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)
John H. Gernon 522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code:				212-296-0289
Date of fiscal year end:	December 31,
Date of reporting period:		June 30, 2017

Item 1 - Report to Shareholders

MORGAN STANLEY
VARIABLE INVESTMENT SERIES

Semi-Annual Report

JUNE 30, 2017

The Funds are intended to be a 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
Fund Performance	11
Expense Examples	12
Portfolio of Investments:
Limited Duration	15
Income Plus	23
European Equity	33
Multi Cap Growth	36
Financial Statements:
Statements of Assets and Liabilities	39
Statements of Operations	40
Statements of Changes in Net Assets	42
Notes to Financial Statements	46
Financial Highlights	76
Investment Advisory Agreement Approval	82

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited)

Dear Shareholder:

The first half of 2017 delivered positive performance across global equity and fixed income markets. Despite underwhelming U.S. economic and political progress, markets advanced in an environment of strengthening global economic growth, with better-than-expected results in Europe and stability in China, along with low inflation and still-accommodative central banks.

Domestic and International Equity Overview

In the six-month reporting period, U.S. stocks (as measured by the S&P 500 Index) rallied strongly on expectations for stimulative and business-friendly fiscal policy from the new presidential administration. With the Republicans controlling both Congress and the White House, President Trump's promises to cut taxes, increase infrastructure spending and relax regulations were initially anticipated to be enacted wholesale, which sent stocks soaring in the month following the election. However, early policy stumbles and emerging political scandals cast doubt about the ability to pass these reforms. Nevertheless, U.S. stock prices continued to rise and volatility remained relatively low over this reporting period. U.S. companies reported increasing profits, and the economy continued its restrained pace of growth. The Federal Reserve's (Fed) recent interest rate hikes were also perceived as a vote of confidence on the health of the economy.

The European equity market rallied in the first half of 2017, led by cyclical sectors such as technology and industrials (as represented by the MSCI Europe Index). More defensive sectors, such as energy and telecommunications, underperformed the overall MSCI Europe Index. The most recent macro-economic data across the region came in strongly, although the magnitude of improvements somewhat declined toward the end of the period. Political risks also eased, with mainstream candidates winning in the Dutch and French elections during the spring of 2017. Despite political upheaval following Britain's snap election in early June, the U.K. and European Union formally began Brexit negotiations. Additionally, European markets responded positively to signals from the European Central Bank that continued to point toward an accommodative monetary policy stance.

Fixed Income Overview

We could be at a turning point in the market's narrative. While the first half of 2017 was about reflation, looking forward, a unique aspect of the second half stems from central bank polices to remove accommodation, which is creating unknown risk factors. Data in the U.S. continued to cool in the second quarter of 2017, leading to the question of whether the economy had peaked. Nevertheless, these pockets of worries failed to seriously dent market confidence. It was another good quarter for risky assets, with the S&P 500 Index steadily climbing higher and credit spreads grinding lower.

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

In this environment, U.S. Treasury yields have remained depressed by declining inflation and easy monetary policy in Europe and Japan. High yield and investment grade corporate credit posted gains over the period (as measured by the Bloomberg Barclays U.S. Corporate High Yield Index and Bloomberg Barclays U.S. Corporate Index, respectively), aided by a backdrop of moderate economic growth, strong corporate profits, low inflation, muted market volatility and favorable technicals. In the securitized markets, low interest rate volatility has benefited agency mortgage-backed securities (MBS), although the Fed's ongoing interest rate hikes and its plans for balance sheet reduction could potentially increase volatility for the asset class. Non-agency residential MBS continued to be supported by favorable fundamental conditions in the U.S. housing and mortgage markets. Commercial mortgage-backed securities performance diverged widely depending on collateral composition, as those with greater retail exposure underperformed amid announcements of retail store closings and poor retail earnings.

Limited Duration Portfolio

For the six-month period ended June 30, 2017, Variable Investment Series — Limited Duration Portfolio Class X shares produced a total return of 1.31%, outperforming the Bloomberg Barclays U.S. Government/Credit Index (1-5 Year) (the "Index"),⁽¹⁾ which returned 1.14%. For the same period, the Fund's Class Y shares returned 1.18%. Past performance is no guarantee of future results.

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

During calendar year 2016, the Fund received monies related to certain nonrecurring litigation settlements. If these monies were not received, any period returns which include these settlement monies would have been lower. For example, the 2016 fiscal year total return would have been 1.81% for Class X Shares as of December 31, 2016. The return on the other Share Class would also have been similarly impacted. These were one-time settlements, and as a result, the impact on the net asset value and consequently the performance will not likely be repeated in the future. Please call 1-800-548-7786 for additional information.

The Fund's overweight positions in corporate bonds and holdings in the securitized sector were the primary drivers of the outperformance during the period. These securities benefited from both higher yields and relative price appreciation.

(1)  The Bloomberg Barclays 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.

2

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

Underweights to non-U.S. government securities detracted slightly from relative performance as these sectors also performed well. We have chosen to be underweight this sector to fund the Fund's overweights in corporate and securitized bonds.

Interest rate positioning also slightly detracted from relative performance. Though short-maturity Treasury yields rose as the Federal Reserve raised the federal funds rate twice during the period, diminished market expectations of future rate increases led to a flattening of the yield curve.

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 Fund in the future.

Income Plus Portfolio

For the six-month period ended June 30, 2017, Variable Investment Series — Income Plus Portfolio Class X shares produced a total return of 4.11%, outperforming the Bloomberg Barclays U.S. Corporate Index (the "Index"),⁽²⁾ which returned 3.80%. For the same period, the Fund's Class Y shares returned 4.03%. Past performance is no guarantee of future results.

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

Despite a challenging macroeconomic environment and increased market volatility, the Fund ended the six-month reporting period with performance above the Index. The biggest contributor to performance was the investment grade segment of the market. Within investment grade, the Fund's positioning in the financials sector most positively impacted performance, driven mainly by the banking sub-sector. The Fund's industrials positioning had a neutral impact on performance overall over the period. Within industrials, energy and transportation positively impacted performance, while technology and capital goods detracted from performance.

The Fund's overweight to the high yield segment of the market was also beneficial to performance, as this asset class performed well during 2017 as yields and spreads declined. Similarly, the Fund's overweight to convertible bonds added to performance given strength in this sector of the market. The Fund's short

(2)  The Bloomberg Barclays 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.

3

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

duration position (or, less sensitivity to interest rate movements) positively contributed to performance over the period. Treasury yields have increased in the 2- and 3-year part of the yield curve, while declining in the 5-, 7-, 10-, and 30-year part of the curve over the period. Additionally, the use of derivatives, used to offset other exposures in the Fund, had a slight positive impact on slightly from performance over the period.

We have observed that global trends have been depressing U.S. Treasury yields in 2017. Very easy monetary policy by the European Central Bank and Bank of Japan worked to keep yields in these countries low, dragging down U.S. yields. This may be reversing as other central banks begin policy normalization. Though the U.S. economic data weakened recently, data elsewhere in the world remained strong. The market awaits the timing of the Fed's balance sheet reduction and if it will follow through with another rate hike. Other major central banks around the world are also considering raising rates and/or selling assets. The significance is that the second half of 2017 represents the first period since the global financial crisis that major global central banks are making a coordinated move to end excessive policy accommodation.

In investment grade corporates, we entered 2017 expecting competing tensions between fundamentals, valuation and technicals. Beneath the surface, we saw divergences between these factors across financials and non-financials and between the U.S. and Europe. Now, at the halfway point of the year, many of these tensions remain the same. As we weight and sum them, we find ourselves still constructive on the market, with somewhat better (or at least not worse) fundamentals, though facing valuations that are somewhat more expensive. After being very constructive, we are now modestly constructive.

In terms of fundamentals, U.S. banking and other financials remain very strong with high capital levels and improving profitability. We have been concerned about the pace of leveraging of U.S. industrials, though this trend has ameliorated in 2017 given a pause in merger and acquisition activity and share buybacks combined with improving corporate earnings.

The investment grade corporate market continued to perform well in the second quarter of 2017, with yield spreads tightening by 9 basis points, as represented by the Index.⁽³⁾ On a year-to-date basis, investment-grade spreads are 14 basis points tighter.⁽²⁾ Spreads are now at the tightest level in nearly three years, returning to post-crisis lows of July 2014.⁽²⁾

(3)  Source: Bloomberg Barclays. Data as of June 30, 2017.

4

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

Some notable news items in the second quarter of 2017 were the U.S. bank stress tests and falling oil prices. All 34 banks passed the Federal Reserve's 2017 stress tests, so no banks need to raise additional capital, as balance sheets remain strong and capital levels remain high. Oil prices trended lower during the second quarter of 2017, although the market viewed this as supply-side driven and therefore sector-specific.

The backdrop for the market remained benign, as volatility, as measured by the VIX volatility index, remains trading in a narrow range and just above historic lows.⁽²⁾ Financials yield spreads tightened by a similar amount as those of non-financials, as the pace of outperformance in the senior bank space was noticeably slower. Within non-financials, energy was the notable underperformer, as spreads widened in sympathy with softness in oil prices.

In Europe, the debt-equity cycle is much less advanced and the pressure on leverage is much lower. At a macro level, the election of Emmanuel Macron in France during the second quarter of 2017 removes the risk of an anti-euro project government. Macron has been elected on a platform promising structural reform (particularly labor reform), which is pro-growth and viewed as a market positive. Furthermore, reduced uncertainty over bank restructuring and recapitalization helped higher-quality Tier 2 and senior bonds to rally.

In summary, while yield spreads are trading inside long-term median levels, we remain cautiously optimistic about investment grade credit. Technicals remain supportive and fundamentals do not seem to be deteriorating further, though they remain stretched for many non-financials. Financial fundamentals remain strong and continue to improve. Given current valuations, we do not expect a drastic move tighter in spreads; however, we anticipate that spreads will continue to grind tighter if the current backdrop persists. Though we are still looking to take advantage of the current environment of modest, slow spread tightening, we are also open to opportunities to de-risk where appropriate to reflect tighter valuations and less favorable fundamentals.

