce Holdings PLC (a)		1,299,116
		Commercial Banks
	350,236	Barclays PLC		957,565
	262,788	HSBC Holdings PLC		2,004,023
				2,961,588

See Notes to Financial Statements
46

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES			VALUE
		Food & Staples Retailing
	197,166	WM Morrison Supermarkets PLC	$	998,820
		Household Products
	23,693	Reckitt Benckiser Group PLC		1,170,088
		Insurance
	105,789	Prudential PLC		1,048,994
		Metals & Mining
	40,084	Anglo American PLC		1,480,938
	70,203	Xstrata PLC		1,066,267
				2,547,205
		Oil, Gas & Consumable Fuels
	84,252	BG Group PLC		1,801,059
	280,967	BP PLC		2,009,354
	65,236	Royal Dutch Shell PLC, Class A		2,402,096
	43,390	Tullow Oil PLC		944,733
				7,157,242
		Pharmaceuticals
	81,084	GlaxoSmithKline PLC		1,852,964
		Professional Services
	91,900	Experian PLC		1,249,520
		Specialty Retail
	163,542	Carphone Warehouse Group PLC		784,800
		Tobacco
	38,784	British American Tobacco PLC		1,840,375
	38,419	Imperial Tobacco Group PLC		1,452,836
				3,293,211

NUMBER OF SHARES					VALUE
		Wireless Telecommunication Services
	781,074	Vodafone Group PLC			$	2,170,071
		Total United Kingdom				26,533,619
		Total Common Stocks (Cost $48,318,220)				52,136,386
NUMBER OF SHARES (000)
		Short-Term Investment (1.4%)
		Investment Company
	719	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $718,547)				718,547
Total Investments(Cost $49,036,767) (b)			100.0	%		52,854,933
Liabilities in Excess ofOther Assets			0.0	(c)		(5,275	)
Net Assets			100.0	%	$	52,849,658

(a)  Non-income producing security.

(b)  Securities are available for collateral in connection with open foreign currency exchange contracts.

(c)  Amount is less than 0.05%.

FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT DECEMBER 31, 2011:

COUNTERPARTY	CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED DEPRECIATION
State Street Bank London	GBP	3,805,000	EUR	4,451,417	01/13/12	$	(147,144	)

Currency Abbreviations:

EUR  Euro.

GBP  British Pound.

See Notes to Financial Statements
47

Morgan Stanley Variable Investment Series - European Equity

Summary of Investments n December 31, 2011

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil, Gas & Consumable Fuels	$	7,777,830		14.7	%
Pharmaceuticals		6,825,856		12.9
Commercial Banks		5,674,026		10.7
Metals & Mining		3,316,096		6.3
Tobacco		3,293,211		6.2
Insurance		3,058,343		5.8
Food Products		2,696,435		5.1
Wireless Telecommunication Services		2,170,071		4.1
Media		1,724,329		3.3
Industrial Conglomerates		1,716,132		3.2
Machinery		1,589,169		3.0
Food & Staples Retailing		1,548,514		2.9
Aerospace & Defense		1,299,116		2.5
Professional Services		1,249,520		2.4
Household Products		1,170,088		2.2

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Automobiles	$	1,095,461			2.1	%
Health Care Providers & Services		1,086,936			2.0
Electrical Equipment		928,748			1.8
Multi-Utilities		905,075			1.7
Information Technology Services		830,120			1.6
Chemicals		812,292			1.5
Specialty Retail		784,800			1.5
Investment Company		718,547			1.4
Hotels, Restaurants & Leisure		584,218			1.1
	$	52,854,933	+		100.0	%

+  Does not include open foreign currency exchange contracts with net unrealized depreciation of $147,144.

See Notes to Financial Statements
48

Morgan Stanley Variable Investment Series - Multi Cap Growth

Portfolio of Investments n December 31, 2011

NUMBER OF SHARES			VALUE
		Common Stocks (93.1%)
		Air Transport (1.9%)
	104,274	Expeditors International of Washington, Inc.	$	4,271,063
		Alternative Energy (4.4%)
	85,888	Range Resources Corp.		5,319,903
	153,869	Ultra Petroleum Corp. (a)		4,559,138
				9,879,041
		Asset Management & Custodian (1.6%)
	96,484	Greenhill & Co., Inc.		3,509,123
		Biotechnology (1.7%)
	123,026	Illumina, Inc. (a)		3,749,833
		Chemicals: Diversified (2.9%)
	92,154	Monsanto Co.		6,457,231
		Commercial Finance & Mortgage Companies (1.7%)
	708,808	BM&F Bovespa SA (Brazil)		3,724,068
		Commercial Services (5.2%)
	120,180	CoStar Group, Inc. (a)		8,019,612
	156,272	Leucadia National Corp.		3,553,625
				11,573,237
		Communications Technology (4.2%)
	201,350	Motorola Solutions, Inc.		9,320,492
		Computer Services, Software & Systems (18.6%)
	59,751	Baidu, Inc. ADR (China) (a)		6,959,199
	327,898	Facebook, Inc., Class B (a)(b)(c)		8,853,246
	24,573	Google, Inc., Class A (a)		15,871,700
	55,674	LinkedIn Corp., Class A (a)		3,508,019
	44,954	Salesforce.com, Inc. (a)		4,561,033
	182,042	Zynga, Inc., Class A (a)		1,713,015
				41,466,212
		Computer Technology (11.1%)
	51,326	Apple, Inc. (a)		20,787,030
	206,438	Yandex N.V., Class A (Russia) (a)		4,066,829
				24,853,859

NUMBER OF SHARES			VALUE
		Diversified Retail (13.9%)
	95,234	Amazon.com, Inc. (a)	$	16,485,005
	161,667	Fastenal Co.		7,050,298
	254,966	Groupon, Inc. (a)		5,259,949
	30,472	NetFlix, Inc. (a)		2,111,405
				30,906,657
		Financial Data & Systems (5.3%)
	179,631	MSCI, Inc., Class A (a)		5,915,249
	144,770	Verisk Analytics, Inc., Class A (a)		5,809,620
				11,724,869
		Health Care Services (3.0%)
	136,892	athenahealth, Inc. (a)		6,724,135
		Medical Equipment (3.7%)
	17,930	Intuitive Surgical, Inc. (a)		8,301,769
		Metals & Minerals: Diversified (2.4%)
	2,771,679	Lynas Corp. Ltd. (Australia) (a)		2,962,443
	104,852	Molycorp, Inc. (a)		2,514,351
				5,476,794
		Pharmaceuticals (2.9%)
	95,828	Mead Johnson Nutrition Co.		6,586,258
		Real Estate Investment Trusts (REIT) (3.4%)
	274,767	Brookfield Asset Management, Inc., Class A (Canada)		7,550,597
		Recreational Vehicles & Boats (3.3%)
	300,011	Edenred (France)		7,385,264
		Wholesale & International Trade (1.9%)
	2,296,000	Li & Fung Ltd. (d)		4,251,085
		Total Common Stocks(Cost $171,939,872)		207,711,587

See Notes to Financial Statements
49

Morgan Stanley Variable Investment Series - Multi Cap Growth

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES					VALUE
		Convertible Preferred Stocks (1.4%)
		Alternative Energy (1.2%)
	586,326	Better Place, Inc. (a)(b)(c)			$	2,661,920
		Computer Services, Software & Systems (0.2%)
	28,236	Workday, Inc. (a)(b)(c)				374,409
		Total Convertible Preferred Stocks(Cost $1,840,224)				3,036,329
NUMBER OF SHARES (000)
		Short-Term Investment (5.5%)
		Investment Company
	12,217	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $12,216,664)				12,216,664
Total Investments(Cost $185,996,760)			100.0	%		222,964,580
Liabilities in Excess of Other Assets			0.0	(e)		(2,319	)
Net Assets			100.0	%	$	222,962,261

  ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  At December 31, 2011, the Portfolio held fair valued securities valued at $11,889,575, representing 5.3% 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.

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

  (d)  Security trades on the Hong Kong exchange.

  (e)  Amount is less than 0.05%.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Computer Services, Software & Systems	$	41,840,621		18.8	%
Diversified Retail		30,906,657		13.9
Computer Technology		24,853,859		11.1
Alternative Energy		12,540,961		5.6
Investment Company		12,216,664		5.5
Financial Data & Systems		11,724,869		5.3
Commercial Services		11,573,237		5.2
Communications Technology		9,320,492		4.2
Medical Equipment		8,301,769		3.7
Real Estate Investment Trusts (REIT)		7,550,597		3.4
Recreational Vehicles & Boats		7,385,264		3.3
Health Care Services		6,724,135		3.0
Pharmaceuticals		6,586,258		2.9
Chemicals: Diversified		6,457,231		2.9
Metals & Minerals: Diversified		5,476,794		2.4
Air Transport		4,271,063		1.9
Wholesale & International Trade		4,251,085		1.9
Biotechnology		3,749,833		1.7
Commercial Finance & Mortgage Companies		3,724,068		1.7
Asset Management & Custodian		3,509,123		1.6
	$	222,964,580		100.0	%

See Notes to Financial Statements
50

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2011

NUMBER OF SHARES			VALUE
		Common Stocks (92.5%)
		Air Transport (1.9%)
	12,916	Expeditors International of Washington, Inc.	$	529,039
		Alternative Energy (4.1%)
	10,066	Range Resources Corp.		623,488
	18,034	Ultra Petroleum Corp. (a)		534,348
				1,157,836
		Asset Management & Custodian (1.5%)
	11,308	Greenhill & Co., Inc.		411,272
		Biotechnology (1.6%)
	14,419	Illumina, Inc. (a)		439,491
		Chemicals: Diversified (3.1%)
	12,216	Monsanto Co.		855,975
		Commercial Finance & Mortgage Companies (1.8%)
	93,281	BM&F Bovespa SA (Brazil)		490,097
		Commercial Services (5.1%)
	14,085	CoStar Group, Inc. (a)		939,892
	20,715	Leucadia National Corp.		471,059
				1,410,951
		Communications Technology (4.0%)
	23,944	Motorola Solutions, Inc.		1,108,368
		Computer Services, Software & Systems (18.6%)
	7,934	Baidu, Inc. ADR (China) (a)		924,073
	39,222	Facebook, Inc., Class B (a)(b)(c)		1,058,994
	3,076	Google, Inc., Class A (a)		1,986,788
	6,423	LinkedIn Corp., Class A (a)		404,713
	5,923	Salesforce.com, Inc. (a)		600,948
	22,787	Zynga, Inc., Class A (a)		214,426
				5,189,942
		Computer Technology (11.0%)
	6,379	Apple, Inc. (a)		2,583,495
	24,689	Yandex N.V., Class A (Russia) (a)		486,373
				3,069,868

NUMBER OF SHARES			VALUE
		Diversified Retail (13.9%)
	11,836	Amazon.com, Inc. (a)	$	2,048,812
	20,402	Fastenal Co.		889,731
	31,894	Groupon, Inc. (a)		657,973
	4,039	NetFlix, Inc. (a)		279,862
				3,876,378
		Financial Data & Systems (5.4%)
	22,657	MSCI, Inc., Class A (a)		746,095
	19,190	Verisk Analytics, Inc., Class A (a)		770,095
				1,516,190
		Health Care Services (2.8%)
	16,213	athenahealth, Inc. (a)		796,383
		Medical Equipment (3.7%)
	2,239	Intuitive Surgical, Inc. (a)		1,036,679
		Metals & Minerals: Diversified (2.3%)
	324,848	Lynas Corp. Ltd. (Australia) (a)		347,206
	12,289	Molycorp, Inc. (a)		294,690
				641,896
		Pharmaceuticals (2.9%)
	11,739	Mead Johnson Nutrition Co.		806,822
		Real Estate Investment Trusts (REIT) (3.6%)
	36,202	Brookfield Asset Management, Inc., Class A (Canada)		994,831
		Recreational Vehicles & Boats (3.2%)
	36,626	Edenred (France)		901,609
		Wholesale & International Trade (2.0%)
	302,000	Li & Fung Ltd. (d)		559,158
		Total Common Stocks(Cost $21,573,421)		25,792,785

See Notes to Financial Statements
51

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES					VALUE
		Convertible Preferred Stocks (1.3%)
		Alternative Energy (1.1%)
	70,908	Better Place, Inc. (a)(b)(c)			$	321,922
		Computer Services, Software & Systems (0.2%)
	3,313	Workday, Inc. (a)(b)(c)				43,931
		Total Convertible Preferred Stocks (Cost $221,200)				365,853
NUMBER OF SHARES (000)
		Short-Term Investment (6.4%)
		Investment Company
	1,791	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,790,916)				1,790,916
Total Investments(Cost $23,585,537)			100.2	%		27,949,554
Liabilities in Excess of Other Assets			(0.2	)		(51,176	)
Net Assets			100.0	%	$	27,898,378

  ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  At December 31, 2011, the Portfolio held fair valued securities valued at $1,424,847, representing 5.1% 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.

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

  (d)  Security trades on the Hong Kong exchange.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Computer Services, Software & Systems	$	5,233,873		18.7	%
Diversified Retail		3,876,378		13.9
Computer Technology		3,069,868		11.0
Investment Company		1,790,916		6.4
Financial Data & Systems		1,516,190		5.4
Alternative Energy		1,479,758		5.3
Commercial Services		1,410,951		5.0
Communications Technology		1,108,368		4.0
Medical Equipment		1,036,679		3.7
Real Estate Investment Trusts (REIT)		994,831		3.6
Recreational Vehicles & Boats		901,609		3.2
Chemicals: Diversified		855,975		3.1
Pharmaceuticals		806,822		2.9
Health Care Services		796,383		2.8
Metals & Minerals: Diversified		641,896		2.3
Wholesale & International Trade		559,158		2.0
Air Transport		529,039		1.9
Commercial Finance & Mortgage Companies		490,097		1.7
Biotechnology		439,491		1.6
Asset Management & Custodian		411,272		1.5
	$	27,949,554		100.0	%

See Notes to Financial Statements
52

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011

NUMBER OF SHARES			VALUE
		Common Stocks (55.9%)
		Aerospace & Defense (1.1%)
	31,100	Raytheon Co.	$	1,504,618
		Auto Components (1.0%)
	45,180	Johnson Controls, Inc.		1,412,327
		Biotechnology (0.7%)
	30,700	Vertex Pharmaceuticals, Inc. (a)		1,019,547
		Chemicals (1.0%)
	29,670	EI du Pont de Nemours & Co.		1,358,293
		Commercial Banks (2.0%)
	100,000	Wells Fargo & Co.		2,756,000
		Computers & Peripherals (7.3%)
	8,765	Apple, Inc. (a)		3,549,825
	101,300	Hewlett-Packard Co.		2,609,488
	77,700	SanDisk Corp. (a)		3,823,617
				9,982,930
		Diversified Financial Services (2.6%)
	45,000	Citigroup, Inc. (See Note 6)		1,183,950
	71,445	JPMorgan Chase & Co.		2,375,546
				3,559,496
		Diversified Telecommunication Services (4.1%)
	110,770	CenturyLink, Inc.		4,120,644
	37,650	Verizon Communications, Inc.		1,510,518
				5,631,162
		Food & Staples Retailing (1.1%)
	71,100	Safeway, Inc.		1,495,944
		Food Products (1.1%)
	56,700	ConAgra Foods, Inc.		1,496,880
		Hotels, Restaurants & Leisure (3.2%)
	29,050	McDonald's Corp.		2,914,587
	25,000	Yum! Brands, Inc.		1,475,250
				4,389,837
		Industrial Conglomerates (2.2%)
	89,950	General Electric Co.		1,611,004
	29,480	Tyco International Ltd.		1,377,011
				2,988,015
		Insurance (2.3%)
	45,050	Chubb Corp. (The)		3,118,361

See Notes to Financial Statements
53

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

NUMBER OF SHARES			VALUE
		Machinery (1.1%)
	31,000	Illinois Tool Works, Inc.	$	1,448,010
		Media (1.1%)
	40,650	Time Warner, Inc.		1,469,091
		Metals & Mining (2.6%)
	254,000	Alcoa, Inc.		2,197,100
	37,060	Freeport-McMoRan Copper & Gold, Inc.		1,363,437
				3,560,537
		Multi-Utilities (1.1%)
	27,630	Integrys Energy Group, Inc.		1,496,993
		Oil, Gas & Consumable Fuels (5.2%)
	26,550	Chevron Corp.		2,824,920
	39,035	ConocoPhillips		2,844,481
	17,690	Exxon Mobil Corp.		1,499,404
				7,168,805
		Paper & Forest Products (1.0%)
	47,670	MeadWestvaco Corp.		1,427,717
		Pharmaceuticals (5.2%)
	55,485	Abbott Laboratories		3,119,922
	113,060	Bristol-Myers Squibb Co.		3,984,234
				7,104,156
		Real Estate Investment Trusts (REIT) (0.7%)
	25,825	Plum Creek Timber Co., Inc. REIT		944,162
		Road & Rail (1.0%)
	18,600	Norfolk Southern Corp.		1,355,196
		Semiconductors & Semiconductor Equipment (2.0%)
	83,805	Intel Corp.		2,032,271
	50,000	NVIDIA Corp. (a)		693,000
				2,725,271
		Software (1.1%)
	55,340	Microsoft Corp.		1,436,626
		Specialty Retail (2.2%)
	73,120	Home Depot, Inc.		3,073,965
		Textiles, Apparel & Luxury Goods (0.9%)
	10,170	VF Corp.		1,291,488
		Tobacco (1.0%)
	34,280	Reynolds American, Inc.		1,419,878
		Total Common Stocks (Cost $79,773,969)		76,635,305

See Notes to Financial Statements
54

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (10.5%)
		Basic Materials (0.7%)
$	105	Air Products & Chemicals, Inc.		2.00	%	08/02/16	$	107,958
	100	Anglo American Capital PLC (United Kingdom) (b)		9.375		04/08/19		127,418
	15	ArcelorMittal (Luxembourg)		7.00		10/15/39		13,980
	50	ArcelorMittal (Luxembourg)		9.85		06/01/19		55,685
	55	Barrick North America Finance LLC		4.40		05/30/21		59,680
	105	Cliffs Natural Resources, Inc.		4.875		04/01/21		104,814
	50	Ecolab, Inc.		3.00		12/08/16		51,780
	20	Ecolab, Inc.		4.35		12/08/21		21,401
	15	FMG Resources August 2006 Pty Ltd. (Australia) (b)		6.875		02/01/18		14,438
	35	Georgia-Pacific LLC		7.75		11/15/29		44,166
	50	Georgia-Pacific LLC		8.875		05/15/31		68,912
	75	Kinross Gold Corp. (Canada) (b)		5.125		09/01/21		73,745
	20	MeadWestvaco Corp.		7.375		09/01/19		23,269
	20	Rio Tinto Finance USA Ltd. (Australia)		9.00		05/01/19		27,335
	65	Teck Resources Ltd. (Canada)		4.75		01/15/22		70,008
	70	Teck Resources Ltd. (Canada)		6.25		07/15/41		81,158
	60	Vale Overseas Ltd. (Brazil)		5.625		09/15/19		66,396
	15	Vale Overseas Ltd. (Brazil)		6.875		11/10/39		17,256
								1,029,399
		Communications (1.2%)
	50	AT&T, Inc.		3.875		08/15/21		52,994
	85	AT&T, Inc.		6.30		01/15/38		104,724
	50	CBS Corp.		8.875		05/15/19		64,311
	45	CenturyLink, Inc.		6.45		06/15/21		45,162
	50	Comcast Corp.		5.15		03/01/20		56,958
	45	Comcast Corp.		5.70		05/15/18		51,854
	15	Comcast Corp.		6.45		03/15/37		18,245
	15	COX Communications, Inc. (b)		8.375		03/01/39		20,148
	45	Deutsche Telekom International Finance BV (Germany)		8.75		06/15/30		62,937
	30	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		7.625		05/15/16		31,867
	20	Expedia, Inc.		5.95		08/15/20		20,202
	40	NBC Universal Media LLC		4.375		04/01/21		42,294
	65	NBC Universal Media LLC		5.15		04/30/20		72,493
	65	News America, Inc.		4.50		02/15/21		68,281
	40	Qwest Corp.		6.875		09/15/33		39,932
	100	Sable International Finance Ltd. (United Kingdom) (b)		7.75		02/15/17		100,500
	65	Telecom Italia Capital SA (Italy)		7.175		06/18/19		60,997
	95	Telefonica Europe BV (Spain)		8.25		09/15/30		104,740

See Notes to Financial Statements
55

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	55	Telstra Corp., Ltd. (Australia) (b)		4.80	%	10/12/21	$	58,445
	55	Time Warner, Inc.		4.75		03/29/21		59,758
	25	Time Warner, Inc.		4.875		03/15/20		27,137
	40	Time Warner, Inc.		5.875		11/15/16		46,219
	25	Time Warner, Inc.		7.70		05/01/32		32,711
	35	Verizon Communications, Inc.		4.60		04/01/21		39,586
	35	Verizon Communications, Inc.		4.75		11/01/41		37,823
	55	Verizon Communications, Inc.		8.95		03/01/39		88,374
	45	Vivendi SA (France) (b)		6.625		04/04/18		51,211
	40	WPP Finance 2010 (United Kingdom) (b)		4.75		11/21/21		39,786
	100	WPP Finance UK (United Kingdom)		8.00		09/15/14		111,459
								1,611,148
		Consumer, Cyclical (0.5%)
	90	Best Buy Co., Inc.		3.75		03/15/16		88,748
	60	Daimler Finance North America LLC (Germany)		7.30		01/15/12		60,112
	65	Gap, Inc. (The)		5.95		04/12/21		62,105
	90	Home Depot, Inc.		5.875		12/16/36		113,345
	40	Hyatt Hotels Corp. (b)		6.875		08/15/19		44,704
	20	Ingram Micro, Inc.		5.25		09/01/17		20,627
	25	JC Penney Co., Inc.		5.65		06/01/20		24,625
	49	JC Penney Corp., Inc.		6.375		10/15/36		41,221
	70	VF Corp.		3.50		09/01/21		72,862
	40	Wal-Mart Stores, Inc.		5.25		09/01/35		48,020
	45	Wesfarmers Ltd. (Australia) (b)		2.983		05/18/16		45,404
	75	Wyndham Worldwide Corp.		5.625		03/01/21		77,581
	5	Yum! Brands, Inc.		6.875		11/15/37		6,405
								705,759
		Consumer, Non-Cyclical (1.3%)
	50	Altria Group, Inc.		4.125		09/11/15		54,327
	60	Altria Group, Inc.		9.25		08/06/19		80,682
	50	Amgen, Inc.		2.50		11/15/16		50,657
	15	Amgen, Inc.		3.875		11/15/21		15,168
	50	BAT International Finance PLC (United Kingdom) (b)		9.50		11/15/18		67,985
	60	Boston Scientific Corp.		6.00		01/15/20		67,088
	45	Bunge Ltd. Finance Corp.		8.50		06/15/19		54,854
	90	Cigna Corp.		2.75		11/15/16		89,904
	55	ConAgra Foods, Inc.		8.25		09/15/30		69,960
	65	Coventry Health Care, Inc.		5.45		06/15/21		72,364
	96	Delhaize Group SA (Belgium)		5.70		10/01/40		98,903
	65	Gilead Sciences, Inc.		4.50		04/01/21		69,046

See Notes to Financial Statements
56

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	100	Grupo Bimbo SAB de CV (Mexico) (b)		4.875	%	06/30/20	$	106,340
	180	Kraft Foods, Inc.		7.00		08/11/37		241,293
	70	Life Technologies Corp.		6.00		03/01/20		78,377
	50	Quest Diagnostics, Inc.		6.95		07/01/37		62,371
	75	Sanofi (France)		4.00		03/29/21		83,257
	120	Teva Pharmaceutical Finance IV BV (Israel)		3.65		11/10/21		122,308
	115	UnitedHealth Group, Inc.		6.625		11/15/37		148,154
	55	Verisk Analytics, Inc.		5.80		05/01/21		59,315
	65	Woolworths Ltd. (Australia) (b)		4.00		09/22/20		67,183
								1,759,536
		Energy (0.8%)
	45	Anadarko Petroleum Corp.		6.95		06/15/19		53,802
	75	Energy Transfer Partners LP		8.50		04/15/14		84,133
	35	Enterprise Products Operating LLC		5.25		01/31/20		38,709
	90	Enterprise Products Operating LLC, Series N		6.50		01/31/19		104,955
	50	EQT Corp.		4.875		11/15/21		50,570
	25	EQT Corp.		8.125		06/01/19		29,366
	100	Gazprom OAO Via Gaz Capital SA (Russia) (b)		6.51		03/07/22		102,000
	75	Hess Corp.		6.00		01/15/40		89,061
	50	Kinder Morgan Energy Partners LP		5.95		02/15/18		57,197
	80	Kinder Morgan Finance Co. ULC		5.70		01/05/16		82,200
	35	Marathon Petroleum Corp.		5.125		03/01/21		36,630
	80	Petrobras International Finance Co. (Brazil)		5.75		01/20/20		86,010
	60	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		71,515
	60	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		76,758
	50	Spectra Energy Capital LLC		7.50		09/15/38		65,275
	55	Texas Eastern Transmission LP		7.00		07/15/32		70,357
								1,098,538
		Finance (4.5%)
	100	ABB Treasury Center USA, Inc. (Switzerland) (b)		2.50		06/15/16		100,658
	100	Abbey National Treasury Services PLC (United Kingdom) (b)		3.875		11/10/14		93,913
	75	Aegon N.V. (Netherlands)		4.625		12/01/15		77,822
	135	American International Group, Inc.		6.40		12/15/20		136,476
	100	Australia & New Zealand Banking Group Ltd. (Australia) (b)		4.875		01/12/21		105,810
	30	Bank of America Corp.		5.75		12/01/17		28,370
	135	Bank of America Corp., Series L		5.65		05/01/18		128,789
	175	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		194,294
	60	Bear Stearns Cos. LLC (The)		6.40		10/02/17		67,115