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 Fund in the future.

5

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

European Equity Portfolio

For the six-month period ended June 30, 2017, Variable Investment Series — European Equity Portfolio Class X shares produced a total return of 14.95%, underperforming the MSCI Europe Index (the "Index"),⁽⁴⁾ which returned 15.36%. For the same period, the Fund's Class Y shares returned 14.77%. Past performance is no guarantee of future results.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

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

The main country-level detractors from performance were our stock selection in the U.K., underweight allocation to Spain, and both stock selection and an overweight allocation in Ireland. However, positive relative performance came from our stock selection in Sweden and France, as well as our stock selection in and an overweight allocation to the Netherlands.

On a sector basis, our stock selection in banks, stock selection and overweight allocation in telecommunications, and an underweight allocation in consumer durables and apparel were unfavorable to relative returns. Positive contributors included our stock selection in the capital goods, consumer services and utilities sectors, along with an overweight allocation to household and personal products companies.

The holdings that detracted the most from relative performance included a U.K. oil company, whose share price suffered along with slumping oil prices in the first half of 2017; a U.K. telecommunications company facing concerns about its pension liabilities, falling revenues on the loss of a government contract and speculation of a break-up of the company; a U.K.-based global bank that was hurt by management scandals and regulatory fines; and an Irish building materials company that saw profit-taking in the market because the stock had performed well in 2016 and because a stronger U.S. dollar in 2017 was expected to hurt profitability when its U.S.-based revenues were translated back into euros.

(4)  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.

6

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

In contrast, the top positive contributors to performance were a Swedish truck company with recovering profit margins as well as an improving outlook amid stronger global economic growth; an Anglo-Dutch household and personal products company whose share price rallied following a bid from a competitor (which was later withdrawn); the Fund's lack of exposure to a French oil company, which performed poorly due to falling oil prices; and a holding in a French industrial company that reported strong quarterly earnings results and increased demand for its jets.

We believe that the outlook for European equities remains constructive as we see reduced political risk in Europe following the Dutch and French elections; global economic growth on a more solid footing compared to earlier in the period, due to a stabilization of emerging markets, significant improvements in the eurozone economy and hope of fiscal stimulus by the new U.S. administration; and an accommodative European Central Bank (ECB) stance that will continue for the rest of 2017 and for most of 2018. European economic growth has, in particular, exceeded expectations as we saw strong consumer sentiment, consumer confidence and industrial production data during the reporting period. Improved consumer confidence readings have been supported by a sustained decline in unemployment across the region, including in peripheral Europe. Furthermore, market-friendly results in the recent elections have provided more visibility for companies and they now may be more prone to increase capital expenditures. Additional company investments could extend the life of the economic cycle and support a broader and firmer economy.

As of the end of reporting period, we continue to follow what we consider a well-balanced and diversified approach. The Fund remained overweight technology, telecommunications, health care and consumer staples. The Fund was underweight in materials, utilities, industrials, energy, consumer discretionary and financials.

In these uncertain times, our investment approach remains the same. We continue to seek high-quality companies with high earnings visibility and predictability, stable and strong cash flow, and low levels of debt, trading at attractive valuations.

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

7

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

Multi Cap Growth Portfolio

For the six-month period ended June 30, 2017, Variable Investment Series — Multi Cap Growth Portfolio Class X shares produced a total return of 28.70%, outperforming the Russell 3000^® Growth Index (the "Index"),⁽⁵⁾ which returned 13.69%. For the same period, the Fund's Class Y shares returned 28.54%. Past performance is no guarantee of future results.

Please keep in mind that double-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.

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

The long-term investment horizon and conviction-weighted investment approach embraced by the team since 1998 can result in periods of performance deviation from the benchmark and peers. The Fund outperformed the Index this reporting period primarily due to favorable stock selection and sector allocations.

Stock selection and an overweight allocation in the information technology sector contributed the most to relative outperformance. A provider of proprietary human capital management and financial management enterprise software over the cloud was the sector's largest contributor and the second greatest contributor in the Fund. The company's shares rebounded after a weak fourth quarter on news that the company has signed deals with a number of enterprises.

Stock selection and an overweight allocation in the health care sector also delivered relative gains. A genetic testing and analysis leader was the top contributor in the sector and the third greatest across the Fund. In January 2017, the company reported better-than-expected results, raised its financial outlook, and announced the introduction of a new sequencing system, which helped its share price rally.

The Fund benefited from stock selection in the consumer discretionary sector. An electric car maker was the top contributor both in the sector and across the Fund, due to positive investor sentiment regarding the

(5)  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.

8

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (unaudited) continued

upcoming launch of its mass market offering, as well as continued progress in the build out of its lithium-ion battery factory. However, relative outperformance was somewhat offset by weak performance from the Fund's holding in a leading coffee roaster and retail chain, which was the largest detractor within the sector and across the Fund. The company's shares pulled back at the end of the reporting period on investor concerns about near-term same-store sales trends.

There were no sector-level relative detractors, while the utilities and materials sectors had a negligible impact on the Fund's relative performance in the reporting period.

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 Fund 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,

John H. Gernon
President and Principal Executive Officer

9

Morgan Stanley Variable Investment Series

Letter to the Shareholders nJune 30, 2017 (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/im. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-1520.

Proxy Voting Policy and Procedures and Proxy Voting Record

You may obtain a copy of the Funds' Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 548-7786 or by visiting the Mutual Fund Center on our web site at www.morganstanley.com/im. It is also available on the SEC's web site at http://www.sec.gov.

You may obtain information regarding how the Funds 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/im. This information is also available on the SEC's web site at http://www.sec.gov.

10

Morgan Stanley Variable Investment Series

Fund Performance nJune 30, 2017 (unaudited)

Average Annual Total Returns — Period Ended June 30, 2017(1)
Class X	1 Year			5 Years			10 Years			Since Inception			Gross Expense Ratio			Date of Inception
European Equity		16.40	%		7.20	%		0.59	%		7.90	%		1.42	%	3/1/1991
Income Plus		3.74			4.94			6.25			6.98			0.68		3/1/1987
Limited Duration		2.11			1.83			0.60			1.98			0.92		5/4/1999
Multi Cap Growth		30.86			17.09			10.92			11.80			0.58		3/9/1984
Class Y
European Equity		16.15			6.93			0.34			2.06			1.67		6/5/2000
Income Plus		3.48			4.68			5.98			6.12			0.93		6/5/2000
Limited Duration		1.85			1.57			0.36			1.66			1.17		6/5/2000
Multi Cap Growth		30.53			16.80			10.64			6.12			0.83		6/5/2000

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 Fund 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 Fund distributions or the redemption of Fund shares. Performance for Class Y shares will vary from the performance of Class X shares due to differences in expenses. Expenses are as of each Fund's fiscal year end as outlined in the Fund's current prospectus.

⁽¹⁾  Figure assumes reinvestment of all distributions for the underlying fund 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.

11

Morgan Stanley Variable Investment Series

Expense Examples nJune 30, 2017 (unaudited)

As a shareholder of a Fund, you incur two types of costs: (1) insurance company charges; and (2) ongoing costs, which may include advisory fees, administration fees, distribution and services (12b-1) fees, and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period 01/01/17 – 06/30/17.

Actual Expenses

The first line of the tables on the following page 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 tables on the following page provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the second line of the tables 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.

12

Morgan Stanley Variable Investment Series

Expense Examples nJune 30, 2017 (unaudited)continued

Limited Duration

	Beginning Account Value		Ending Account Value		Expenses Paid During Period(1)
	01/01/17		06/30/17		01/01/17 – 06/30/17
Class X
Actual (1.31% return)	$	1,000.00	$	1,013.10	$	5.04
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.79	$	5.06
Class Y
Actual (1.18% return)	$	1,000.00	$	1,011.80	$	6.29
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.55	$	6.31

  (1)  Expenses are equal to the Fund's annualized expense ratios of 1.01% and 1.26% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Income Plus  

	Beginning Account Value		Ending Account Value		Expenses Paid During Period(1)
	01/01/17		06/30/17		01/01/17 – 06/30/17
Class X
Actual (4.11% return)	$	1,000.00	$	1,041.10	$	3.54
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.32	$	3.51
Class Y
Actual (4.03% return)	$	1,000.00	$	1,040.30	$	4.81
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.08	$	4.76

  (1)  Expenses are equal to the Fund's annualized expense ratios of 0.70% and 0.95% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

13

Morgan Stanley Variable Investment Series

Expense Examples nJune 30, 2017 (unaudited)continued

European Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period(1)
	01/01/17		06/30/17		01/01/17 – 06/30/17
Class X
Actual (14.95% return)	$	1,000.00	$	1,149.50	$	5.33
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.84	$	5.01
Class Y
Actual (14.77% return)	$	1,000.00	$	1,147.70	$	6.66
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.60	$	6.26

  (1)  Expenses are equal to the Fund'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 181/365 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 1.42% and 1.67% for Class X and Class Y shares, respectively.

Multi Cap Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period(1)
	01/01/17		06/30/17		01/01/17 – 06/30/17
Class X
Actual (28.70% return)	$	1,000.00	$	1,287.00	$	3.23
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.97	$	2.86
Class Y
Actual (28.54% return)	$	1,000.00	$	1,285.40	$	4.65
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.73	$	4.11

  (1)  Expenses are equal to the Fund's annualized expense ratios of 0.57% and 0.82% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 0.58% and 0.83% for Class X and Class Y shares, respectively.