See Notes to Financial Statements
57

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	170	Bear Stearns Cos. LLC (The)		7.25	%	02/01/18	$	199,550
	130	Berkshire Hathaway, Inc.		3.75		08/15/21		135,349
	75	BNP Paribas SA (France)		5.00		01/15/21		72,316
	75	Brandywine Operating Partnership LP		4.95		04/15/18		73,927
	45	Brookfield Asset Management, Inc. (Canada)		5.80		04/25/17		47,813
	35	Citigroup, Inc. (See Note 6)		5.875		05/29/37		35,071
	160	Citigroup, Inc. (See Note 6)		6.125		11/21/17		170,968
	70	Citigroup, Inc. (See Note 6)		6.125		05/15/18		74,603
	95	CNA Financial Corp.		5.75		08/15/21		97,119
	240	Credit Suisse (Switzerland)		5.40		01/14/20		226,720
	25	Credit Suisse (Switzerland)		6.00		02/15/18		24,687
	60	Dexus Diversified Trust/Dexus Office Trust (Australia) (b)		5.60		03/15/21		61,082
	115	Digital Realty Trust LP		4.50		07/15/15		117,395
	25	ERP Operating LP		4.625		12/15/21		25,543
	140	Farmers Exchange Capital (b)		7.05		07/15/28		148,541
	60	General Electric Capital Corp.		5.30		02/11/21		64,253
	160	General Electric Capital Corp.		5.625		05/01/18		179,441
	270	General Electric Capital Corp., Series G		6.00		08/07/19		310,611
	75	Genworth Financial, Inc.		7.20		02/15/21		68,553
	190	Goldman Sachs Group, Inc. (The)		6.15		04/01/18		196,350
	80	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		74,659
	60	Goldman Sachs Group, Inc. (The)		7.50		02/15/19		66,357
	45	Harley-Davidson Funding Corp. (b)		6.80		06/15/18		52,660
	60	Hartford Financial Services Group, Inc.		5.50		03/30/20		60,996
	130	HBOS PLC, Series G (United Kingdom) (b)		6.75		05/21/18		104,360
	30	Health Care REIT, Inc.		6.125		04/15/20		31,134
	210	HSBC Holdings PLC (United Kingdom)		5.10		04/05/21		223,558
	60	JPMorgan Chase & Co.		4.25		10/15/20		60,531
	15	JPMorgan Chase & Co.		4.95		03/25/20		15,970
	70	Lloyds TSB Bank PLC (United Kingdom)		6.375		01/21/21		70,269
	50	Macquarie Bank Ltd. (Australia) (b)		6.625		04/07/21		46,175
	55	Macquarie Group Ltd. (Australia) (b)		6.00		01/14/20		51,670
	225	Merrill Lynch & Co., Inc., MTN		6.875		04/25/18		222,116
	35	MetLife, Inc. (See Note 6)		7.717		02/15/19		43,951
	35	NASDAQ OMX Group, Inc. (The)		5.55		01/15/20		35,915
	170	Nationwide Building Society (United Kingdom) (b)		6.25		02/25/20		168,936
	50	Nationwide Financial Services (b)		5.375		03/25/21		49,201
	75	Pacific LifeCorp (b)		6.00		02/10/20		79,951
	60	Platinum Underwriters Finance, Inc., Series B		7.50		06/01/17		63,215
	50	Principal Financial Group, Inc.		8.875		05/15/19		62,340

See Notes to Financial Statements
58

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	40	Prudential Financial, Inc., MTN		6.625	%	12/01/37	$	43,942
	50	Regions Financial Corp.		5.75		06/15/15		48,250
	60	Reinsurance Group of America, Inc.		6.45		11/15/19		67,512
	25	Santander Holdings USA, Inc. (Spain)		4.625		04/19/16		24,031
	50	Simon Property Group LP		4.125		12/01/21		52,390
	70	SLM Corp., MTN		6.25		01/25/16		68,133
	100	Standard Chartered Bank (United Kingdom) (b)		6.40		09/26/17		103,091
	55	SunTrust Banks, Inc.		3.50		01/20/17		55,347
	105	TD Ameritrade Holding Corp.		5.60		12/01/19		113,713
	100	UBS AG (Switzerland)		5.75		04/25/18		103,744
	100	Ventas Realty LP/Ventas Capital Corp.		4.75		06/01/21		96,695
	75	Vornado Realty LP		5.00		01/15/22		75,770
	60	Wachovia Corp.		5.625		10/15/16		65,391
	75	WEA Finance LLC (Australia) (b)		4.625		05/10/21		73,750
	95	Wells Fargo & Co.		5.625		12/11/17		108,394
	80	Wells Operating Partnership II LP		5.875		04/01/18		82,205
	80	Willis Group Holdings PLC		4.125		03/15/16		81,329
								6,110,790
		Industrials (0.6%)
	100	BAA Funding Ltd. (United Kingdom) (b)		4.875		07/15/23		103,090
	65	Bemis Co., Inc.		4.50		10/15/21		68,993
	90	Cooper US, Inc.		5.25		11/15/12		93,459
	75	CRH America, Inc.		6.00		09/30/16		80,199
	30	Holcim US Finance Sarl & Cie SCS (Switzerland) (b)		6.00		12/30/19		30,963
	75	L-3 Communications Corp.		4.95		02/15/21		74,464
	55	Lafarge SA (France) (b)		6.20		07/09/15		56,016
	10	Norfolk Southern Corp. (b)		4.837		10/01/41		10,653
	50	Norfolk Southern Corp.		7.25		02/15/31		69,582
	70	Sonoco Products Co.		5.75		11/01/40		75,066
	40	Union Pacific Corp.		6.125		02/15/20		49,045
	80	Waste Management, Inc.		6.125		11/30/39		98,495
								810,025
		Technology (0.3%)
	50	Fiserv, Inc.		3.125		06/15/16		50,962
	125	Hewlett-Packard Co.		4.65		12/09/21		132,148
	100	International Business Machines Corp.		7.625		10/15/18		134,383
	45	KLA-Tencor Corp.		6.90		05/01/18		51,960
								369,453

See Notes to Financial Statements
59

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Utilities (0.6%)
$	50	EDF SA (France) (b)		4.60	%	01/27/20	$	51,190
	125	Enel Finance International N.V. (Italy) (b)		5.125		10/07/19		111,842
	150	Exelon Generation Co., LLC		6.25		10/01/39		183,435
	140	FirstEnergy Solutions Corp.		6.05		08/15/21		155,644
	75	Iberdrola Finance Ireland Ltd. (Spain) (b)		5.00		09/11/19		73,367
	75	Ohio Power Co., Series M		5.375		10/01/21		86,199
	80	Oncor Electric Delivery Co., LLC		6.80		09/01/18		97,422
	75	PPL WEM Holdings PLC (b)		3.90		05/01/16		75,255
								834,354
		Total Corporate Bonds (Cost $13,425,935)						14,329,002
		Sovereign (0.3%)
	230	Brazilian Government International Bond (Brazil)		6.00		01/17/17		269,100
	105	Republic of Italy (Italy)		6.875		09/27/23		102,207
		Total Sovereign (Cost $350,899)						371,307
		Municipal Bonds (0.4%)
	75	Chicago, IL, Transit Authority		6.20		12/01/40		84,721
	30	City of Chicago, IL		6.395		01/01/40		36,846
	70	City of New York, NY, Series G-1		5.968		03/01/36		83,383
	85	Illinois State Toll Highway Authority, Highway Revenue, Build America Bonds		6.184		01/01/34		100,748
		Municipal Electric Authority of Georgia
	50			6.637		04/01/57		52,970
	95			6.655		04/01/57		97,523
	65	New York City Transitional Finance Authority		5.267		05/01/27		81,091
		State of California,
		General Obligation Bonds
	45			5.95		04/01/16		50,759
	30			6.65		03/01/22		35,001
		Total Municipal Bonds (Cost $547,369)						623,042
		Agency Fixed Rate Mortgages (0.0%)
	2	Federal Home Loan Mortgage Corporation, Gold Pools		6.50		05/01/29 - 12/01/31		2,824
	1	Federal National Mortgage Association, Conventional Pools		6.50		11/01/29		647
		Total Agency Fixed Rate Mortgages (Cost $3,155)						3,471

See Notes to Financial Statements
60

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Asset-Backed Securities (1.0%)
$	100	Ally Master Owner Trust		1.148	(c)%	01/15/16	$	100,297
	123	America West Airlines 2001-1 Pass-Through Trust, Series 011G (AMBAC)		7.10		10/02/22		114,075
	31	Brazos Student Finance Corp.		1.258	(c)	06/25/35		31,177
	144	CVS Pass-Through Trust		6.036		12/10/28		150,129
	200	FUEL Trust (b)		4.207		04/15/16		201,894
	100	GE Dealer Floorplan Master Note Trust (b)		1.828	(c)	10/20/14		100,883
	175	Louisiana Public Facilities Authority		1.318	(c)	04/26/27		169,477
	150	Nissan Auto Receivables Owner Trust		1.18		02/16/15		150,711
	180	PFS Financing Corp. (b)		1.778	(c)	10/17/16		180,133
	125	World Omni Automobile Lease Securitization Trust		1.49		10/15/14		125,772
		Total Asset-Backed Securities (Cost $1,325,757)						1,324,548
		Agency Bond - Banking (FDIC Guaranteed) (0.7%)
	1,000	Citigroup Funding, Inc. (See Note 6) (Cost $1,000,690) (d)		2.25		12/10/12		1,018,808
		U.S. Treasury Securities (9.8%)
		U.S. Treasury Bonds
	1,830			3.50		02/15/39		2,058,750
	280			3.875		08/15/40		335,694
	730			6.875		08/15/25		1,124,314
		U.S. Treasury Notes
	610			0.50		10/15/13		612,740
	1,975			1.25		08/31/15		2,027,770
	3,275			1.75		01/31/14 - 07/31/15		3,395,561
	1,345			2.25		01/31/15		1,420,972
	2,300			2.375		08/31/14		2,423,266
		Total U.S. Treasury Securities (Cost $12,741,745)						13,399,067
		U.S. Agency Securities (1.6%)
		Federal Home Loan Mortgage Corporation
	260			0.625		12/29/14		260,002
	365			1.00		07/30/14		369,148
	150			3.75		03/27/19		171,504
	45			6.75		03/15/31		67,857

See Notes to Financial Statements
61

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Federal National Mortgage Association
$	700			4.375	%	10/15/15			$	791,691
	450			5.375		06/12/17				544,358
		Total U.S. Agency Securities (Cost $2,111,456)								2,204,560
		Short-Term Investments (19.5%)
		U.S. Treasury Security (0.1%)
	100	U.S. Treasury Bill (Cost $99,996) (e)(f)		0.018		03/22/12				99,997
NUMBER OF SHARES (000)
		Investment Company (19.4%)
	26,626	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $26,626,452)								26,626,452
		Total Short-Term Investments (Cost $26,726,448)								26,726,449
		Total Investments (Cost $138,007,423) (g)					99.7	%		136,635,559
		Other Assets in Excess of Liabilities					0.3			376,770
		Net Assets					100.0	%	$	137,012,329

  FDIC  Federal Deposit Insurance Corporation.

  MTN  Medium Term Note.

  (a)  Non-income producing security.

  (b)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

  (c)  Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2011.

  (d)  Agency Bonds — Banking (FDIC Guaranteed)

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

  (f)  Rate shown is the yield to maturity at December 31, 2011.

  (g)  Securities are available for collateral in connection with open foreign currency exchange contracts, futures contracts and swap agreements.

Bond Insurance:

AMBAC  AMBAC Assurance Corporation.

See Notes to Financial Statements
62

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT DECEMBER 31, 2011:

COUNTERPARTY	CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
UBS AG	$	178,321	NOK	1,030,000	01/20/12	$	(6,192	)
JPMorgan Chase Bank	CHF	66,000	$	71,375	01/20/12		1,091
JPMorgan Chase Bank	SEK	360,000	$	53,295	01/20/12		1,027
Net Unrealized Depreciation						$	(4,074	)

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2011:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	2	Long	U.S. Treasury 5 yr. Note, Mar-12	$	246,516		$	265
	1	Long	U.S. Treasury 2 yr. Note, Mar-12		220,547			118
	1	Short	U.S. Treasury Ultra Long Bond, Mar-12		(160,187	)		(781	)
	3	Short	U.S. Treasury 30 yr. Bond, Mar-12		(434,438	)		(2,625	)
Net Unrealized Depreciation							$	(3,023	)

See Notes to Financial Statements
63

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2011 continued

INTEREST RATE SWAP AGREEMENTS OPEN AT DECEMBER 31, 2011:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Goldman Sachs	$	5,640	3 Month CDOR	Receive		2.70	%	07/15/15	$	(147,395	)
Barclays Capital		59,956	3 Month STIBOR	Receive		2.89		07/29/13		(91,873	)
Bank of America NA		2,305	3 Month LIBOR	Receive		4.35		08/18/26		(93,796	)
Barclays Capital		24,090	3 Month STIBOR	Receive		2.30		09/12/12		19,456
Bank of America NA		2,175	6 Month EURIBOR	Receive		3.61		08/18/31		(76,446	)
Bank of America NA		1,720	6 Month EURIBOR	Pay		4.26		08/18/26		76,636
Bank of America		2,860	3 Month LIBOR	Pay		4.15		08/18/31		103,291
Credit Suisse		1,388	3 Month CDOR	Pay		4.07		09/08/20		88,111
Credit Suisse		1,000	3 Month CDOR	Pay		4.12		09/08/20		66,086
Barclays Capital		51,185	3 Month STIBOR	Pay		2.76		07/29/12		82,475
Net Unrealized Appreciation									$	26,545

ZERO COUPON SWAP AGREEMENTS OPEN AT DECEMBER 31, 2011:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank PLC	$	515	3 Month LIBOR	Pay	11/15/19	$	95,195
Barclays Bank PLC		435	3 Month LIBOR	Receive	11/15/19		(171,196	)
Net Unrealized Depreciation						$	(76,001	)

  CDOR    Canadian Dealer Offered Rate.

  EURIBOR  Euro Interbank Offered Rate.

  LIBOR    London Interbank Offered Rate.

  STIBOR  Stockholm Interbank Offered Rate.

Currency Abbreviations:

CHF  Swiss Franc.

NOK  Norwegian Krone.

SEK  Swedish Krona.

See Notes to Financial Statements
64

Morgan Stanley Variable Investment Series - Strategist

Summary of Investments n December 31, 2011

PORTFOLIO COMPOSITION	VALUE			PERCENT OF TOTAL INVESTMENTS
Common Stocks	$	76,635,305			56.1	%
Investment Company		26,626,452			19.5
Corporate Bonds		14,329,002			10.5
U.S. Treasury Securities		13,499,064			9.9
U.S. Agency Securities		2,204,560			1.6
Asset-Backed Securities		1,324,548			1.0
Agency Bond - Banking (FDIC Guaranteed)		1,018,808			0.7
Municipal Bonds		623,042			0.4
Sovereign		371,307			0.3
Agency Fixed Rate Mortgages		3,471			0.0	+
	$	136,635,559	++		100.0	%

  +  Amount is less that 0.05%

  ++  Does not include open long/short futures contracts with an underlying face amount of $1,061,688 and net unrealized depreciation of $3,023. Also does not include open foreign currency exchange contracts with net unrealized depreciation of $4,074 and open swap agreements with net unrealized depreciation of $49,456.