14

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (73.5%)
		Basic Materials (1.1%)
$	125	EI du Pont de Nemours & Co.		2.20	%	05/01/20	$	125,729
	175	Goldcorp, Inc. (Canada)		2.125		03/15/18		175,216
								300,945
		Communications (6.9%)
	400	AT&T, Inc.		2.45		06/30/20		402,334
	225	Baidu, Inc. (China)		3.25		08/06/18		227,863
	200	CBS Corp.		2.30		08/15/19		201,406
	150	Deutsche Telekom International Finance BV (Germany) (a)		2.225		01/17/20		150,318
	225	Orange SA (France)		2.75		02/06/19		227,942
	175	Scripps Networks Interactive, Inc.		2.75		11/15/19		177,255
	50	Thomson Reuters Corp. (Canada)		1.65		09/29/17		50,014
	175	Time Warner Cable LLC		6.75		07/01/18		183,130
	230	Verizon Communications, Inc. (a)		2.946		03/15/22		231,851
								1,852,113
		Consumer Discretionary (0.7%)
	200	Sprint Spectrum Co., LLC/Sprint Spectrum Co., II LLC/Sprint Spectrum Co., III LLC (a)		3.36		03/20/23		202,250
		Consumer, Cyclical (5.8%)
	175	CVS Health Corp.		2.125		06/01/21		173,027
	100	Delta Air Lines, Inc.		2.875		03/13/20		101,373
	200	Ford Motor Credit Co., LLC		2.681		01/09/20		201,465
	125	Hyundai Capital America (Korea, Republic of) (a)		2.00		03/19/18		125,106
	50	Hyundai Capital America (a)		2.55		04/03/20		49,908
	100	Hyundai Capital America (Korea, Republic of) (a)		2.60		03/19/20		100,299
	175	McDonald's Corp., MTN		2.20		05/26/20		176,262
	240	Nissan Motor Acceptance Corp. (Japan) (a)		2.65		09/26/18		242,475
	175	Southwest Airlines Co.		2.75		11/06/19		177,824
	200	Volkswagen Group of America Finance LLC (Germany) (a)		2.40		05/22/20		200,823
								1,548,562
		Consumer, Non-Cyclical (15.7%)
	140	Abbott Laboratories		2.35		11/22/19		141,134
	175	AbbVie, Inc.		2.50		05/14/20		177,147
	280	Allergan Funding SCS		3.00		03/12/20		286,120
	200	Anheuser-Busch InBev Finance, Inc. (Belgium)		2.65		02/01/21		202,850
	150	BAT International Finance PLC (United Kingdom) (a)		2.75		06/15/20		152,067

See Notes to Financial Statements
15

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	175	Baxalta, Inc.		2.875	%	06/23/20	$	177,916
	200	Bayer US Finance LLC (a)		2.375		10/08/19		201,658
	100	Becton Dickinson and Co.		2.675		12/15/19		101,284
	175	Biogen, Inc.		2.90		09/15/20		178,644
	50	Cardinal Health, Inc.		1.948		06/14/19		50,073
	175	Celgene Corp.		2.875		08/15/20		179,084
	250	Cooperatieve Rabobank UA, Series BKTN (Netherlands)		1.375		08/09/19		247,268
	200	Danone SA (France) (a)		1.691		10/30/19		198,515
	175	EMD Finance LLC (Germany) (a)		2.40		03/19/20		176,228
	175	Gilead Sciences, Inc.		2.55		09/01/20		177,602
	75	JM Smucker Co. (The)		2.50		03/15/20		75,829
	150	Kroger Co. (The)		2.30		01/15/19		150,660
	50	Mead Johnson Nutrition Co.		3.00		11/15/20		51,313
	175	Medtronic, Inc.		2.50		03/15/20		177,605
	150	Molson Coors Brewing Co.		1.45		07/15/19		148,246
	175	Reynolds American, Inc.		2.30		06/12/18		175,802
	300	Synchrony Financial		3.00		08/15/19		304,378
	75	Teva Pharmaceutical Finance Netherlands III BV (Israel)		1.40		07/20/18		74,843
	250	Tyson Foods, Inc.		2.65		08/15/19		253,277
	150	UnitedHealth Group, Inc.		2.70		07/15/20		153,223
								4,212,766
		Diversified (0.7%)
	200	Hutchison Whampoa International 14 Ltd. (Hong Kong) (a)		1.625		10/31/17		199,642
		Energy (2.3%)
	100	BP Capital Markets PLC (United Kingdom)		2.315		02/13/20		100,956
	175	Energy Transfer LP		2.50		06/15/18		175,899
	125	Enterprise Products Operating LLC		2.55		10/15/19		126,146
	200	Kinder Morgan, Inc.		3.05		12/01/19		203,589
								606,590
		Finance (30.0%)
	230	ABN Amro Bank N.V. (Netherlands) (a)		2.50		10/30/18		231,927
	150	Air Lease Corp.		2.125		01/15/20		149,374
	225	American Express Credit Corp., Series G		2.25		08/15/19		227,008
	280	Bank of America Corp., MTN		2.625		10/19/20		283,045
	150	Bank of New York Mellon Corp. (The), MTN		2.45		11/27/20		151,535
	210	BNP Paribas SA, MTN (France)		2.70		08/20/18		212,418
	260	BNZ International Funding Ltd. (New Zealand) (a)		2.35		03/04/19		261,270

See Notes to Financial Statements
16

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	275	BPCE SA, MTN (France)		2.25	%	01/27/20	$	275,458
	175	Capital One Financial Corp.		2.45		04/24/19		176,010
	150	Citigroup, Inc.		2.45		01/10/20		150,990
	250	Compass Bank		1.85		09/29/17		250,070
	250	Credit Agricole SA (France) (a)		2.125		04/17/18		250,736
	250	Credit Suisse AG, Series G (Switzerland)		2.30		05/28/19		251,714
	200	Danske Bank A/S (Denmark) (a)		1.65		09/06/19		198,200
	225	DBS Group Holdings Ltd. (Singapore) (a)		2.246		07/16/19		225,689
	250	Discover Bank		2.00		02/21/18		250,346
	175	ERP Operating LP		2.375		07/01/19		176,110
	175	Goldman Sachs Group, Inc. (The)		2.35		11/15/21		172,823
	220	HSBC USA, Inc.		2.25		06/23/19		221,126
	200	Intesa Sanpaolo SpA (Italy)		3.875		01/16/18		201,876
	100	Jackson National Life Global Funding (a)		1.875		10/15/18		100,198
	100	Jackson National Life Global Funding (a)		2.20		01/30/20		100,066
	50	JPMorgan Chase & Co., MTN		2.295		08/15/21		49,738
	200	LeasePlan Corp. N.V. (Netherlands) (a)		2.875		01/22/19		200,709
	200	Lloyds Banking Group PLC (United Kingdom)		3.10		07/06/21		203,343
	201	Macquarie Bank Ltd. (Australia) (a)		2.60		06/24/19		202,758
	175	Metropolitan Life Global Funding I (See Note 8) (a)		2.00		04/14/20		174,592
	150	Metropolitan Life Global Funding I (See Note 8) (a)		2.05		06/12/20		149,913
	230	Mizuho Bank Ltd. (Japan) (a)		1.85		03/21/18		230,332
	250	National Bank of Canada (Canada)		2.15		06/12/20		249,587
	125	New York Life Global Funding (a)		1.55		11/02/18		124,808
	250	Principal Life Global Funding II (a)		2.15		01/10/20		250,375
	150	Protective Life Global Funding (a)		1.722		04/15/19		149,006
	150	Protective Life Global Funding (a)		2.70		11/25/20		151,188
	200	QBE Insurance Group Ltd. (Australia) (a)		2.40		05/01/18		200,217
	200	Santander Holdings USA, Inc.		2.70		05/24/19		201,565
	250	Skandinaviska Enskilda Banken AB (Sweden)		2.30		03/11/20		251,024
	260	Sumitomo Mitsui Banking Corp. (Japan)		2.45		01/10/19		262,302
	300	UBS AG, MTN (Switzerland)		2.375		08/14/19		302,824
	200	WEA Finance LLC/Westfield UK & Europe Finance PLC (a)		2.70		09/17/19		201,756
								8,074,026
		Industrials (3.2%)
	50	Harris Corp.		2.70		04/27/20		50,551
	115	Ingersoll-Rand Global Holding Co., Ltd.		2.875		01/15/19		116,720
	75	Lockheed Martin Corp.		2.50		11/23/20		76,089
	150	Rockwell Collins, Inc.		1.95		07/15/19		150,295
	50	Ryder System, Inc., MTN		2.65		03/02/20		50,386

See Notes to Financial Statements
17

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	250	Siemens Financieringsmaatschappij N.V. (Germany) (a)		2.15	%	05/27/20	$	251,396
	175	Union Pacific Corp.		2.25		06/19/20		176,164
								871,601
		Technology (1.6%)
	125	Lam Research Corp.		2.80		06/15/21		126,915
	300	TSMC Global Ltd. (Taiwan) (a)		1.625		04/03/18		299,450
								426,365
		Utilities (5.5%)
	275	Dominion Energy Gas Holdings LLC		2.50		12/15/19		276,996
	75	DTE Energy Co.		1.50		10/01/19		73,918
	100	Duke Energy Corp.		1.80		09/01/21		97,715
	225	Engie SA (France) (a)		1.625		10/10/17		224,832
	175	Eversource Energy		1.45		05/01/18		174,783
	200	Origin Energy Finance Ltd. (Australia) (a)		3.50		10/09/18		202,364
	175	Sempra Energy		2.40		03/15/20		175,896
	250	Southern Co. (The)		2.15		09/01/19		250,238
								1,476,742
		Total Corporate Bonds (Cost $19,644,112)						19,771,602
		Asset-Backed Securities (16.2%)
	100	AMSR Trust (a)		2.609	(b)	11/17/33		100,734
	98	Bayview Opportunity Master Fund IVb Trust (a)		3.50	(b)	01/28/55		100,470
	40	CAM Mortgage Trust (a)		4.00		01/15/56		40,578
	100	CLUB Credit Trust (a)		2.39		04/17/23		100,106
		Colony American Homes
	120	(a)		2.359	(b)	05/17/31		120,615
	100	(a)		4.009	(b)	05/17/31		100,950
	82	(a)		4.42	(b)	07/17/31		82,230
	73	Conn Funding II LP (a)		2.73		05/15/20		73,146
	381	Ford Credit Auto Owner Trust (a)		2.26		11/15/25		384,640
	99	GCAT LLC (a)		3.228		05/25/22		99,166
	135	Golden Credit Card Trust (Canada) (a)		1.98		04/15/22		135,024
	125	Green Tree Agency Advance Funding Trust I (a)		2.38		10/15/48		124,639
	206	Invitation Homes Trust (a)		3.74	(b)	08/17/32		207,810
	100	Mariner Finance Issuance Trust (a)		3.62		02/20/29		100,900
	86	Marlette Funding Trust (a)		2.827		03/15/24		86,098
		Nationstar HECM Loan Trust
	40	(a)		2.239	(b)	06/25/26		40,139