See Notes to Financial Statements
65

Morgan Stanley Variable Investment Series

Financial Statements

Statements of Assets and Liabilities
December 31, 2011

	Money Market			Limited Duration			Income Plus			Global Infrastructure
Assets:
Investments in securities, at value*	$	107,581,291	(1)	$	55,012,592		$	185,070,247		$	71,238,028
Investment in affiliate, at value**		—			1,525,070			4,673,651			1,993,348
Total investments in securities, at value		107,581,291			56,537,662			189,743,898			73,231,376
Unrealized appreciation on open swap agreements		—			369,297			—			—
Unrealized appreciation on open foreign currency exchange contracts		—			—			—			—
Cash		10,785			—			16,350			31,825	(2)
Receivable for:
Investments sold		—			—			666,654			—
Interest		8,068			396,556			2,481,710			—
Shares of beneficial interest sold		727,309			170,382			1,120,153			7
Dividends		—			—			11,604			330,533
Foreign withholding taxes reclaimed		—			—			572			29,231
Interest and dividends from affiliates		—			1,316			63,640			85
Variation margin		—			10,406			—			—
Premium paid on open swap agreements		—			—			16,985			—
Prepaid expenses and other assets		5,567			5,037			4,810			2,286
Total Assets		108,333,020			57,490,656			194,126,376			73,625,343
Liabilities:
Unrealized depreciation on open swap agreements		—			640,290			10,900			—
Unrealized depreciation on open foreign currency exchange contracts		—			—			—			—
Payable for:
Investments purchased		1,000,014			—			—			27,279
Shares of beneficial interest redeemed		115			31			87,775			36,741
Investment advisory fee		605			14,493			68,576			34,805
Variation margin		—			—			35,282			—
Distribution fee (Class Y)		—			9,381			21,541			3,019
Administration fee		4,418			3,865			13,062			4,885
Transfer agent fee		493			417			500			500
Accrued expenses and other payables		47,267			44,731			64,790			47,290
Total Liabilities		1,052,912			713,208			302,426			154,519
Net Assets	$	107,280,108		$	56,777,448		$	193,823,950		$	73,470,824
Composition of Net Assets:
Paid-in-capital	$	107,282,061		$	90,211,343		$	195,124,681		$	53,816,923
Net unrealized appreciation (depreciation)		—			268,823			7,963,613			11,897,343
Accumulated undistributed net investment income (net investment loss)		58			1,499,321			10,694,720			1,649,890
Accumulated net realized gain (loss)		(2,011	)		(35,202,039	)		(19,959,064	)		6,106,668
Net Assets	$	107,280,108		$	56,777,448		$	193,823,950		$	73,470,824
* Cost	$	107,581,291		$	54,497,173		$	177,449,907		$	59,339,593
** Affiliated Cost	$	—		$	1,528,271		$	4,110,680		$	1,993,348
Class X Shares:
Net Assets	$	51,431,164		$	12,692,678		$	90,875,979		$	58,998,494
Shares Outstanding (unlimited shares authorized, $0.01 par value)		51,432,028			1,649,509			8,161,558			6,762,529
Net Asset Value Per Share	$	1.00		$	7.69		$	11.13		$	8.72
Class Y Shares:
Net Assets	$	55,848,944		$	44,084,770		$	102,947,971		$	14,472,330
Shares Outstanding (unlimited shares authorized, $0.01 par value)		55,850,039			5,747,334			9,280,033			1,664,584
Net Asset Value Per Share	$	1.00		$	7.67		$	11.09		$	8.69

⁽¹⁾  Including repurchase agreements of $56,655,000

⁽²⁾  Including foreign currency valued at $31,825, $20,368, and $87, respectively with a cost of $31,795, $20,349, and $87, respectively.

See Notes to Financial Statements
66

	European Equity			Multi Cap Growth			Aggressive Equity			Strategist
Assets:
Investments in securities, at value*	$	52,136,386		$	210,747,916		$	26,158,638		$	107,481,756
Investment in affiliate, at value**		718,547			12,216,664			1,790,916			29,153,803
Total investments in securities, at value		52,854,933			222,964,580			27,949,554			136,635,559
Unrealized appreciation on open swap agreements		—			—			—			531,250
Unrealized appreciation on open foreign currency exchange contracts		—			—			—			2,118
Cash		20,368	(2)		—			—			987	(2)
Receivable for:
Investments sold		12,732			—			—			8,040,560
Interest		—			—			—			334,240
Shares of beneficial interest sold		2,466			201,436			6,520			942
Dividends		144,498			120,901			14,383			106,446
Foreign withholding taxes reclaimed		64,894			—			—			41
Interest and dividends from affiliates		69			944			185			6,697
Variation margin		—			—			—			25,446
Premium paid on open swap agreements		—			—			—			—
Prepaid expenses and other assets		2,115			9,046			3,378			7,924
Total Assets		53,102,075			223,296,907			27,974,020			145,692,210
Liabilities:
Unrealized depreciation on open swap agreements		—			—			—			580,706
Unrealized depreciation on open foreign currency exchange contracts		147,144			—			—			6,192
Payable for:
Investments purchased		—			156,352			19,649			7,737,241
Shares of beneficial interest redeemed		29,232			14,120			11,819			232,415
Investment advisory fee		26,187			81,298			16,245			48,980
Variation margin		—			—			—			—
Distribution fee (Class Y)		2,474			10,750			3,443			8,511
Administration fee		3,586			15,485			1,940			9,330
Transfer agent fee		500			584			417			500
Accrued expenses and other payables		43,294			56,057			22,129			56,006
Total Liabilities		252,417			334,646			75,642			8,679,881
Net Assets	$	52,849,658		$	222,962,261		$	27,898,378		$	137,012,329
Composition of Net Assets:
Paid-in-capital	$	62,200,242		$	182,013,144		$	21,371,337		$	134,637,224
Net unrealized appreciation (depreciation)		3,664,714			36,965,474			4,363,742			(1,431,592	)
Accumulated undistributed net investment income (net investment loss)		1,565,150			(240,492	)		(33,028	)		2,444,177
Accumulated net realized gain (loss)		(14,580,448	)		4,224,135			2,196,327			1,362,520
Net Assets	$	52,849,658		$	222,962,261		$	27,898,378		$	137,012,329
* Cost	$	48,318,220		$	173,780,096		$	21,794,621		$	107,872,867
** Affiliated Cost	$	718,547		$	12,216,664		$	1,790,916		$	30,134,556
Class X Shares:
Net Assets	$	41,181,413		$	173,283,896		$	12,077,694		$	97,168,826
Shares Outstanding (unlimited shares authorized, $0.01 par value)		2,902,944			4,644,388			672,697			9,341,162
Net Asset Value Per Share	$	14.19		$	37.31		$	17.95		$	10.40
Class Y Shares:
Net Assets	$	11,668,245		$	49,678,365		$	15,820,684		$	39,843,503
Shares Outstanding (unlimited shares authorized, $0.01 par value)		826,186			1,342,682			902,796			3,845,400
Net Asset Value Per Share	$	14.12		$	37.00		$	17.52		$	10.36

67

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Operations
For the year ended December 31, 2011

	Money Market			Limited Duration			Income Plus			Global Infrastructure
Net Investment Income:
Income
Interest†	$	273,988		$	1,664,759		$	11,345,175			—
Dividends†		—			—			72,259		$	2,500,836
Interest and dividends from affiliates (Note 6)		—			46,457			504,011			1,717
Income from securities loaned - net		—			—			—			—
Total Income		273,988			1,711,216			11,921,445			2,502,553
†Net of foreign withholding taxes		—			—			—			145,788
Expenses
Investment advisory fee (Note 4)		525,074			187,130			893,580			426,740
Distribution fee (Class Y shares) (Note 5)		154,136			121,663			284,274			37,356
Administration fee (Note 4)		58,342			49,901			170,205			59,893
Professional fees		61,813			66,355			78,761			70,852
Shareholder reports and notices		21,489			26,071			39,219			24,707
Custodian fees		22,689			11,560			15,261			41,158
Trustees' fees and expenses		4,136			2,489			7,479			2,901
Transfer agent fees and expenses		2,993			2,417			3,000			3,000
Other		6,727			26,801			46,031			15,893
Total Expenses		857,399			494,387			1,537,810			682,500
Less: amounts waived		(595,451	)		—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		—			(1,009	)		(1,719	)		(1,419	)
Net Expenses		261,948			493,378			1,536,091			681,081
Net Investment Income (Loss)		12,040			1,217,838			10,385,354			1,821,472
Realized and Unrealized Gain (Loss):
Realized Gain (Loss) on:
Investments		(2,034	)		377,923			6,231,226			6,396,662
Investments in affiliates (Note 6)		—			26,644			449,298			—
Futures contracts		—			611,416			(1,409,742	)		—
Swap agreements		—			(675,647	)		402,198			—
Foreign currency exchange contracts		—			—			—			—
Foreign currency translation		—			—			—			(124,640	)
Net Realized Gain (Loss)		(2,034	)		340,336			5,672,980			6,272,022
Change in Unrealized Appreciation/Depreciation on:
Investments		—			(258,359	)		(4,576,750	)		3,168,021
Investments in affiliates (Note 6)		—			(41,593	)		(538,885	)		—
Futures contracts		—			44,090			(675,018	)		—
Swap agreements		—			330,785			113,226			—
Foreign currency exchange contracts		—			—			—			—
Foreign currency translation		—			—			—			(4,852	)
Net Change in Unrealized Appreciation/Depreciation		—			74,923			(5,677,427	)		3,163,169
Net Gain (Loss)		(2,034	)		415,259			(4,447	)		9,435,191
Net Increase (Decrease)	$	10,006		$	1,633,097		$	10,380,907		$	11,256,663

See Notes to Financial Statements
68

	European Equity			Multi Cap Growth			Aggressive Equity			Strategist
Net Investment Income:
Income
Interest†	$	30		$	317			—		$	1,343,351
Dividends†		2,236,914			1,538,618		$	184,019			2,009,227
Interest and dividends from affiliates (Note 6)		1,321			11,490			1,407			79,943
Income from securities loaned - net		96,083			—			—			—
Total Income		2,334,348			1,550,425			185,426			3,432,521
†Net of foreign withholding taxes		192,930			65,215			7,663			224
Expenses
Investment advisory fee (Note 4)		570,255			1,104,601			209,841			683,171
Distribution fee (Class Y shares) (Note 5)		39,636			148,411			42,962			120,780
Administration fee (Note 4)		52,437			210,400			25,056			130,128
Professional fees		72,076			72,004			60,095			77,375
Shareholder reports and notices		32,569			36,177			15,963			32,029
Custodian fees		19,914			24,572			7,881			20,627
Trustees' fees and expenses		2,664			9,107			1,440			5,956
Transfer agent fees and expenses		3,000			3,554			2,501			3,000
Other		15,494			17,478			9,760			39,562
Total Expenses		808,045			1,626,304			375,499			1,112,628
Less: amounts waived		(112,937	)		—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		(1,140	)		(11,007	)		(1,351	)		(31,209	)
Net Expenses		693,968			1,615,297			374,148			1,081,419
Net Investment Income (Loss)		1,640,380			(64,872	)		(188,722	)		2,351,102
Realized and Unrealized Gain (Loss):
Realized Gain (Loss) on:
Investments		1,358,256			32,692,019			4,226,644			3,546,862
Investments in affiliates (Note 6)		—			—			—			(1,203,292	)
Futures contracts		—			—			—			(165,494	)
Swap agreements		—			—			—			(400,820	)
Foreign currency exchange contracts		92,515			—			—			(8,678	)
Foreign currency translation		(57,591	)		(46,468	)		(4,588	)		1,225
Net Realized Gain (Loss)		1,393,180			32,645,551			4,222,056			1,769,803
Change in Unrealized Appreciation/Depreciation on:
Investments		(8,661,312	)		(48,026,045	)		(6,086,325	)		(15,607,287	)
Investments in affiliates (Note 6)		—			—			—			(1,050,344	)
Futures contracts		—			—			—			(52,939	)
Swap agreements		—			—			—			240,859
Foreign currency exchange contracts		(203,880	)		—			—			(3,017	)
Foreign currency translation		(12,777	)		(2,500	)		(294	)		(2,977	)
Net Change in Unrealized Appreciation/Depreciation		(8,877,969	)		(48,028,545	)		(6,086,619	)		(16,475,705	)
Net Gain (Loss)		(7,484,789	)		(15,382,994	)		(1,864,563	)		(14,705,902	)
Net Increase (Decrease)	$	(5,844,409	)	$	(15,447,866	)	$	(2,053,285	)	$	(12,354,800	)