See Notes to Financial Statements
18

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	23	(a)		2.883	%	11/25/25	$	23,311
	100	(a)		2.942		05/25/27		100,034
	37	(a)		2.981	(b)	02/25/26		37,349
	50	Nissan Auto Lease Trust		1.91		04/15/20		49,953
	139	North Carolina State Education Assistance Authority		1.956	(b)	07/25/25		139,426
	103	NRZ Excess Spread-Collateralized Notes (a)		5.683		07/25/21		103,301
	100	Ocwen Master Advance Receivables Trust (a)		2.722		08/16/49		99,773
	36	Panhandle-Plains Higher Education Authority, Inc.		2.098	(b)	07/01/24		36,153
	50	PennyMac LLC (a)		4.00		03/25/55		50,221
	89	PRPM LLC (a)		4.00		09/27/21		88,718
	57	RMAT LLC (a)		4.826		06/25/35		57,222
	103	Skopos Auto Receivables Trust (a)		5.43		12/15/23		104,072
	100	SPS Servicer Advance Receivables Trust (a)		2.53		11/16/48		99,128
	100	Sunset Mortgage Loan Co., LLC (a)		3.50		06/16/47		100,203
	98	Towd Point Mortgage Trust (a)		2.75	(b)	04/25/57		99,461
		Verizon Owner Trust
	110	(a)		1.68		05/20/21		109,746
	105	(a)		2.06		09/20/21		105,433
	97	VOLT LIX LLC (a)		3.25		05/25/47		97,584
	94	VOLT LV LLC (a)		3.50		03/25/47		93,982
	92	VOLT LVI LLC (a)		3.50		03/25/47		92,231
	100	VOLT LX LLC (a)		3.25		04/25/59		100,161
	100	VOLT LXI LLC (a)		3.125		06/25/47		100,000
		VOLT NPL X LLC
	95	(a)		3.375		10/26/54		95,838
	88	(a)		4.75		10/26/54		88,822
	100	VOLT XIX LLC (a)		5.00		04/25/55		100,601
	100	VOLT XXII LLC (a)		4.25		02/25/55		99,967
	198	VOLT XXXIII LLC (a)		4.25		03/25/55		198,367
		Total Asset-Backed Securities (Cost $4,339,210)						4,368,302
		Mortgages - Other (4.3%)
	61	CHL Mortgage Pass-Through Trust		5.50		05/25/34		61,943
		Fannie Mae Connecticut Avenue Securities
	131			2.516	(b)	04/25/29 - 07/25/29		133,078
	56			3.416	(b)	10/25/28		57,027
		Freddie Mac Structured Agency Credit Risk Debt Notes
	93			2.116	(b)	10/25/27		93,545
	90			2.466	(b)	10/25/28		90,439
	126			2.966	(b)	09/25/28		126,851

See Notes to Financial Statements
19

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	62	JP Morgan Mortgage Trust		3.757	(b)%	07/25/35	$	61,716
	119	Merrill Lynch Mortgage Investors Trust		3.076	(b)	12/25/34		119,926
	279	New Residential Mortgage Loan Trust (a)		3.75	(b)	11/26/35 - 08/25/55		288,055
	127	Sequoia Mortgage Trust		1.832	(b)	08/20/34		121,061
		Total Mortgages - Other (Cost $1,149,672)						1,153,641
		Commercial Mortgage-Backed Securities (2.4%)
	148	BLCP Hotel Trust (a)		2.109	(b)	08/15/29		148,059
	109	CDGJ Commercial Mortgage Trust (a)		2.559	(b)	12/15/27		109,223
	86	Citigroup Commercial Mortgage Trust (a)		2.11		01/12/30		86,603
	94	Cosmopolitan Hotel Trust (a)		2.559	(b)	11/15/33		94,810
	100	Hudsons Bay Simon JV Trust (a)		2.656	(b)	08/05/34		100,287
	34	JP Morgan Chase Commercial Mortgage Securities Trust (a)		2.139	(b)	07/15/31		34,281
	89	Velocity Commercial Capital Loan Trust		3.016	(b)	10/25/46		89,973
		Total Commercial Mortgage-Backed Securities (Cost $662,662)						663,236
		Sovereign (0.9%)
	245	Korea Development Bank (The) (Korea, Republic of) (Cost $242,428)		1.50		01/22/18		244,578
		Collateralized Mortgage Obligations - Agency Collateral Series (0.9%)
	106	Federal Home Loan Mortgage Corporation, REMIC		7.50		09/15/29		122,713
		Government National Mortgage Association,
		IO
	206			5.018	(b)	03/20/43		35,178
	260			5.288	(b)	05/20/40		49,733
		IO PAC
	333			4.938	(b)	10/20/41		31,997
		Total Collateralized Mortgage Obligations - Agency Collateral Series (Cost $178,954)						239,621
		Agency Fixed Rate Mortgages (0.3%)
		Federal National Mortgage Association, Conventional Pools:
	52			6.50		01/01/32		57,630
	23			7.00		12/01/31 - 06/01/32		23,384
		Total Agency Fixed Rate Mortgages (Cost $78,318)						81,014

See Notes to Financial Statements
20

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE			VALUE
		Short-Term Investments (1.1%)
		U.S. Treasury Security (0.2%)
$	51	U.S. Treasury Bill (c)(d) (Cost $50,507)		1.191	%	04/26/18			$	50,513
NUMBER OF SHARES (000)
		Investment Company (0.9%)
		230Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (See Note 8) (Cost $229,828)								229,828
		Total Short-Term Investments (Cost $280,335)								280,341
		Total Investments(Cost $26,575,691) (e)(f)					99.6	%		26,802,335
		Other Assets in Excess of Liabilities					0.4			99,753
		Net Assets					100.0	%	$	26,902,088

  IO  Interest Only.

  MTN  Medium Term Note.

  PAC  Planned Amortization Class.

  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 June 30, 2017.

  (c)  Rate shown is the yield to maturity at June 30, 2017.

  (d)  All or a portion of the security was pledged to cover margin requirements for futures contracts.

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

  (f)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $285,084 and the aggregate gross unrealized depreciation is $58,440, resulting in net unrealized appreciation of $226,644.

See Notes to Financial Statements
21

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n June 30, 2017 (unaudited)continued

FUTURES CONTRACTS OPEN AT JUNE 30, 2017:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE		UNREALIZED DEPRECIATION
	44	Long	U.S. Treasury 5 yr. Note, Sep-17	$	5,184,781	$	(11,500	)
	5	Long	U.S. Treasury 2 yr. Note, Sep-17		1,080,547		(625	)
Total Unrealized Depreciation						$	(12,125	)

LONG TERM CREDIT ANALYSIS+

AAA	12.1	%
AA	9.5
A	39.7
BBB	29.8
BB	0.0
B or Below	0.0
Not Rated	8.9
	100.0	%++

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

++  Does not include open long futures contracts with an underlying face amount of $6,265,328 with total unrealized depreciation of $12,125.

See Notes to Financial Statements
22

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (96.4%)
		Basic Materials (4.0%)
$	350	Air Liquide Finance SA (France) (a)		2.25	%	09/27/23	$	340,804
	225	BHP Billiton Finance USA Ltd. (Australia)		5.00		09/30/43		260,970
	450	EI du Pont de Nemours & Co.		2.20		05/01/20		452,627
	390	Eldorado Gold Corp. (Canada) (a)		6.125		12/15/20		401,213
	175	Goldcorp, Inc. (Canada)		5.45		06/09/44		195,410
	450	International Paper Co.		3.00		02/15/27		433,975
	300	LyondellBasell Industries N.V.		4.625		02/26/55		295,162
	470	NOVA Chemicals Corp. (Canada) (a)		5.25		08/01/23		484,687
	575	Sherwin-Williams Co. (The)		2.75		06/01/22		575,312
	315	Southern Copper Corp. (Mexico)		7.50		07/27/35		390,958
	220	Vale Overseas Ltd. (Brazil)		6.875		11/21/36		237,050
								4,068,168
		Communications (11.8%)
	325	21st Century Fox America, Inc.		4.75		09/15/44		343,450
	700	Alibaba Group Holding Ltd. (China)		2.50		11/28/19		705,832
	226	Altaba, Inc.		0.00	(b)	12/01/18		257,499
	175	Amazon.com, Inc.		4.95		12/05/44		207,052
	1,101	AT&T, Inc.		4.50		03/09/48		1,034,326
	525	Baidu, Inc. (China)		2.75		06/09/19		531,481
	220	Baidu, Inc. (China) (c)		2.875		07/06/22		218,940
	200	Baidu, Inc. (China)		3.25		08/06/18		202,545
	150	CBS Corp.		4.90		08/15/44		158,128
	275	Charter Communications Operating LLC/ Charter Communications Operating Capital		4.908		07/23/25		297,571
	275	Charter Communications Operating LLC/ Charter Communications Operating Capital		6.484		10/23/45		331,222
	725	Cisco Systems, Inc.		1.85		09/20/21		716,495
	270	Comcast Corp.		6.40		05/15/38		359,764
	300	Ctrip.com International Ltd. (China) (a)		1.25		09/15/22		324,938
	150	Deutsche Telekom International Finance BV (Germany) (a)		3.60		01/19/27		152,914
	200	DISH DBS Corp.		5.875		11/15/24		214,144
	425	NBC Universal Media LLC		5.95		04/01/41		545,323
	175	Netflix, Inc. (a)		4.375		11/15/26		175,000
	900	Ooredoo International Finance Ltd. (Qatar) (a)		3.25		02/21/23		889,042
	300	Priceline Group, Inc. (The)		0.90		09/15/21		344,250
	250	Shutterfly, Inc.		0.25		05/15/18		250,469
	200	Sprint Corp.		7.125		06/15/24		223,000
	175	Telefonica Emisiones SAU (Spain)		4.103		03/08/27		181,161