69

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, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	12,040		$	8,852		$	1,217,838		$	1,509,025		$	10,385,354		$	12,408,378
Net realized gain (loss)		(2,034	)		1,958			340,336			940,308			5,672,980			11,573,449
Net change in unrealized appreciation/depreciation		—			—			74,923			(810,317	)		(5,677,427	)		(2,449,027	)
Net Increase (Decrease)		10,006			10,810			1,633,097			1,639,016			10,380,907			21,532,800
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(5,521	)		(7,144	)		(456,806	)		(562,429	)		(5,809,741	)		(6,824,574	)
Class Y Shares		(6,188	)		(7,532	)		(1,462,462	)		(1,897,146	)		(6,427,424	)		(7,792,022	)
Net realized gain
Class X Shares		—			—			—			—			—			—
Class Y Shares		—			—			—			—			—			—
Total Dividends and Distributions		(11,709	)		(14,676	)		(1,919,268	)		(2,459,575	)		(12,237,165	)		(14,616,596	)
Net decrease from transactions in shares of beneficial interest		(19,788,308	)		(38,557,210	)		(11,618,059	)		(8,139,476	)		(35,004,480	)		(38,827,172	)
Net Decrease		(19,790,011	)		(38,561,076	)		(11,904,230	)		(8,960,035	)		(36,860,738	)		(31,910,968	)
Regulatory Settlement Proceeds:		—			—			—			—			—			—
Net Assets:
Beginning of period		127,070,119			165,631,195			68,681,678			77,641,713			230,684,688			262,595,656
End of Period	$	107,280,108		$	127,070,119		$	56,777,448		$	68,681,678		$	193,823,950		$	230,684,688
Accumulated Undistributed Net Investment Income (Loss)	$	58		$	(166	)	$	1,499,321		$	1,500,506		$	10,694,720		$	11,785,302

^  Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

See Notes to Financial Statements
70

	Global Infrastructure						European Equity
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,821,472		$	2,073,599		$	1,640,380		$	1,247,197
Net realized gain (loss)		6,272,022			5,114,667			1,393,180			(2,469,262	)
Net change in unrealized appreciation/depreciation		3,163,169			(2,435,382	)		(8,877,969	)		5,518,693
Net Increase (Decrease)		11,256,663			4,752,884			(5,844,409	)		4,296,628
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(1,548,002	)		(1,869,792	)		(1,159,573	)		(1,420,614	)
Class Y Shares		(341,922	)		(440,577	)		(329,209	)		(416,655	)
Net realized gain
Class X Shares		(3,167,474	)		(5,105,356	)		—			—
Class Y Shares		(781,261	)		(1,313,510	)		—			—
Total Dividends and Distributions		(5,838,659	)		(8,729,235	)		(1,488,782	)		(1,837,269	)
Net decrease from transactions in shares of beneficial interest		(9,143,834	)		(5,393,355	)		(12,462,693	)		(10,418,618	)
Net Decrease		(3,725,830	)		(9,369,706	)		(19,795,884	)		(7,959,259	)
Regulatory Settlement Proceeds:		—			—			—			84,956
Net Assets:
Beginning of period		77,196,654			86,566,360			72,645,542			80,519,845
End of Period	$	73,470,824		$	77,196,654		$	52,849,658		$	72,645,542
Accumulated Undistributed Net Investment Income (Loss)	$	1,649,890		$	1,836,870		$	1,565,150		$	1,378,682

71

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued

	Multi Cap Growth						Aggressive Equity
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	(64,872	)	$	330,653		$	(188,722	)	$	(139,804	)
Net realized gain		32,645,551			27,894,016			4,222,056			3,081,471
Net change in unrealized appreciation/depreciation		(48,028,545	)		36,811,414			(6,086,619	)		4,245,027
Net Increase (Decrease)		(15,447,866	)		65,036,083			(2,053,285	)		7,186,694
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(327,521	)		(333,905	)		—			—
Class Y Shares		—			—			—			—
Net realized gain
Class X Shares		—			—			—			—
Class Y Shares		—			—			—			—
Total Dividends and Distributions		(327,521	)		(333,905	)		—			—
Net decrease from transactions in shares of beneficial interest		(49,118,412	)		(43,247,359	)		(4,238,872	)		(5,434,742	)
Net Increase (Decrease)		(64,893,799	)		21,454,819			(6,292,157	)		1,751,952
Net Assets:
Beginning of period		287,856,060			266,401,241			34,190,535			32,438,583
End of Period	$	222,962,261		$	287,856,060		$	27,898,378		$	34,190,535
Accumulated Undistributed Net Investment Income (Loss)	$	(240,492	)	$	33,893		$	(33,028	)	$	(33,495	)

^  Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

See Notes to Financial Statements
72

	Strategist
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	2,351,102		$	3,426,081
Net realized gain		1,769,803			17,577,561
Net change in unrealized appreciation/depreciation		(16,475,705	)		(8,886,455	)
Net Increase (Decrease)		(12,354,800	)		12,117,187
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(2,406,851	)		(2,078,387	)
Class Y Shares		(860,346	)		(786,800	)
Net realized gain
Class X Shares		(12,604,023	)		(699,178	)
Class Y Shares		(5,258,076	)		(311,234	)
Total Dividends and Distributions		(21,129,296	)		(3,875,599	)
Net decrease from transactions in shares of beneficial interest		(14,118,840	)		(21,094,433	)
Net Increase (Decrease)		(47,602,936	)		(12,852,845	)
Net Assets:
Beginning of period		184,615,265			197,468,110
End of Period	$	137,012,329		$	184,615,265
Accumulated Undistributed Net Investment Income (Loss)	$	2,444,177		$	3,145,376

73

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, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Class X Shares
Shares
Sold		9,528,528			7,067,298			37,891			182,994			120,523			87,443
Reinvestment of dividends and distributions		5,521			7,144			59,870			73,810			529,120			646,266
Redeemed		(18,033,730	)		(31,627,402	)		(375,310	)		(484,177	)		(1,931,499	)		(1,707,768	)
Net Decrease - Class X		(8,499,681	)		(24,552,960	)		(277,549	)		(227,373	)		(1,281,856	)		(974,059	)
Amount
Sold	$	9,528,528		$	7,067,298		$	292,242		$	1,424,485		$	1,351,724		$	974,412
Reinvestment of dividends and distributions		5,521			7,144			456,806			562,429			5,809,741			6,824,574
Redeemed		(18,033,730	)		(31,627,402	)		(2,907,547	)		(3,778,238	)		(21,828,131	)		(19,049,643	)
Net Decrease - Class X	$	(8,499,681	)	$	(24,552,960	)	$	(2,158,499	)	$	(1,791,324	)	$	(14,666,666	)	$	(11,250,657	)
Class Y Shares
Shares
Sold		14,834,425			12,204,944			159,097			459,275			238,653			456,727
Reinvestment of dividends and distributions		6,188			7,532			191,924			249,624			586,444			739,983
Redeemed		(26,129,240	)		(26,216,726	)		(1,571,630	)		(1,519,333	)		(2,627,052	)		(3,645,566	)
Net Decrease - Class Y		(11,288,627	)		(14,004,250	)		(1,220,609	)		(810,434	)		(1,801,955	)		(2,448,856	)
Amount
Sold	$	14,834,425		$	12,204,944		$	1,222,848		$	3,550,343		$	2,668,015		$	5,104,104
Reinvestment of dividends and distributions		6,188			7,532			1,462,462			1,897,146			6,427,424			7,792,022
Redeemed		(26,129,240	)		(26,216,726	)		(12,144,870	)		(11,795,641	)		(29,433,253	)		(40,472,641	)
Net Decrease - Class Y	$	(11,288,627	)	$	(14,004,250	)	$	(9,459,560	)	$	(6,348,152	)	$	(20,337,814	)	$	(27,576,515	)
Regulatory Settlement Proceeds:		—			—			—			—			—			—

^  Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

See Notes to Financial Statements
74

	Global Infrastructure						European Equity
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Class X Shares
Shares
Sold		41,008			46,011			10,124			7,727
Reinvestment of dividends and distributions		560,033			1,047,320			68,170			111,246
Redeemed		(1,394,386	)		(1,462,098	)		(590,445	)		(672,452	)
Net Decrease - Class X		(793,345	)		(368,767	)		(512,151	)		(553,479	)
Amount
Sold	$	350,997		$	379,861		$	152,977		$	111,210
Reinvestment of dividends and distributions		4,715,476			6,975,148			1,159,573			1,420,614
Redeemed		(11,775,763	)		(11,546,584	)		(9,410,517	)		(9,737,700	)
Net Decrease - Class X	$	(6,709,290	)	$	(4,191,575	)	$	(8,097,967	)	$	(8,205,876	)
Class Y Shares
Shares
Sold		37,827			41,158			4,450			19,373
Reinvestment of dividends and distributions		133,712			263,773			19,411			32,730
Redeemed		(456,268	)		(416,792	)		(312,722	)		(195,961	)
Net Decrease - Class Y		(284,729	)		(111,861	)		(288,861	)		(143,858	)
Amount
Sold	$	315,142		$	325,071		$	67,572		$	273,981
Reinvestment of dividends and distributions		1,123,183			1,754,087			329,209			416,655
Redeemed		(3,872,869	)		(3,280,938	)		(4,761,507	)		(2,903,378	)
Net Decrease - Class Y	$	(2,434,544	)	$	(1,201,780	)	$	(4,364,726	)	$	(2,212,742	)
Regulatory Settlement Proceeds:		—			—			—		$	84,956

75

Morgan Stanley Variable Investment Series

Financial Statements continued

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

	Multi Cap Growth						Aggressive Equity
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^			For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Class X Shares
Shares
Sold		23,630			19,352			22,589			21,087
Reinvestment of dividends and distributions		7,793			10,719			—			—
Redeemed		(891,278	)		(964,108	)		(145,437	)		(194,973	)
Net Decrease - Class X		(859,855	)		(934,037	)		(122,848	)		(173,886	)
Amount
Sold	$	952,101		$	644,195		$	434,357		$	338,664
Reinvestment of dividends and distributions		327,521			333,905			—			—
Redeemed		(36,256,926	)		(32,044,596	)		(2,852,868	)		(3,118,178	)
Net Decrease - Class X	$	(34,977,304	)	$	(31,066,496	)	$	(2,418,511	)	$	(2,779,514	)
Class Y Shares
Shares
Sold		44,490			22,133			154,196			50,042
Reinvestment of dividends and distributions		—			—			—			—
Redeemed		(394,005	)		(384,584	)		(241,830	)		(223,151	)
Net Decrease - Class Y		(349,515	)		(362,451	)		(87,634	)		(173,109	)
Amount
Sold	$	1,698,262		$	704,927		$	2,809,245		$	800,661
Reinvestment of dividends and distributions		—			—			—			—
Redeemed		(15,839,370	)		(12,885,790	)		(4,629,606	)		(3,455,889	)
Net Decrease - Class Y	$	(14,141,108	)	$	(12,180,863	)	$	(1,820,361	)	$	(2,655,228	)

^  Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous year was audited by another independent registered public accounting firm.

See Notes to Financial Statements
76

	Strategist
	For The Year Ended December 31, 2011			For The Year Ended December 31, 2010^
Class X Shares
Shares
Sold		33,714			54,599
Reinvestment of dividends and distributions		1,314,437			229,551
Redeemed		(1,905,781	)		(1,492,547	)
Net Decrease - Class X		(557,630	)		(1,208,397	)
Amount
Sold	$	381,164		$	677,302
Reinvestment of dividends and distributions		15,010,874			2,777,565
Redeemed		(22,742,640	)		(18,715,821	)
Net Decrease - Class X	$	(7,350,602	)	$	(15,260,954	)
Class Y Shares
Shares
Sold		11,243			106,023
Reinvestment of dividends and distributions		537,175			90,972
Redeemed		(1,070,631	)		(665,609	)
Net Decrease - Class Y		(522,213	)		(468,614	)
Amount
Sold	$	130,345		$	1,342,545
Reinvestment of dividends and distributions		6,118,422			1,098,034
Redeemed		(13,017,005	)		(8,274,058	)
Net Decrease - Class Y	$	(6,768,238	)	$	(5,833,479	)

77

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2011

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	Multi Cap Growth	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.
Multi Cap Growth* (Formerly 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.

*  Name change effective April 29, 2011.

78

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2011 continued

The following is a summary of significant policies:

A. Valuation of Investments — Money Market: Portfolio securities are valued at amortized cost, which approximates fair 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 latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and 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) futures are valued at the latest price published by the commodities exchange on which they trade; (7) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "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 fair value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are 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 Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (8) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees. The prices provided by a pricing service take into account broker-dealer market price quotations for trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities; (9) investments in 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 (10) 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 fair value.

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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 value 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; 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 translations. 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. Structured Investments — Certain Portfolios also may invest a portion of its assets in 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. The Portfolio will typically use structured 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.

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

H. 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.

I. 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.

J. 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 value 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 valuing 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 valuing 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

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

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•  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 to value the Fund's investments as of December 31, 2011.

Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Money Market
Assets:
Repurchase Agreements		—	$	56,655,000		—	$	56,655,000
Commercial Paper		—		27,926,271		—		27,926,271
Certificates of Deposit		—		10,000,020		—		10,000,020
Floating Rate Notes		—		10,000,000		—		10,000,000
Weekly Variable Rate Bonds		—		3,000,000		—		3,000,000
Total Assets		—	$	107,581,291		—	$	107,581,291
Limited Duration
Assets:
Fixed Income Securities
Corporate Bonds		—	$	32,687,869		—	$	32,687,869
Asset-Backed Securities		—		12,649,096		—		12,649,096
U.S. Treasury Securities		—		4,803,818		—		4,803,818
Non-U.S. Government — Guaranteed		—		3,312,583		—		3,312,583
Sovereign		—		591,810		—		591,810
Agency Fixed Rate Mortgages		—		465,978		—		465,978
Agency Adjustable Rate Mortgages		—		380,344		—		380,344
Collateralized Mortgage Obligation — Agency Collateral Series		—		356,141		—		356,141
Municipal Bond		—		300,066		—		300,066
Commercial Mortgage Backed Security		—		204,468		—		204,468
Total Fixed Income Securities		—		55,752,173		—		55,752,173

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Investment Type	Level 1 Unadjusted Quoted Prices			Level 2 Other Significant Observable Inputs			Level 3 Significant Unobservable Inputs		Total
Short-Term Investments
U.S. Treasury Security		—		$	674,978			—	$	674,978
Investment Company	$	110,511			—			—		110,511
Total Short-Term Investments		110,511			674,978			—		785,489
Futures Contracts		29,731			—			—		29,731
Zero Coupon Swap Agreements		—			369,297			—		369,297
Total Assets		140,242			56,796,448			—		56,936,690
Liabilities:
Futures Contracts		(2,133	)		—			—		(2,133	)
Zero Coupon Swap Agreements		—			(640,290	)		—		(640,290	)
Total Liabilities		(2,133	)		(640,290	)		—		(642,423	)
Total	$	138,109		$	56,156,158			—	$	56,294,267
Income Plus
Assets:
Fixed Income Securities
Corporate Bonds		—		$	183,503,029			—	$	183,503,029
Asset-Backed Securities		—			3,525,560			—		3,525,560
Municipal Bond		—			676,788			—		676,788
Sovereign		—			391,044			—		391,044
Agency Fixed Rate Mortgage		—			1,588			—		1,588
Total Fixed Income Securities		—			188,098,009			—		188,098,009
Convertible Preferred Stocks	$	523,134			—			—		523,134
Preferred Stock		439,501			—			—		439,501
Short-Term Investments
U.S. Treasury Security		—			474,984			—		474,984
Investment Company		208,270			—			—		208,270
Total Short-Term Investments		208,270			474,984			—		683,254
Futures Contracts		125,085			—			—		125,085
Total Assets		1,295,990			188,572,993			—		189,868,983
Liabilities:
Futures Contracts		(333,883	)		—			—		(333,883	)
Credit Default Swap Agreement		—			(10,900	)		—		(10,900	)
Total Liabilities		(333,883	)		(10,900	)		—		(344,783	)
Total	$	962,107		$	188,562,093			—	$	189,524,200

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Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Global Infrastructure
Assets:
Common Stocks
Airports	$	1,592,454		—		—	$	1,592,454
Communications		10,392,291		—		—		10,392,291
Diversified		2,935,063		—		—		2,935,063
Oil & Gas Storage & Transportation		35,698,761		—		—		35,698,761
Ports		876,965		—		—		876,965
Toll Roads		4,920,150		—		—		4,920,150
Transmission & Distribution		11,850,628		—		—		11,850,628
Water		2,971,716		—		—		2,971,716
Total Common Stocks		71,238,028		—		—		71,238,028
Short-Term Investment — Investment Company		1,993,348		—		—		1,993,348
Total Assets	$	73,231,376		—		—	$	73,231,376
European Equity
Assets:
Common Stocks
Aerospace & Defense	$	1,299,116		—		—	$	1,299,116
Automobiles		1,095,461		—		—		1,095,461
Chemicals		812,292		—		—		812,292
Commercial Banks		5,674,026		—		—		5,674,026
Electrical Equipment		928,748		—		—		928,748
Food & Staples Retailing		1,548,514		—		—		1,548,514
Food Products		2,696,435		—		—		2,696,435
Health Care Providers & Services		1,086,936		—		—		1,086,936
Hotels, Restaurants & Leisure		584,218		—		—		584,218
Household Products		1,170,088		—		—		1,170,088
Industrial Conglomerates		1,716,132		—		—		1,716,132
Information Technology Services		830,120		—		—		830,120
Insurance		3,058,343		—		—		3,058,343
Machinery		1,589,169		—		—		1,589,169
Media		1,724,329		—		—		1,724,329
Metals & Mining		3,316,096		—		—		3,316,096
Multi-Utilities		905,075		—		—		905,075
Oil, Gas & Consumable Fuels		7,777,830		—		—		7,777,830
Pharmaceuticals		6,825,856		—		—		6,825,856
Professional Services		1,249,520		—		—		1,249,520

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Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs			Level 3 Significant Unobservable Inputs		Total
Specialty Retail	$	784,800		—			—	$	784,800
Tobacco		3,293,211		—			—		3,293,211
Wireless Telecommunication Services		2,170,071		—			—		2,170,071
Total Common Stocks		52,136,386		—			—		52,136,386
Short-Term Investment — Investment Company		718,547		—			—		718,547
Total Assets		52,854,933		—			—		52,854,933
Liabilities:
Foreign Currency Exchange Contracts		—	$	(147,144	)		—		(147,144	)
Total	$	52,854,933	$	(147,144	)		—	$	52,707,789
Multi Cap Growth
Assets:
Common Stocks
Air Transport	$	4,271,063		—			—	$	4,271,063
Alternative Energy		9,879,041		—			—		9,879,041
Asset Management & Custodian		3,509,123		—			—		3,509,123
Biotechnology		3,749,833		—			—		3,749,833
Chemicals: Diversified		6,457,231		—			—		6,457,231
Commercial Finance & Mortgage Companies		3,724,068		—			—		3,724,068
Commercial Services		11,573,237		—			—		11,573,237
Communications Technology		9,320,492		—			—		9,320,492
Computer Services, Software & Systems		32,612,966		—		$	8,853,246		41,466,212
Computer Technology		24,853,859		—			—		24,853,859
Diversified Retail		30,906,657		—			—		30,906,657
Financial Data & Systems		11,724,869		—			—		11,724,869
Health Care Services		6,724,135		—			—		6,724,135
Medical Equipment		8,301,769		—			—		8,301,769
Metals & Minerals: Diversified		5,476,794		—			—		5,476,794
Pharmaceuticals		6,586,258		—			—		6,586,258
Real Estate Investment Trusts (REIT)		7,550,597		—			—		7,550,597
Recreational Vehicles & Boats		7,385,264		—			—		7,385,264
Wholesale & International Trade		4,251,085		—			—		4,251,085
Total Common Stocks		198,858,341		—			8,853,246		207,711,587
Convertible Preferred Stocks		—		—			3,036,329		3,036,329
Short-Term Investment — Investment Company		12,216,664		—			—		12,216,664
Total Assets	$	211,075,005		—		$	11,889,575	$	222,964,580

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Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Aggressive Equity
Assets:
Common Stocks
Air Transport	$	529,039		—		—	$	529,039
Alternative Energy		1,157,836		—		—		1,157,836
Asset Management & Custodian		411,272		—		—		411,272
Biotechnology		439,491		—		—		439,491
Chemicals: Diversified		855,975		—		—		855,975
Commercial Finance & Mortgage Companies		490,097		—		—		490,097
Commercial Services		1,410,951		—		—		1,410,951
Communications Technology		1,108,368		—		—		1,108,368
Computer Services, Software & Systems		4,130,948		—	$	1,058,994		5,189,942
Computer Technology		3,069,868		—		—		3,069,868
Diversified Retail		3,876,378		—		—		3,876,378
Financial Data & Systems		1,516,190		—		—		1,516,190
Health Care Services		796,383		—		—		796,383
Medical Equipment		1,036,679		—		—		1,036,679
Metals & Minerals: Diversified		641,896		—		—		641,896
Pharmaceuticals		806,822		—		—		806,822
Real Estate Investment Trusts (REIT)		994,831		—		—		994,831
Recreational Vehicles & Boats		901,609		—		—		901,609
Wholesale & International Trade		559,158		—		—		559,158
Total Common Stocks		24,733,791		—		1,058,994		25,792,785
Convertible Preferred Stocks		—		—		365,853		365,853
Short-Term Investment — Investment Company		1,790,916		—		—		1,790,916
Total Assets	$	26,524,707		—	$	1,424,847	$	27,949,554
Strategist
Assets:
Common Stocks
Aerospace & Defense	$	1,504,618		—		—	$	1,504,618
Auto Components		1,412,327		—		—		1,412,327
Biotechnology		1,019,547		—		—		1,019,547
Chemicals		1,358,293		—		—		1,358,293
Commercial Banks		2,756,000		—		—		2,756,000
Computers & Peripherals		9,982,930		—		—		9,982,930
Diversified Financial Services		3,559,496		—		—		3,559,496
Diversified Telecommunication Services		5,631,162		—		—		5,631,162

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Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Food & Staples Retailing	$	1,495,944		—		—	$	1,495,944
Food Products		1,496,880		—		—		1,496,880
Hotels, Restaurants & Leisure		4,389,837		—		—		4,389,837
Industrial Conglomerates		2,988,015		—		—		2,988,015
Insurance		3,118,361		—		—		3,118,361
Machinery		1,448,010		—		—		1,448,010
Media		1,469,091		—		—		1,469,091
Metals & Mining		3,560,537		—		—		3,560,537
Multi-Utilities		1,496,993		—		—		1,496,993
Oil, Gas & Consumable Fuels		7,168,805		—		—		7,168,805
Paper & Forest Products		1,427,717		—		—		1,427,717
Pharmaceuticals		7,104,156		—		—		7,104,156
Real Estate Investment Trusts (REIT)		944,162		—		—		944,162
Road & Rail		1,355,196		—		—		1,355,196
Semiconductors & Semiconductor Equipment		2,725,271		—		—		2,725,271
Software		1,436,626		—		—		1,436,626
Specialty Retail		3,073,965		—		—		3,073,965
Textiles, Apparel & Luxury Goods		1,291,488		—		—		1,291,488
Tobacco		1,419,878		—		—		1,419,878
Total Common Stocks		76,635,305		—		—		76,635,305
Fixed Income Securities
Corporate Bonds		—	$	14,329,002		—		14,329,002
Sovereign		—		371,307		—		371,307
Municipal Bonds		—		623,042		—		623,042
Agency Fixed Rate Mortgages		—		3,471		—		3,471
Asset-Backed Securities		—		1,324,548		—		1,324,548
Agency Bond — Banking (FDIC Guaranteed)		—		1,018,808		—		1,018,808
U.S. Treasury Securities		—		13,399,067		—		13,399,067
U.S. Agency Securities		—		2,204,560		—		2,204,560
Total Fixed Income Securities		—		33,273,805		—		33,273,805
Short-Term Investments
U.S. Treasury Security		—		99,997		—		99,997
Investment Company		26,626,452		—		—		26,626,452
Total Short-Term Investments		26,626,452		99,997		—		26,726,449

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Investment Type	Level 1 Unadjusted Quoted Prices			Level 2 Other Significant Observable Inputs			Level 3 Significant Unobservable Inputs		Total
Foreign Currency Exchange Contracts		—		$	2,118			—	$	2,118
Futures Contracts	$	383			—			—		383
Interest Rate Swap Agreements		—			436,055			—		436,055
Zero Coupon Swap Agreements		—			95,195			—		95,195
Total Assets		103,262,140			33,907,170			—		137,169,310
Liabilities:
Foreign Currency Exchange Contracts		—			(6,192	)		—		(6,192	)
Futures Contracts		(3,406	)		—			—		(3,406	)
Interest Rate Swap Agreements		—			(409,510	)		—		(409,510	)
Zero Coupon Swap Agreements		—			(171,196	)		—		(171,196	)
Total Liabilities		(3,406	)		(586,898	)		—		(590,304	)
Total	$	103,258,734		$	33,320,272			—	$	136,579,006

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, 2011, Global Infrastructure held a security that transferred from level 2 to level 1. This security was valued using other significant observable inputs at December 31, 2010 and was valued using an unadjusted quoted price at December 31, 2011. The value of the transfer was as follows:

 
 GLOBAL
INFRASTRUCTURE

  $2,743,255

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

	Multi Cap Growth				Aggressive Equity
	Common Stock		Convertible Preferred Stocks		Common Stock		Convertible Preferred Stocks
Beginning Balance	$	5,231,372	$	1,465,815		—	$	177,270
Purchases		—		374,409	$	862,949		43,931
Sales		—		—		—		—
Amortization of discount		—		—		—		—
Transfers in		—		—		—		—

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	Multi Cap Growth				Aggressive Equity
	Common Stock		Convertible Preferred Stocks		Common Stock		Convertible Preferred Stocks
Transfers out		—		—		—		—
Change in unrealized appreciation (depreciation)	$	3,621,874	$	1,196,105	$	196,045	$	144,652
Realized gains (losses)		—		—		—		—
Ending Balance	$	8,853,246	$	3,036,329	$	1,058,994	$	365,853
Net change in unrealized appreciation/depreciation from investments still held as of December 31, 2011.	$	3,621,874	$	1,196,105	$	196,045	$	144,652

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

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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 its 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 may use 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 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.

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

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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.

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 or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or 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 and 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 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 has instructed 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. If applicable, cash collateral is included with "Due from (to) Broker" in the Statements of Assets and Liabilities.

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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 each Portfolio's derivative contracts by primary risk exposure as of December 31, 2011.

PORTFOLIO	PRIMARY RISK EXPOSURE	ASSET DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE			LIABILITIES DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE
Limited Duration	Interest Rate Risk	Variation margin Unrealized appreciation on open swap agreements	$	29,731 369,297	†	Variation margin Unrealized depreciation on open swap agreements	$	(2,133 (640,290)	)†
			$	399,028			$	(642,423	)
Income Plus	Interest Rate Risk Credit Risk	Variation margin Unrealized appreciation on open swap agreements	$	125,085 —	†	Variation margin Unrealized depreciation on open swap agreements	$	(333,883 (10,900)	)†
			$	125,085			$	(344,783	)
European Equity	Currency Risk	Unrealized appreciation on open foreign currency exchange contracts		—		Unrealized depreciation on open foreign currency exchange contracts	$	(147,144	)
Strategist	Interest Rate Risk	Variation margin Unrealized appreciation on open swap agreements	$	383 531,250	†	Variation margin Unrealized depreciation on open swap agreements	$	(3,406 (580,706)	)†
	Currency Risk	Unrealized appreciation on open foreign currency exchange contracts		2,118		Unrealized depreciation on open foreign currency exchange contracts		(6,192	)
			$	533,751			$	(590,304	)

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

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The following tables set forth by primary risk exposure of the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2011 in accordance with ASC 815.