See Notes to Financial Statements
23

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	330	Telefonica Europe BV (Spain)		8.25	%	09/15/30	$	463,971
	200	Telenor East Holding II AS, Series VIP (Norway)		0.25		09/20/19		220,580
	800	Time Warner, Inc.		3.80		02/15/27		806,985
	990	Verizon Communications, Inc.		4.672		03/15/55		930,784
	100	Verizon Communications, Inc.		5.012		08/21/54		99,152
	200	Viacom, Inc.		5.85		09/01/43		216,721
	250	Viavi Solutions, Inc.		0.625		08/15/33		277,344
	200	Vodafone Group PLC (United Kingdom)		4.375		02/19/43		198,255
								11,878,338
		Consumer Discretionary (0.8%)
	825	Sprint Spectrum Co., LLC/Sprint Spectrum Co., II LLC/Sprint Spectrum Co., III LLC (a)		3.36		03/20/23		834,281
		Consumer, Cyclical (7.2%)
	351	American Airlines Pass-Through Trust		4.00		07/15/25		367,558
	575	BMW US Capital LLC (Germany) (a)		2.70		04/06/22		580,940
	562	British Airways Pass-Through Trust (United Kingdom) (a)		4.625		06/20/24		606,134
	150	Darden Restaurants, Inc.		3.85		05/01/27		152,710
	100	Darden Restaurants, Inc.		6.80		10/15/37		128,123
	475	Delta Air Lines, Inc.		3.625		03/15/22		488,144
	325	Dollar General Corp.		3.25		04/15/23		331,444
	175	Ford Motor Co.		4.75		01/15/43		169,536
	300	Ford Motor Credit Co., LLC		3.096		05/04/23		296,795
	300	General Motors Co.		6.60		04/01/36		348,555
	168	Hanesbrands, Inc. (a)		4.875		05/15/26		171,360
	200	Home Depot, Inc.		3.35		09/15/25		207,896
	175	Home Depot, Inc.		5.875		12/16/36		228,396
	400	Lowe's Cos., Inc.		2.50		04/15/26		384,939
	375	Macy's Retail Holdings, Inc.		2.875		02/15/23		344,259
	300	McDonald's Corp., MTN		4.60		05/26/45		324,741
	475	RH (a)		0.00	(b)	06/15/19		434,625
	125	Tesla, Inc.		0.25		03/01/19		143,125
	275	Under Armour, Inc.		3.25		06/15/26		258,168
	241	United Airlines Pass-Through Trust, Class A		4.30		08/15/25		256,922
	375	Volkswagen Group of America Finance LLC (Germany) (a)		2.40		05/22/20		376,543
	125	Wal-Mart Stores, Inc.		5.25		09/01/35		152,740
	200	Walgreens Boots Alliance, Inc.		3.45		06/01/26		199,957
	350	ZF North America Capital, Inc. (Germany) (a)		4.50		04/29/22		368,812
								7,322,422

See Notes to Financial Statements
24

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
		Consumer, Non-Cyclical (12.9%)
$	450	Abbott Laboratories		3.40	%	11/30/23	$	461,301
	175	Abbott Laboratories		4.90		11/30/46		193,526
	200	AbbVie, Inc.		3.20		05/14/26		198,016
	175	AbbVie, Inc.		4.70		05/14/45		186,694
	51	Allergan Funding SCS		4.75		03/15/45		55,269
	140	Altria Group, Inc.		5.375		01/31/44		169,147
	275	Amgen, Inc.		2.60		08/19/26		260,775
	272	Amgen, Inc.		4.663		06/15/51		289,341
	400	Anheuser-Busch InBev Finance, Inc. (Belgium)		3.65		02/01/26		412,846
	525	Anheuser-Busch InBev Finance, Inc. (Belgium)		3.70		02/01/24		550,092
	600	Anheuser-Busch InBev Finance, Inc. (Belgium)		4.90		02/01/46		679,894
	325	AstraZeneca PLC (United Kingdom)		6.45		09/15/37		438,501
	150	Automatic Data Processing, Inc.		3.375		09/15/25		156,052
	125	Baxalta, Inc.		5.25		06/23/45		147,049
	225	Becton Dickinson and Co.		2.894		06/06/22		225,956
	175	Becton Dickinson and Co.		4.685		12/15/44		180,922
	260	BRF SA (Brazil) (a)		3.95		05/22/23		251,953
	250	Cencosud SA (Chile) (a)		6.625		02/12/45		273,489
	312	EMD Finance LLC (Germany) (a)		3.25		03/19/25		313,614
	275	Express Scripts Holding Co.		4.50		02/25/26		291,958
	150	Express Scripts Holding Co.		4.80		07/15/46		153,171
	225	Gilead Sciences, Inc.		4.80		04/01/44		245,748
	275	Grupo Bimbo SAB de CV (Mexico) (a)		3.875		06/27/24		283,848
	250	Humana, Inc.		3.95		03/15/27		261,052
	316	Illumina, Inc.		0.00	(b)	06/15/19		320,740
	300	Kraft Heinz Foods Co.		4.375		06/01/46		294,992
	300	Mead Johnson Nutrition Co.		3.00		11/15/20		307,877
	375	Medtronic, Inc.		4.625		03/15/45		423,070
	325	Novartis Capital Corp. (Switzerland)		4.40		05/06/44		361,467
	350	PepsiCo, Inc.		3.60		03/01/24		370,581
	350	Pfizer, Inc.		3.00		12/15/26		351,407
	200	Philip Morris International, Inc.		4.50		03/20/42		213,232
	400	Reckitt Benckiser Treasury Services PLC (United Kingdom) (a)		2.375		06/24/22		397,666
	575	Teva Pharmaceutical Finance Netherlands III BV (Israel)		3.15		10/01/26		547,145
	325	Thermo Fisher Scientific, Inc.		2.95		09/19/26		316,657
	175	Transurban Finance Co., Pty Ltd. (Australia) (a)		3.375		03/22/27		171,265
	300	Transurban Finance Co., Pty Ltd. (Australia) (a)		4.125		02/02/26		311,910
	200	Tyson Foods, Inc.		4.875		08/15/34		219,454

See Notes to Financial Statements
25

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	250	UnitedHealth Group, Inc.		2.875	%	03/15/23	$	254,038
	525	UnitedHealth Group, Inc.		3.75		07/15/25		553,533
	930	WM Wrigley Jr. Co. (a)		2.90		10/21/19		946,027
								13,041,275
		Diversified (0.2%)
	200	Alfa SAB de CV (Mexico) (a)		5.25		03/25/24		215,500
		Energy (8.1%)
	250	Anadarko Petroleum Corp.		6.45		09/15/36		295,130
	400	APT Pipelines Ltd. (Australia) (a)		4.20		03/23/25		413,587
	200	BG Energy Capital PLC (United Kingdom) (a)		5.125		10/15/41		223,930
	500	BP Capital Markets PLC (United Kingdom)		3.119		05/04/26		496,134
	675	Buckeye Partners LP		4.15		07/01/23		694,096
	525	Cimarex Energy Co.		3.90		05/15/27		528,925
	450	ConocoPhillips Co.		4.95		03/15/26		502,048
	151	DCP Midstream Operating LP (a)		5.35		03/15/20		157,795
	425	Enable Midstream Partners LP		3.90		05/15/24		422,094
	250	Endeavor Energy Resources LP/ EER Finance, Inc. (a)		7.00		08/15/21		259,688
	175	Enterprise Products Operating LLC		5.95		02/01/41		208,018
	250	Exxon Mobil Corp.		4.114		03/01/46		264,396
	100	Kinder Morgan Energy Partners LP		3.95		09/01/22		103,434
	250	Kinder Morgan, Inc.		5.55		06/01/45		265,887
	300	Kinder Morgan, Inc. (a)		5.625		11/15/23		332,367
	325	MPLX LP		4.00		02/15/25		327,730
	25	MPLX LP		4.875		06/01/25		26,552
	150	MPLX LP		5.20		03/01/47		155,068
	100	Noble Energy, Inc.		5.05		11/15/44		103,083
	100	Phillips 66 Partners LP		4.68		02/15/45		96,150
	325	Spectra Energy Capital LLC		7.50		09/15/38		428,054
	450	Tesoro Corp. (a)		4.75		12/15/23		487,125
	275	TransCanada PipeLines Ltd. (Canada)		7.625		01/15/39		402,380
	475	Williams Partners LP/ACMP Finance Corp.		4.875		05/15/23		494,057
	450	Woodside Finance Ltd. (Australia) (a)		3.70		09/15/26		443,963
								8,131,691
		Finance (33.9%)
	390	ABB Treasury Center USA, Inc. (Switzerland) (a)		4.00		06/15/21		414,383
	600	ABN Amro Bank N.V. (Netherlands) (a)		4.75		07/28/25		633,745
	150	AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Netherlands)		3.50		05/26/22		154,106
	420	AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Netherlands)		3.75		05/15/19		431,588

See Notes to Financial Statements
26

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	225	Air Lease Corp.		2.625	%	07/01/22	$	223,265
	250	Air Lease Corp.		3.375		06/01/21		256,870
	275	Alexandria Real Estate Equities, Inc.		3.95		01/15/27		280,627
	350	American Express Credit Corp., MTN		3.30		05/03/27		350,148
	125	American International Group, Inc.		4.50		07/16/44		127,604
	375	American International Group, Inc.		4.875		06/01/22		411,922
	425	Bank of America Corp.		4.244	(d)	04/24/38		442,831
	205	Bank of America Corp.		7.75		05/14/38		295,701
	325	Bank of America Corp., MTN		2.151		11/09/20		323,788
	150	Bank of America Corp., MTN		5.00		01/21/44		170,220
	750	Bank of America Corp., Series G		3.50		04/19/26		753,969
	800	BBVA Bancomer SA (Mexico) (a)		6.50		03/10/21		885,000
	300	BNP Paribas SA (France) (a)		3.80		01/10/24		312,877
	400	Boston Properties LP		3.65		02/01/26		405,501
	625	BPCE SA (France) (a)		5.15		07/21/24		668,718
	275	Brighthouse Financial, Inc. (a)		3.70		06/22/27		272,220
	450	Brixmor Operating Partnership LP		4.125		06/15/26		448,218
	400	Brookfield Finance, Inc. (Canada)		4.25		06/02/26		411,573
	625	Capital One Financial Corp.		3.75		03/09/27		623,986
	850	Citigroup, Inc.		4.45		09/29/27		885,105
	350	Citigroup, Inc.		8.125		07/15/39		539,043
	250	Credit Suisse Group AG (Switzerland) (a)		3.574		01/09/23		256,450
	625	Credit Suisse Group Funding Guernsey Ltd. (Switzerland)		4.55		04/17/26		665,140
	150	CubeSmart LP		3.125		09/01/26		142,814
	425	Discover Bank		7.00		04/15/20		472,028
	715	Discover Financial Services		3.85		11/21/22		733,127
	300	Discover Financial Services		3.95		11/06/24		305,114
	300	Extra Space Storage LP (a)		3.125		10/01/35		321,188
	450	Five Corners Funding Trust (a)		4.419		11/15/23		483,921
	250	GE Capital International Funding Co.		4.418		11/15/35		272,620
	375	Goldman Sachs Group, Inc. (The)		6.25		02/01/41		490,869
	525	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		682,717
	300	Goldman Sachs Group, Inc. (The), MTN		4.80		07/08/44		333,449
	250	Guardian Life Insurance Co. of America (The) (a)		4.85		01/24/77		265,531
	400	Healthcare Trust of America Holdings LP		3.70		04/15/23		408,597
	410	HSBC Finance Corp.		6.676		01/15/21		462,422
	525	HSBC Holdings PLC (United Kingdom)		3.90		05/25/26		542,515
	325	HSBC Holdings PLC (United Kingdom)		4.041	(d)	03/13/28		337,032
	250	HSBC Holdings PLC (United Kingdom)		4.375		11/23/26		259,904
	400	ING Bank N.V. (Netherlands) (a)		5.80		09/25/23		452,273

See Notes to Financial Statements
27

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	200	ING Groep N.V. (Netherlands)		6.00	(d) %	04/16/20(e)	$	205,000
	300	Intesa Sanpaolo SpA (Italy)		3.875		01/16/18		302,814
	250	Intesa Sanpaolo SpA (Italy) (a)		5.71		01/15/26		264,405
	750	JPMorgan Chase & Co.		3.782	(d)	02/01/28		767,883
	480	JPMorgan Chase & Co.		4.95		06/01/45		536,738
	575	LeasePlan Corp. N.V. (Netherlands) (a)		2.875		01/22/19		577,040
	275	Lincoln National Corp.		7.00		06/15/40		370,516
	475	Lloyds Banking Group PLC (United Kingdom)		3.10		07/06/21		482,940
	125	Massachusetts Mutual Life Insurance Co. (a)		4.50		04/15/65		126,810
	500	MetLife, Inc. (See Note 8)		5.70		06/15/35		617,428
	500	New York Life Global Funding (a)		2.90		01/17/24		505,219
	275	Northern Trust Corp.		3.375	(d)	05/08/32		275,224
	750	PNC Financial Services Group, Inc. (The)		3.15		05/19/27		747,199
	675	Prudential Financial, Inc.		5.625	(d)	06/15/43		742,500
	135	Prudential Financial, Inc., MTN		6.625		12/01/37		180,666
	575	Realty Income Corp.		3.25		10/15/22		584,336
	575	Royal Bank of Scotland Group PLC (United Kingdom)		3.875		09/12/23		587,942
	750	Santander UK Group Holdings PLC (United Kingdom)		3.571		01/10/23		767,863
	325	Santander UK PLC (United Kingdom) (a)		5.00		11/07/23		349,511
	600	Skandinaviska Enskilda Banken AB (Sweden) (a)		2.625		11/17/20		607,619
	250	Spirit Realty Capital, Inc.		3.75		05/15/21		248,595
	300	Standard Chartered PLC (United Kingdom) (a)		2.10		08/19/19		299,051
	700	Swedbank AB (Sweden) (a)		2.80		03/14/22		709,990
	475	Synchrony Bank		3.00		06/15/22		473,396
	125	TD Ameritrade Holding Corp.		3.30		04/01/27		124,998
	350	TD Ameritrade Holding Corp.		3.625		04/01/25		362,512
	475	Toronto-Dominion Bank (The) (Canada)		3.625	(d)	09/15/31		472,064
	525	UBS Group Funding Switzerland AG (Switzerland) (a)		3.491		05/23/23		537,730
	425	Visa, Inc.		4.30		12/14/45		467,299
	325	WEA Finance LLC/Westfield UK & Europe Finance PLC (a)		3.25		10/05/20		330,988
	1,800	Wells Fargo & Co.		3.00		10/23/26		1,754,876
	250	Wells Fargo & Co., MTN		4.10		06/03/26		259,157
								34,251,028
		Industrials (3.4%)
	500	Brambles USA, Inc. (Australia) (a)		4.125		10/23/25		513,701
	375	Burlington Northern Santa Fe LLC		4.55		09/01/44		416,669
	325	CSX Corp.		2.60		11/01/26		314,139
	165	Embraer Netherlands Finance BV (Brazil)		5.40		02/01/27		172,631

See Notes to Financial Statements
28

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE	VALUE
$	200	Harris Corp.		4.854	%	04/27/35	$	219,646
	510	Heathrow Funding Ltd. (United Kingdom) (a)		4.875		07/15/21		549,971
	225	Johnson Controls International PLC		3.90		02/14/26		236,001
	425	Lockheed Martin Corp.		3.55		01/15/26		441,176
	235	MasTec, Inc.		4.875		03/15/23		235,588
	300	Siemens Financieringsmaatschappij N.V. (Germany) (a)		2.35		10/15/26		283,601
								3,383,123
		Technology (4.7%)
	250	Akamai Technologies, Inc.		0.00	(b)	02/15/19		245,158
	1,150	Apple, Inc.		2.45		08/04/26		1,100,975
	400	Apple, Inc.		3.00		06/20/27		398,501
	325	Applied Materials, Inc.		3.30		04/01/27		330,684
	200	Dell International LLC/EMC Corp. (a)		8.10		07/15/36		252,042
	950	Microsoft Corp.		2.875		02/06/24		966,299
	350	Microsoft Corp.		4.45		11/03/45		390,403
	250	Nuance Communications, Inc.		1.00		12/15/35		242,188
	225	ON Semiconductor Corp.		1.00		12/01/20		234,563
	550	QUALCOMM, Inc.		2.60		01/30/23		548,417
								4,709,230
		Utilities (9.4%)
	400	Alabama Power Co.		3.75		03/01/45		396,213
	475	Appalachian Power Co.		3.40		06/01/25		488,646
	425	Baltimore Gas & Electric Co.		2.40		08/15/26		402,741
	175	Black Hills Corp.		3.15		01/15/27		169,552
	250	Boston Gas Co. (a)		4.487		02/15/42		267,862
	495	CMS Energy Corp.		5.05		03/15/22		545,024
	280	CMS Energy Corp.		6.25		02/01/20		308,412
	275	Duke Energy Carolinas LLC		3.75		06/01/45		274,244
	275	Duke Energy Corp.		2.65		09/01/26		261,701
	550	EDP Finance BV (Portugal) (a)		3.625		07/15/24		546,529
	225	Enel Finance International N.V. (Italy) (a)		6.00		10/07/39		268,456
	210	Enel SpA (Italy) (a)		8.75	(d)	09/24/73		250,425
	300	Entergy Arkansas, Inc.		3.50		04/01/26		310,059
	150	Entergy Louisiana LLC		3.05		06/01/31		145,080
	700	Exelon Generation Co., LLC		4.00		10/01/20		730,865
	300	Fortis, Inc., Series WI (Canada)		2.10		10/04/21		294,129
	200	GNL Quintero SA (Chile) (a)		4.634		07/31/29		208,000
	450	NextEra Energy Capital Holdings, Inc.		3.55		05/01/27		458,072
	275	Oncor Electric Delivery Co., LLC		2.95		04/01/25		275,012
	325	Origin Energy Finance Ltd. (Australia) (a)		3.50		10/09/18		328,842

See Notes to Financial Statements
29

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)			COUPON RATE			MATURITY DATE			VALUE
$	590	Puget Energy, Inc.		6.50	%	12/15/20			$	660,035
	250	South Carolina Electric & Gas Co.		4.50		06/01/64				251,198
	525	Trans-Allegheny Interstate Line Co. (a)		3.85		06/01/25				545,334
	396	TransAlta Corp. (Canada)		4.50		11/15/22				401,148
	475	Virginia Electric & Power Co., Series B		4.20		05/15/45				500,732
	250	Xcel Energy, Inc.		3.30		06/01/25				252,629
										9,540,940
		Total Corporate Bonds (Cost $94,280,519)								97,375,996
		Sovereign (0.5%)
	550	Sinopec Group Overseas Development 2015 Ltd. (China) (a) (Cost $548,460)		2.50		04/28/20				552,963
		Asset-Backed Security (0.1%)
	98	CVS Pass-Through Trust (a) (Cost $97,686)		8.353		07/10/31				126,230
		Short-Term Investments (2.5%)
		U.S. Treasury Security (0.9%)
	889	U.S. Treasury Bill (f)(g) (Cost $880,413)		1.191		04/26/18				880,512
NUMBER OF SHARES (000)
		Investment Company (1.6%)
		1,662Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (See Note 8) (Cost $1,661,891)								1,661,891
		Total Short-Term Investments (Cost $2,542,304)								2,542,403
		Total Investments (Cost $97,468,969) (h)(i)					99.5	%		100,597,592
		Other Assets in Excess of Liabilities					0.5			460,743
		Net Assets					100.0	%	$	101,058,335

  MTN  Medium Term Note.