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS			FOREIGN CURRENCY EXCHANGE
Limited Duration	Interest Rate Risk	$	611,416		$	(675,647	)		—
Income Plus	Interest Rate Risk	$	(1,409,742	)	$	402,198			—
European Equity	Currency Risk		—			—		$	92,515
Strategist	Interest Rate Risk	$	(165,494	)	$	(400,820	)		—
	Currency Risk		—			—		$	(8,678	)
	Total	$	(165,494	)	$	(400,820	)	$	(8,678	)

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS		FOREIGN CURRENCY EXCHANGE
Limited Duration	Interest Rate Risk	$	44,090		$	330,785		—
Income Plus	Interest Rate Risk	$	(675,018	)	$	113,226		—
European Equity	Currency Risk		—			—	$	(203,880	)
Strategist	Interest Rate Risk	$	(52,939	)	$	240,859		—
	Currency Risk		—			—	$	(3,017	)
	Total	$	(52,939	)	$	240,859	$	(3,017	)

For the year ended December 31, 2011, Income Plus and Limited Duration Portfolios' average monthly original value of futures contracts was $103,589,587 and $13,685,353, respectively, and average monthly notional amount of swap agreements was $29,407,083 and $16,884,317, respectively. European Equity Portfolio's average monthly principal amount of foreign currency exchange contracts was $8,335,338. Strategist Portfolio's average monthly principal amount of foreign currency exchange contracts was $1,283,987, the average monthly original value of futures contracts was $4,584,936 and the average monthly notional amount of swap agreements was $44,163,739.

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4. Investment Advisory/Administration and Sub-Advisory Agreements

Pursuant to an Investment Advisory Agreement with the Adviser and Sub-Advisers, 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 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.

Multi Cap Growth — 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.

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

The Adviser has 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. These fee waivers and/or expense reimbursements will continue for one year or until such time as the Board of Trustees acts to discontinue such waivers and/or reimbursements when it deems that such action is appropriate.

Pursuant to an Administration Agreement with the Administrator, an affiliate of the Adviser and Sub-Advisers, 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.

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 Distribution, Inc. (the "Distributor"), an affiliate of the Adviser, Administrator and Sub-Advisers. 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, Adviser and Administrator have agreed to waive/reimburse all or a portion of the Money Market Portfolio's distribution fee, 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, 2011, the Distributor waived $154,136, the Adviser waived $434,703 and the Administrator waived $6,612. These fee waivers and/or expense reimbursements will continue for one year or until such

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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/Transactions with Affiliates and Interfund Transactions

For the year ended December 31, 2011, purchases and sales of investment securities, excluding short-term investments, were as follows:

	U.S. GOVERNMENT SECURITIES				OTHER
	PURCHASES		SALES		PURCHASES		SALES
Limited Duration	$	13,615,052	$	17,107,591	$	14,016,752	$	21,355,862
Income Plus		—				88,890,145		124,090,545
Global Infrastructure		—		—		26,616,878		39,236,618
European Equity		—		—		7,459,170		19,239,592
Multi Cap Growth		—		—		61,531,782		112,692,181
Aggressive Equity		—		—		8,435,485		13,402,173
Strategist		7,151,029		7,401,226		159,477,436		211,033,833

Each Portfolio (except Money Market) invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly, and as a portion of the securities held as collateral on loaned securities. Investment advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the year ended December 31, 2011 is as follows:

PORTFOLIO	VALUE DECEMBER 31, 2010		PURCHASES AT COST		SALES		DIVIDEND INCOME		VALUE DECEMBER 31, 2011
Limited Duration	$	830,785	$	21,803,215	$	22,523,489	$	959	$	110,511
Income Plus		3,382,277		55,159,765		58,333,772		2,003		208,270
Global Infrastructure		2,007,943		20,724,175		20,738,770		1,717		1,993,348
European Equity		1,187,046		12,117,920		12,586,419		1,321		718,547
Multi Cap Growth		10,848,140		84,483,328		83,114,804		11,490		12,216,664
Aggressive Equity		1,244,382		12,870,063		12,323,529		1,407		1,790,916
Strategist		7,186,645		96,560,674		77,120,867		29,669		26,626,452

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In addition, the table also identifies the income distributions earned, if any, by each Portfolio for that Portfolio's investment in the Liquidity Funds.

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

PORTFOLIO	ADVISORY FEE REDUCTION
Limited Duration	$	1,009

Income Plus	1,719
Global Infrastructure	1,419
European Equity	1,140
Multi Cap Growth	11,007
Aggressive Equity	1,351
Strategist	31,209

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

PORTFOLIO	ISSUER	VALUE DECEMBER 31, 2010		PURCHASES AT COST		SALES		NET REALIZED GAIN		INTEREST INCOME		VALUE DECEMBER 31, 2011
Limited Duration	MetLife Global	$	226,235	$	328,646	$	229,402	$	3,395	$	6,119	$	327,079
Income Plus	MetLife, Inc.		1,296,422		—		—		—		103,641		1,276,994
Strategist	Allstate Corp. (The)		60,780		—		61,526		10,492		168		—
	MetLife, Inc.		55,334		43,164		55,375		3,372		1,673		43,951

The following Portfolios had transactions with Citigroup, Inc., and its affiliated broker/dealers, which may be deemed to be affiliates of the Adviser, Sub-Advisers, Administrator and Distributor under Section 17 of the Act, for the year ended December 31, 2011:

PORTFOLIO	VALUE DECEMBER 31, 2010		PURCHASES AT COST		SALES		NET REALIZED GAIN (LOSS)			DIVIDEND/ INTEREST INCOME		VALUE DECEMBER 31, 2011
Limited Duration	$	1,250,914	$	498,322	$	639,540	$	23,249		$	39,379	$	1,087,480
Income Plus		7,222,659		704,602		4,010,624		449,298			398,367		3,188,387
Strategist		4,074,750		3,667,730		3,007,111		(1,217,156	)		48,433		2,483,400

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The following Portfolio had transactions with other Morgan Stanley funds for the year ended December 31, 2011:

PORTFOLIO	SALES		REALIZED GAIN
Multi Cap Growth	$	5,035,807	$	1,567,592

For the year ended December 31, 2011, the following Portfolios incurred brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser, Sub-Advisers, Administrator and Distributor, for portfolio transactions executed on behalf of the each Portfolio:

GLOBAL INFRASTRUCTURE		MULTI CAP GROWTH		AGGRESSIVE EQUITY		STRATEGIST
$	246	$	5,619	$	579	$	245,802

For the year ended December 31, 2011, the following Portfolios incurred brokerage commissions with Citigroup, Inc., and its affiliated broker/dealers, which may be deemed affiliates of the Adviser, Sub-Advisers, Administrator and Distributor under Section 17 of the Act, for portfolio transactions executed on behalf of each Portfolio:

GLOBAL INFRASTRUCTURE		EUROPEAN EQUITY		MULTI CAP GROWTH		AGGRESSIVE EQUITY
$	9,358	$	721	$	365	$	14

Morgan Stanley Services Company Inc., an affiliate of the 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.

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Aggregate pension costs for the year ended December 31, 2011, 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		MULTI CAP GROWTH		AGGRESSIVE EQUITY		STRATEGIST
$	324	$	179	$	610	$	234	$	201	$	766	$	91	$	505

AGGREGATE PENSION LIABILITY

MONEY MARKET		LIMITED DURATION		INCOME PLUS		GLOBAL INFRASTRUCTURE		EUROPEAN EQUITY		MULTI CAP GROWTH		AGGRESSIVE EQUITY		STRATEGIST
$	5,440	$	2,832	$	9,415	$	2,896	$	2,585	$	9,914	$	1,178	$	7,416

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.

7. Federal Income Tax Status

It is the Portfolios' intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recognized on an accrual basis. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

A Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

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FASB ASC 740-10 "Income Taxes — Overall" sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolios recognize interest accrued related to unrecognized tax benefits in "interest expense" and penalties in "other expenses" in the Statements of Operations. The Portfolios file tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2011, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal 2011 and 2010 was as follows:

	2011 DISTRIBUTIONS PAID FROM:				2010 DISTRIBUTIONS PAID FROM:
	ORDINARY INCOME		LONG-TERM CAPITAL GAIN		ORDINARY INCOME		LONG-TERM CAPITAL GAIN
Money Market	$	11,709		—	$	14,474	$	202
Limited Duration		1,919,268		—		2,459,575		—
Income Plus		12,237,165		—		14,616,596		—
Global Infrastructure		1,889,924	$	3,948,735		5,523,941		3,205,294
European Equity		1,488,782		—		1,837,269		—
Multi Cap Growth		327,516		5		333,905		—
Strategist		5,463,608		15,665,688		2,865,187		1,010,412

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, swap transactions, paydown adjustments, expiring capital losses, net operating losses, REIT adjustments, partnership basis adjustments, distribution redesignations, nondeductible expenses and certain

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equity securities designated as issued by passive foreign investment companies, resulted in the following reclassifications among the Portfolios' components of net assets at December 31, 2011:

	ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME			ACCUMULATED NET REALIZED GAIN (LOSS)			PAID-IN-CAPITAL
Money Market	$	(107	)	$	107		$	—
Limited Duration		700,245			603,087			(1,303,332	)
Income Plus		761,229			(761,229	)		—
Global Infrastructure		(118,528	)		118,543			(15	)
European Equity		34,870			(34,877	)		7
Multi Cap Growth		118,008			(40,804	)		(77,204	)
Aggressive Equity		189,189			(2,163	)		(187,026	)
Strategist		214,896			(214,894	)		(2	)

At December 31, 2011, the components of distributable earnings on a tax basis were as follows:

PORTFOLIO	UNDISTRIBUTED ORDINARY INCOME		UNDISTRIBUTED LONG-TERM CAPITAL GAIN
Money Market	$	7,605		—
Limited Duration		1,503,207		—
Income Plus		10,700,252		—
Global Infrastructure		2,854,240	$	5,230,378
European Equity		1,421,623		—
Multi Cap Growth		—		4,886,438
Aggressive Equity		—		2,196,459
Strategist		2,450,279		1,953,002

At December 31, 2011, cost, unrealized appreciation, unrealized depreciation, and net unrealized appreciation (depreciation) for U.S. Federal income tax purposes of the investments of each of the Portfolios were:

PORTFOLIO	COST		APPRECIATION		DEPRECIATION			NET APPRECIATION (DEPRECIATION)
Money Market	$	107,581,291		—		—			—
Limited Duration		56,487,005	$	626,338	$	(575,681	)	$	50,657
Income Plus		182,154,362		11,524,943		(3,935,407	)		7,589,536
Global Infrastructure		61,598,095		12,712,294		(1,079,013	)		11,633,281
European Equity		49,750,277		9,384,842		(6,280,186	)		3,104,656
Multi Cap Growth		186,885,788		61,599,853		(25,521,061	)		36,078,792
Aggressive Equity		23,617,061		7,254,523		(2,922,030	)		4,332,493
Strategist		138,237,082		8,233,516		(9,835,039	)		(1,601,523	)

101

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2011 continued

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed into law. The Modernization Act modernizes several tax provisions related to Regulated Investment Companies ("RICs") and their shareholders. One key change made by the Modernization Act is that capital losses will generally retain their character as short-term or long-term and may be carried forward indefinitely to offset future gains. These losses are utilized before other capital loss carryforwards that expire. Generally, the Modernization Act is effective for taxable years beginning after December 22, 2010.

At December 31, 2011, the following Portfolios had available for Federal income tax purposes unused short term capital losses that will not expire:

PORTFOLIO	SHORT TERM LOSSES (NO EXPIRATION)
Money Market	$	2,011

In addition, at December 31, 2011, the following Portfolios had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, through the indicated expiration dates:

	AMOUNTS IN THOUSANDS AVAILABLE THROUGH DECEMBER 31,
PORTFOLIO	2012		2013		2014		2015		2016		2017		2018		TOTAL
Limited Duration	$	4,026	$	1,267	$	2,233	$	1,063	$	17,119	$	8,980		—	$	34,688
Income Plus		—		—		—		344		19,232		—		—		19,576
European Equity		—		—		—		—		—		10,552	$	3,315		13,867

During the year ended December 31, 2011, the following Portfolios expired capital loss carryforwards for U.S. Federal income tax purposes as follows:

PORTFOLIO	EXPIRED CAPITAL LOSS CARRYFORWARDS
Limited Duration	$	1,303,332

During the year ended December 31, 2011, the following Portfolios utilized capital loss carryforwards for U.S. Federal income tax purposes as follows:

PORTFOLIO	UTILIZED CAPITAL LOSS CARRYFORWARDS
Limited Duration	$	88,554
Income Plus		4,828,845
European Equity		1,331,481
Multi Cap Growth		27,708,593
Aggressive Equity		1,987,158

102

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2011 continued

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by a Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

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 Association ("FNMA") and Federal Home Loan Mortgage Corporation ("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 generally higher in the case of mortgage pools that include sub-prime 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 sub-prime 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.

Certain Portfolios may enter into repurchase agreements under which a Portfolio lends excess cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to certain costs and delays.

103

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2011 continued

Certain Portfolios may invest in structured investments, which 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 issuer of 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.

At December 31, 2011, European Equity Portfolio's investments in securities of issuers in the United Kingdom, Switzerland, Germany and France represented 50.2%, 14.5%, 13.7% and 10.4%, 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 (the "Custodian"), whereby credits realized on uninvested cash balances were used to offset a portion of the Fund's expenses. If applicable, these custodian credits are shown as "expense offset" in the Statements of Operations.

10. Accounting Pronouncement

In May 2011, FASB issued Accounting Standards Update ("ASU") 2011-04. The amendments in this update are the results of the work of FASB and the International Accounting Standards Board to develop common requirements for measuring fair value and for disclosing information about fair value measurements, which are effective during interim and annual periods beginning after December 15, 2011. Consequently, these amendments improve the comparability of fair value measurements presented and disclosed in the financial statements prepared in accordance with GAAP and International Financial Reporting Standards. At this time, the Fund's management is evaluating the implications of ASU 2011-04.

11. Regulatory Settlement Proceeds

In July 2010, 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.

104

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Morgan Stanley Variable Investment Series

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
	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)
	2011			1.00		0.000	(e)		(0.000	)(e)		0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
CLASS Y SHARES
	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)
	2011			1.00		0.000	(e)		(0.000	)(e)		0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
LIMITED DURATION CLASS X SHARES
	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	)
	2011			7.74		0.17			0.04			0.21			(0.26	)		—		(0.26	)
CLASS Y SHARES
	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	)
	2011			7.72		0.15			0.04			0.19			(0.24	)		—		(0.24	)
INCOME PLUS CLASS X SHARES
	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	)
	2011			11.26		0.57			(0.02	)		0.55			(0.68	)		—		(0.68	)

See Notes to Financial Statements
106

										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
	2007	^	$	1.00		4.93	%(d)	$	111,478		0.55	%		4.79	%		—			N/A
	2008	^		1.00		2.45			115,415		0.57			2.40			—			N/A
	2009	^		1.00		0.03			84,486		0.40	(f)(g)		0.03	(f)(g)		—			N/A
	2010	^		1.00		0.01			59,932		0.29	(g)		0.00	(g)(h)		—			N/A
	2011			1.00		0.01			51,431		0.22	(g)		0.01	(g)		—			N/A
CLASS Y SHARES
	2007	^		1.00		4.67	(d)		101,524		0.80			4.54			—			N/A
	2008	^		1.00		2.19			112,113		0.82			2.15			—			N/A
	2009	^		1.00		0.01			81,145		0.41	(f)(g)		0.01	(f)(g)		—			N/A
	2010	^		1.00		0.01			67,139		0.29	(g)		0.00	(g)(h)		—			N/A
	2011			1.00		0.01			55,849		0.22	(g)		0.01	(g)		—			N/A
LIMITED DURATION CLASS X SHARES
	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
	2011			7.69		2.75			12,693		0.60	(i)		2.15	(i)		0.00	(h)		45
CLASS Y SHARES
	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
	2011			7.67		2.45			44,085		0.85	(i)		1.90	(i)		0.00	(h)		45
INCOME PLUS CLASS X SHARES
	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
	2011			11.13		5.01			90,876		0.59	(i)		5.01	(i)		0.00	(h)		43

107

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
INCOME PLUS CLASS Y SHARES
	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	)
	2011			11.22		0.54		(0.02	)		0.52			(0.65	)		—			(0.65	)
GLOBAL INFRASTRUCTURE CLASS X SHARES
	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	)
	2011			8.13		0.21		1.07			1.28			(0.23	)		(0.46	)		(0.69	)
CLASS Y SHARES
	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	)
	2011			8.10		0.19		1.06			1.25			(0.20	)		(0.46	)		(0.66	)
EUROPEAN EQUITY CLASS X SHARES
	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	)
	2011			16.05		0.41		(1.90	)		(1.49	)		(0.37	)		—			(0.37	)
CLASS Y SHARES
	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	)
	2011			15.98		0.37		(1.90	)		(1.53	)		(0.33	)		—			(0.33	)

See Notes to Financial Statements
108

										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
	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
	2011			11.09		4.71			102,948		0.84	(i)		4.76	(i)		0.00	(h)		43
GLOBAL INFRASTRUCTURE CLASS X SHARES
	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
	2011			8.72		16.07			58,998		0.86	(i)		2.48	(i)		0.00	(h)		36
CLASS Y SHARES
	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
	2011			8.69		15.82			14,472		1.11	(i)		2.23	(i)		0.00	(h)		36
EUROPEAN EQUITY CLASS X SHARES
	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
	2011			14.19		(9.64	)		41,181		1.00	(i)(j)		2.56	(i)(j)		0.00	(h)		11
CLASS Y SHARES
	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
	2011			14.12		(9.85	)		11,668		1.25	(i)(j)		2.31	(i)(j)		0.00	(h)		11

109

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
MULTI CAP GROWTH CLASS X SHARES
	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	)
	2011			40.07		0.01			(2.70	)		(2.69	)		(0.07	)		—			(0.07	)
CLASS Y SHARES
	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			—			—			—
	2011			39.77		(0.09	)		(2.68	)		(2.77	)		—			—			—
AGGRESSIVE EQUITY CLASS X SHARES
	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			—			—			—
	2011			19.37		(0.09	)		(1.33	)		(1.42	)		—			—			—
CLASS Y SHARES
	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			—			—			—
	2011			18.96		(0.14	)		(1.30	)		(1.44	)		—			—			—
STRATEGIST CLASS X SHARES
	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	)
	2011			12.96		0.18			(1.06	)		(0.88	)		(0.27	)		(1.41	)		(1.68	)

See Notes to Financial Statements
110

										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
MULTI CAP GROWTH CLASS X SHARES
	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
	2011			37.31		(6.74	)		173,284		0.56	(i)		0.03	(i)		0.00	(h)		24
CLASS Y SHARES
	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
	2011			37.00		(6.97	)		49,678		0.81	(i)		(0.22	)(i)		0.00	(h)		24
AGGRESSIVE EQUITY CLASS X SHARES
	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
	2011			17.95		(7.33	)		12,078		1.06	(i)		(0.47	)(i)		0.00	(h)		28
CLASS Y SHARES
	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
	2011			17.52		(7.59	)		15,821		1.31	(i)		(0.72	)(i)		0.00	(h)		28
STRATEGIST CLASS X SHARES
	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
	2011			10.40		(7.96	)		97,169		0.59	(i)		1.52	(i)		0.02			121

111

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
STRATEGIST CLASS Y SHARES
	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	)
	2011			12.90		0.15		(1.05	)		(0.90	)		(0.23	)		(1.41	)		(1.64	)

^  Beginning with the year ended December 31, 2011, the Fund was audited by Ernst & Young LLP. The previous years were audited by another independent registered public accounting firm.

(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 Adviser fully reimbursed the Portfolio for losses incurred resulting from the disposal of an investment. 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 of its expenses that were reimbursed or waived by the Distributor, 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, 2011
Class X		0.60	%		(0.37	)%
Class Y		0.85			(0.62	)
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	)

See Notes to Financial Statements
112

										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
	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
	2011			10.36		(8.13	)		39,844		0.84	(i)		1.27	(i)		0.02			121

(h)  Amount is less than 0.005%.

(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 of its expenses that were reimbursed or waived by the 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, 2011
Class X		1.17	%		2.39	%
Class Y		1.42			2.14
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

(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.

113

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 Money Market Portfolio, Limited Duration Portfolio, Income Plus Portfolio, Global Infrastructure Portfolio, European Equity Portfolio, Multi Cap Growth Portfolio, Aggressive Equity Portfolio, and Strategist Portfolio (the "Portfolios") (eight of the portfolios comprising Morgan Stanley Variable Investment Series), including the portfolios of investments, as of December 31, 2011, and the related statements of operations and changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Portfolios' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets for the year ended December 31, 2010 and the financial highlights for the four years ended December 31, 2010 were audited by another independent registered public accounting firm whose report, dated February 25, 2011, expressed an unqualified opinion on those statements of changes in net assets and financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolios' 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 Portfolios' 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, 2011, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. 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 the aforementioned portfolios constituting Morgan Stanley Variable Investment Series as of December 31, 2011, the results of their operations, the changes in their net assets, and the financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

  

Boston, Massachusetts
February 17, 2012

114

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited)

Independent Trustees:

Name, Age and Address of Independent Trustee	Position(s) Held with Registrant	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 (67) 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 Morgan Stanley 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) (February 2005-November 2008); retired as Admiral, U.S. Navy after serving over 38 years on active duty including 8 years as Director of the Naval Nuclear Propulsion Program in the Department of the Navy and the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996); and on the Joint Staff as Director of Political Military Affairs (June 1992-July 1994); 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 the Armed Services YMCA of the USA and the Naval Submarine League; Director of the American Shipbuilding Suppliers Association; Member of the National Security Advisory Council of the Center for U.S. Global Engagement and a member of the CNA Military Advisory Board. Member of the American Lung Association's President's Council.
Michael Bozic (71) 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 various Morgan Stanley Funds (since April 1994); 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.

115

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited)continued

Name, Age and Address of Independent Trustee	Position(s) Held with Registrant	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***
Kathleen A. Dennis (58) 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 Morgan Stanley Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).		102	Director of various non-profit organizations.
Dr. Manuel H. Johnson (63) 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 various Morgan Stanley Funds (since July 1991); 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).
Joseph J. Kearns (69) c/o Kearns & Associates LLC PMB754 22631 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 various Morgan Stanley Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of various Morgan Stanley Funds (since August 1994); CFO of the J. Paul Getty Trust.		105	Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation.

116

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited)continued

Name, Age and Address of Independent Trustee	Position(s) Held with Registrant	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 (53) 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 Morgan Stanley Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, various Morgan Stanley 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 (75) 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 Trustee since July 1991	General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of various Morgan Stanley Funds (since July 2006); Director or Trustee of various Morgan Stanley Funds (since July 1991); formerly, Chairperson of the Insurance Committee (until July 2006).		104	None.

117

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited)continued

Name, Age and Address of Independent Trustee	Position(s) Held with Registrant	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***
W. Allen Reed (64) 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 Morgan Stanley 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.
Fergus Reid (79) 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 various Morgan Stanley 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	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 (64) 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 various Morgan Stanley Funds (since June 2000); 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).

*  Each Trustee serves an indefinite term, until his or her successor is elected.

**  The Fund Complex includes (as of December 31, 2011) all open-end and closed-end funds (including all of their portfolios) advised by Morgan Stanley Investment Management Inc. (the "Adviser") and any funds that have an adviser that is an affiliated person of the Adviser (including, but not limited to, Morgan Stanley AIP GP LP).

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

118

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	Length of Time Served*	Principal Occupation(s) During Past 5 Years
Arthur Lev (50) 522 Fifth Avenue New York, NY 10036	President and Principal Executive Officer – Equity and Fixed Income Funds	Since June 2011	President and Principal Executive Officer (since June 2011) of the Equity and Fixed Income Funds in the Fund Complex; Head of the Long Only Business of Morgan Stanley Investment Management (since February 2011); Managing Director of the Adviser and various entities affiliated with the Adviser (since December 2006). Formerly, Chief Strategy Officer of Morgan Stanley Investment Management Traditional Asset Management business (November 2010-February 2011); General Counsel of Morgan Stanley Investment Management (December 2006-October 2010); Partner and General Counsel of FrontPoint Partners LLC (July 2002-December 2006); Managing Director and General Counsel of Morgan Stanley Investment Management (May 2000-June 2002).
Mary Ann Picciotto (38) c/o Morgan Stanley Services Company Inc. Harborside Financial Center 201 Plaza Two Jersey City, NJ 07311	Chief Compliance Officer	Since May 2010	Managing Director of the Adviser and various entities affiliated with the Adviser; Chief Compliance Officer of various Morgan Stanley Funds (since May 2010); Chief Compliance Officer of the Adviser (since April 2007).
Stefanie V. Chang Yu (45) 522 Fifth Avenue New York, NY 10036	Vice President	Since December 1997	Managing Director of the Adviser and various entities affiliated with the Adviser; Vice President of various Morgan Stanley Funds (since December 1997).
Francis J. Smith (46) 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 Adviser and various entities affiliated with the Adviser; Treasurer and Principal Financial Officer of various Morgan Stanley Funds (since July 2003).
Mary E. Mullin (44) 522 Fifth Avenue New York, NY 10036	Secretary	Since June 1999	Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of various Morgan Stanley Funds (since June 1999).

*  Each officer serves an indefinite term, until his or her successor is elected.

119

Morgan Stanley Variable Investment Series

Federal Tax Notice n December 31, 2011 (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, 2011. For corporate shareholders, the following percentages of dividends paid by each of the applicable Portfolios qualified for the dividends received deduction.

FUND	DIVIDENDS RECEIVED DEDUCTION%
Global Infrastructure Portfolio		34.92	%
Multi Cap Growth Portfolio		100.00	%
Strategist Portfolio		50.55	%

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

FUND	AMOUNT
Global Infrastructure Portfolio	$	3,948,735
Strategist Portfolio		15,665,688

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, 2011. The European Equity Portfolio intends to pass through foreign tax credits of $92,644, and has derived income from sources within foreign countries amounting to $2,427,065. The Global Infrastructure Portfolio intends to pass through foreign tax credits of $104,375, and has derived income from sources within foreign countries amounting to $2,018,304.

120

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
Arthur Lev 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	State Street Bank and Trust Company One Lincoln Street Boston, Massachusetts 02111
Independent Registered Public Accounting Firm	Legal Counsel
Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116	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 Management 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 Distribution, Inc., member FINRA.

VARINANN
IU12-00299P-Y12/11

#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.

(c)           Not applicable.

(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:

2011

	Registrant			Covered Entities(1)
Audit Fees	$	227,115		N/A
Non-Audit Fees
Audit-Related Fees	$	—	(2)	$		(2)
Tax Fees	$	33,952	(3)	$	89,626	(4)
All Other Fees	$			$	1,133,094
Total Non-Audit Fees	$	33,952		$	1,222,720
Total	$	261,067		$	1,222,720

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	$			$		(5)
Total Non-Audit Fees	$	39,743		$	7,851,000
Total	$	292,093		$	7,851,000

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/ Arthur Lev

Arthur Lev

Principal Executive Officer

February 15, 2012

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/ Arthur Lev

Arthur Lev

Principal Executive Officer

February 15, 2012

/s/ Francis Smith

Francis Smith

Principal Financial Officer

February 15, 2012