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

  (b)  Capital appreciation bond.

See Notes to Financial Statements
30

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

  (c)  When-issued security.

  (d)  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 June 30, 2017.

  (e)  Perpetual - One or more securities do not have a predetermined maturity date. Rates for these securities are fixed for a period of time, after which they revert to a floating rate. Interest rates in effect are as of June 30, 2017.

  (f)  Rate shown is the yield to maturity at June 30, 2017.

  (g)  All or a portion of the security was pledged to cover margin requirements for futures contracts and swap agreements.

  (h)  Securities are available for collateral in connection with purchase of when-issued securities, open futures contracts and swap agreements.

  (i)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $3,787,865 and the aggregate gross unrealized depreciation is $659,242, resulting in net unrealized appreciation of $3,128,623.

FUTURES CONTRACTS OPEN AT JUNE 30, 2017:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	76	Long	U.S. Treasury 2 yr. Note, Sep-17	$	16,424,313		$	(25,094	)
	20	Long	U.S. Treasury 30 yr. Bond, Sep-17		3,073,750			25,156
	10	Long	U.S. Treasury Ultra Bond, Sep-17		1,658,750			28,484
	17	Short	U.S. Treasury 5 yr. Note, Sep-17		(2,003,211	)		8,391
	29	Short	U.S. Treasury 10 yr. Ultra Long Bond, Sep-17		(3,909,563	)		8,220
	32	Short	U.S. Treasury 10 yr. Note, Sep-17		(4,017,000	)		9,031
Net Unrealized Appreciation							$	54,188

See Notes to Financial Statements
31

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n June 30, 2017 (unaudited)continued

CREDIT DEFAULT SWAP AGREEMENTS OPEN AT JUNE 30, 2017:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000)		INTEREST RATE			TERMINATION DATE	UNREALIZED DEPRECIATION			UPFRONT PAYMENTS PAID (RECEIVED)			VALUE			CREDIT RATING OF REFERENCE OBLIGATION†
Barclays Bank PLC Quest Diagnostics, Inc.	Buy	$	845		1.00	%	3/20/19	$	(29,867	)	$	16,217		$	(13,650	)	BBB+
Morgan Stanley & Co., LLC*  CDX.NA.HY.27	Buy		2,054		5.00		12/20/21		(71,682	)		(85,582	)		(157,264	)	NR
Total Credit Default Swaps		$	2,899					$	(101,549	)	$	(69,365	)	$	(170,914	)

INTEREST RATE SWAP AGREEMENT OPEN AT JUNE 30, 2017:

SWAP COUNTERPARTY

NOTIONAL AMOUNT (000)

FLOATING RATE INDEX

PAY/RECEIVE FLOATING RATE

FIXED RATE

TERMINATION DATE

UNREALIZED DEPRECIATION

Morgan Stanley & Co., LLC*

5,897

3 Month LIBOR

Receive

2.48

%

12/21/26

$

(110,977

)

  LIBOR    London Interbank Offered Rate.

  NR    Not rated.

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

  *    Cleared swap agreement, the broker is Morgan Stanley & Co., LLC.

LONG TERM CREDIT ANALYSIS+

AAA	3.0	%
AA	9.4
A	44.1
BBB	37.2
BB	1.7
B or Below	1.2
Not Rated	3.4
	100.0	%++

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

++  Does not include open long/short futures contracts with an underlying face amount of $31,086,587 with net unrealized appreciation of $54,188. Does not include open swap agreements with total unrealized depreciation of $212,526.

See Notes to Financial Statements
32

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n June 30, 2017 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (98.1%) Denmark (2.4%)
		Pharmaceuticals
	17,417	Novo Nordisk A/S, Series B	$	745,868
		France (16.6%)
		Aerospace & Defense
	10,607	Airbus SE		872,264
		Banks
	13,201	BNP Paribas SA		950,788
		Electrical Equipment
	10,348	Schneider Electric SE		795,062
		Hotels, Restaurants & Leisure
	13,393	Accor SA		627,857
		Insurance
	28,049	AXA SA		767,266
		Media
	8,353	Publicis Groupe SA		623,082
		Multi-Utilities
	32,927	Suez		609,807
		Total France		5,246,126
		Germany (16.6%)
		Auto Components
	2,330	Continental AG		502,835
		Automobiles
	8,054	Daimler AG (Registered)		582,933
		Chemicals
	7,247	Symrise AG		513,349
		Health Care Providers & Services
	9,521	Fresenius SE & Co., KGaA		816,233
		Industrial Conglomerates
	7,198	Siemens AG (Registered)		989,421
		Pharmaceuticals
	6,762	Bayer AG (Registered)		874,268
		Software
	9,114	SAP SE		951,954
		Total Germany		5,230,993

NUMBER OF SHARES			VALUE
		Ireland (1.9%)
		Construction Materials
	17,231	CRH PLC	$	609,600
		Italy (1.5%)
		Capital Markets
	23,622	Azimut Holding SpA (a)		473,496
		Netherlands (11.9%)
		Banks
	49,586	ING Groep N.V.		855,183
		Diversified Telecommunication Services
	177,008	Koninklijke KPN N.V.		566,277
		Personal Products
	15,027	Unilever N.V. CVA		829,320
		Professional Services
	35,792	RELX N.V.		735,837
		Semiconductors & Semiconductor Equipment
	5,919	ASML Holding N.V.		771,360
		Total Netherlands		3,757,977
		Spain (1.0%)
		Information Technology Services
	5,279	Amadeus IT Group SA, Class A		315,639
		Sweden (2.0%)
		Machinery
	36,765	Volvo AB, Class B		626,664
		Switzerland (15.8%)
		Food Products
	18,297	Nestle SA (Registered)		1,592,329
		Insurance
	2,530	Zurich Insurance Group AG		736,389
		Pharmaceuticals
	13,468	Novartis AG (Registered)		1,120,812
	4,400	Roche Holding AG (Genusschein)		1,120,534
				2,241,346

See Notes to Financial Statements
33

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n June 30, 2017 (unaudited)continued

NUMBER OF SHARES					VALUE
		Textiles, Apparel & Luxury Goods
	1,151	Swatch Group AG (The)			$	425,038
		Total Switzerland				4,995,102
		United Kingdom (28.4%)
		Banks
	220,329	Barclays PLC				581,827
	685,192	Lloyds Banking Group PLC				590,341
						1,172,168
		Diversified Telecommunication Services
	111,598	BT Group PLC				428,421
		Equity Real Estate Investment Trusts (REITs)
	42,644	Great Portland Estates PLC REIT				331,584
		Household Products
	8,883	Reckitt Benckiser Group PLC				900,582
		Insurance
	44,267	Prudential PLC				1,015,314
		Oil, Gas & Consumable Fuels
	158,591	BP	PL	C		914,634
	35,027	Royal Dutch Shell PLC, Class A				928,385
						1,843,019
		Pharmaceuticals
	32,966	GlaxoSmithKline PLC				702,227
		Tobacco
	15,892	British American Tobacco PLC				1,083,361
	15,302	Imperial Brands PLC				687,289
						1,770,650
		Wireless Telecommunication Services
	286,191	Vodafone Group PLC				811,662
		Total United Kingdom				8,975,627
		Total Common Stocks(Cost $22,311,214)				30,977,092

NUMBER OF SHARES (000)			VALUE
		Short-Term Investments (1.6%) Securities held as Collateral on Loaned Securities
		Investment Company (1.2%)
	389	Morgan Stanley Institutional Liquidity Funds - Treasury Securities Portfolio - Institutional Class (See Note 8)	$	388,667
PRINCIPAL AMOUNT (000)
		Repurchase Agreements (0.4%)
$	47	Barclays Capital, Inc. (1.08%, dated 06/30/17, due 07/03/17; proceeds $47,128; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 06/30/22 - 08/15/42; valued at $48,066)		47,124
	43	HSBC Securities USA, Inc. (1.06%, dated 06/30/17, due 07/03/17; proceeds $43,135; fully collateralized by a U.S. Government agency security; 5.00% due 06/01/47; valued at $44,008)		43,131

See Notes to Financial Statements
34

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n June 30, 2017 (unaudited)continued

PRINCIPAL AMOUNT (000)					VALUE
$	31	HSBC Securities USA, Inc. (1.07%, dated 06/30/17, due 07/03/17; proceeds $30,811; fully collateralized by a U.S. Government agency security; 5.00% due 06/01/47; valued at $31,437)			$	30,808
						121,063
		Total Short-Term Investments(Cost $509,730)				509,730
Total Investments(Cost $22,820,944) (b)			99.7	%		31,486,822
Other Assets in Excess of Liabilities			0.3			80,049
Net Assets			100.0	%	$	31,566,871

Country assignments and aggregations are based generally on third party vendor classifications and information, and may be different from the assignments and aggregations under the policies set forth in the Fund's prospectus and/or statement of additional information relating to geographic classifications.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

  (a)  All or a portion of this security was on loan at June 30, 2017.

  (b)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $10,051,239 and the aggregate gross unrealized depreciation is $1,385,361, resulting in net unrealized appreciation of $8,665,878.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Pharmaceuticals	$	4,563,709			14.7	%
Banks		2,978,139			9.6
Insurance		2,518,969			8.1
Oil, Gas & Consumable Fuels		1,843,019			6.0
Tobacco		1,770,650			5.7
Food Products		1,592,329			5.1
Diversified Telecommunication Services		994,698			3.2
Industrial Conglomerates		989,421			3.2
Software		951,954			3.1
Household Products		900,582			2.9
Aerospace & Defense		872,264			2.8
Personal Products		829,320			2.7
Health Care Providers & Services		816,233			2.6
Wireless Telecommunication Services		811,662			2.6
Electrical Equipment		795,062			2.6
Semiconductors & Semiconductor Equipment		771,360			2.5
Professional Services		735,837			2.4
Hotels, Restaurants & Leisure		627,857			2.0
Machinery		626,664			2.0
Media		623,082			2.0
Multi-Utilities		609,807			2.0
Construction Materials		609,600			2.0
Automobiles		582,933			1.9
Chemicals		513,349			1.7
Auto Components		502,835			1.6
Capital Markets		473,496			1.5
Textiles, Apparel & Luxury Goods		425,038			1.4
Equity Real Estate Investment Trusts (REITs)		331,584			1.1
Information Technology Services		315,639			1.0
	$	30,977,092	+		100.0	%

+  Does not reflect the value of securities held as collateral on loaned securities.

See Notes to Financial Statements
35

Morgan Stanley Variable Investment Series - Multi Cap Growth

Portfolio of Investments n June 30, 2017 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (92.2%)
		Automobiles (1.5%)
	10,079	Tesla, Inc. (a)(b)	$	3,644,667
		Biotechnology (1.2%)
	17,980	Alnylam Pharmaceuticals, Inc. (b)		1,434,085
	26,609	Intrexon Corp. (a)(b)		641,011
	24,595	Juno Therapeutics, Inc. (a)(b)		735,144
				2,810,240
		Health Care Equipment & Supplies (4.9%)
	12,682	Intuitive Surgical, Inc. (b)		11,862,362
		Health Care Technology (12.2%)
	116,337	athenahealth, Inc. (b)		16,351,165
	213,566	Veeva Systems, Inc., Class A (b)		13,093,732
				29,444,897
		Hotels, Restaurants & Leisure (8.3%)
	231,282	Shake Shack, Inc., Class A (a)(b)		8,067,116
	203,459	Starbucks Corp.		11,863,695
				19,930,811
		Information Technology Services (7.2%)
	88,644	Mastercard, Inc., Class A		10,765,814
	71,522	Visa, Inc., Class A		6,707,333
				17,473,147
		Internet & Direct Marketing Retail (13.6%)
	21,265	Amazon.com, Inc. (b)		20,584,520
	6,458	Priceline Group, Inc. (The) (b)		12,079,818
				32,664,338
		Internet Software & Services (20.3%)
	31,886	Alibaba Group Holding Ltd. ADR (China) (b)		4,492,737

NUMBER OF SHARES			VALUE
	16,335	Alphabet, Inc., Class C (b)	$	14,844,104
	137,120	Facebook, Inc., Class A (b)		20,702,378
	114,200	Tencent Holdings Ltd. (China) (c)		4,083,874
	272,699	Twitter, Inc. (b)		4,873,131
				48,996,224
		Life Sciences Tools & Services (4.9%)
	67,992	Illumina, Inc. (b)		11,797,972
		Semiconductors & Semiconductor Equipment (3.2%)
	53,377	NVIDIA Corp.		7,716,179
		Software (14.9%)
	136,265	Salesforce.com, Inc. (b)		11,800,549
	112,646	ServiceNow, Inc. (b)		11,940,476
	46,158	Snap, Inc., Class A (a)(b)		820,228
	116,865	Workday, Inc., Class A (b)		11,335,905
				35,897,158
		Total Common Stocks(Cost $121,834,508)		222,237,995
		Preferred Stocks (4.8%)
		Electronic Equipment, Instruments & Components (0.2%)
	18,954	Magic Leap, Series C (b)(d)(e)(f) (acquisition cost - $436,567; acquired 12/22/15)		471,955
		Hotels, Restaurants & Leisure (0.6%)
	114,561	Blue Bottle Coffee, Inc., Series B (b)(d)(e)(f) (acquisition cost - $1,657,606; acquired 01/24/14)		1,489,293

See Notes to Financial Statements
36

Morgan Stanley Variable Investment Series - Multi Cap Growth

Portfolio of Investments n June 30, 2017 (unaudited)continued

NUMBER OF SHARES			VALUE
		Internet & Direct Marketing Retail (2.8%)
	42,717	Airbnb, Inc., Series D (b)(d)(e)(f) (acquisition cost - $1,739,139; acquired 04/16/14)	$	4,600,621
	50,711	Uber Technologies, Series G (b)(d)(e)(f) (acquisition cost - $2,473,289; acquired 12/03/15)		2,091,321
				6,691,942
		Life Sciences Tools & Services (1.0%)
	627,809	10X Genomics, Inc., Series B (b)(d)(e)(f) (acquisition cost - $2,052,935; acquired 12/19/14)		2,517,514
		Software (0.2%)
	141,612	Lookout, Inc., Series F (b)(d)(e)(f) (acquisition cost - $1,617,648; acquired 06/17/14)		433,333
		Total Preferred Stocks (Cost $9,977,184)		11,604,037
NOTIONAL AMOUNT (000)
		Call Option Purchased (0.0%)
		Foreign Currency Option
	36,450	USD/CNY November 2017 @ CNY $7.40, Royal Bank of Scotland (Cost $122,384)		22,526

NUMBER OF SHARES (000)			VALUE
		Short-Term Investments (4.0%) Securities held as Collateral on Loaned Securities (1.1%)
		Investment Company (0.8%)
	1,937	Morgan Stanley Institutional Liquidity Funds - Treasury Securities Portfolio - Institutional Class (See Note 8)	$	1,937,435
PRINCIPAL AMOUNT (000)
		Repurchase Agreements (0.3%)
$	235	Barclays Capital, Inc. (1.08%, dated 06/30/17, due 07/03/17; proceeds $234,924; fully collateralized by U.S. Government obligations; 2.13% - 2.75% due 06/30/22 - 08/15/42; valued at $239,603)		234,903
	215	HSBC Securities USA, Inc. (1.06%, dated 06/30/17, due 07/03/17; proceeds $215,019; fully collateralized by a U.S. Government agency security; 5.00% due 06/01/47; valued at $219,373)		215,000
	154	HSBC Securities USA, Inc. (1.07%, dated 06/30/17, due 07/03/17; proceeds $153,585; fully collateralized by a U.S. Government agency security; 5.00% due 06/01/47; valued at $156,707)		153,571
				603,474
		Total Securities held as Collateral on Loaned Securities(Cost $2,540,909)		2,540,909

See Notes to Financial Statements
37

Morgan Stanley Variable Investment Series - Multi Cap Growth

Portfolio of Investments n June 30, 2017 (unaudited)continued

NUMBER OF SHARES (000)					VALUE
		Investment Company (2.9%)
	7,041	Morgan Stanley Institutional Liquidity Funds - Treasury Securities Portfolio - Institutional Class (See Note 8) (Cost $7,041,272)			$	7,041,272
		Total Short-Term Investments(Cost $9,582,181)				9,582,181
Total Investments(Cost $141,516,257)(g)			101.0	%		243,446,739
Liabilities in Excess of Other Assets			(1.0	)		(2,321,958	)
Net Assets			100.0	%	$	241,124,781

ADR  American Depositary Receipt.

  (a)  All or a portion of this security was on loan at June 30, 2017.

  (b)  Non-income producing security.

  (c)  Security trades on the Hong Kong exchange.

  (d)  At June 30, 2017, the Fund held fair valued securities valued at $11,604,037, representing 4.8% 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 Trust's Trustees.

  (e)  Illiquid security.

  (f)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Fund has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2017, amounts to $11,604,037 and represents 4.8% of net assets.

  (g)  At June 30, 2017, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $109,298,012 and the aggregate gross unrealized depreciation is $7,367,530, resulting in net unrealized appreciation of $101,930,482.

Currency Abbreviations:

CNY  Chinese Yuan Renminbi.

USD  United States Dollar.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Internet Software & Services	$	48,996,224			20.3	%
Internet & Direct Marketing Retail		39,356,280			16.3
Software		36,330,491			15.1
Health Care Technology		29,444,897			12.2
Hotels, Restaurants & Leisure		21,420,104			8.9
Information Technology Services		17,473,147			7.3
Life Sciences Tools & Services		14,315,486			6.0
Health Care Equipment & Supplies		11,862,362			4.9
Semiconductors & Semiconductor Equipment		7,716,179			3.2
Investment Company		7,041,272			2.9
Automobiles		3,644,667			1.5
Biotechnology		2,810,240			1.2
Electronic Equipment, Instruments & Components		471,955			0.2
Other		22,526			0.0
	$	240,905,830	+		100.0	%

+  Does not reflect the value of securities held as collateral on loaned securities.

See Notes to Financial Statements
38

Morgan Stanley Variable Investment Series

Financial Statements

Statement of Assets and Liabilities
June 30, 2017 (unaudited)

	Limited Duration			Income Plus		European Equity			Multi Cap Growth
Assets:
Investments in securities, at value*	$	26,248,002		$	98,318,273	$	31,098,155	(1)	$	234,468,032	(1)
Investment in affiliate, at value**		554,333			2,279,319		388,667			8,978,707
Total investments in securities, at value		26,802,335			100,597,592		31,486,822			243,446,739
Cash		95,638			79		—			—
Receivable for:
Interest		135,902			921,136		—			—
Investments sold		—			98,565		441,935			512,746
Foreign withholding taxes reclaimed		—			1,636		140,752			—
Dividends		—			—		59,126			—
Shares of beneficial interest sold		21,069			—		—			—
Premium paid on open swap agreements		—			16,217		—			—
Variation margin on open swap agreements		—			13,558		—			—
Interest and dividends from affiliates		1,055			2,304		105			4,455
Prepaid expenses and other assets		9,941			24,338		13,676			28,002
Total Assets		27,065,940			101,675,425		32,142,416			243,991,942
Liabilities:
Collateral on securities loaned, at value		—			—		509,730			2,540,909
Unrealized depreciation on open swap agreements		—			29,867		—			—
Payable to bank		—			—		1,821			—
Payable for:
Investments purchased		95,611			377,684		296			—
Shares of beneficial interest redeemed		15			92,652		3,613			158,257
Advisory fee		6,629			35,097		12,525			83,372
Administration fee		1,777			6,725		2,107			16,253
Distribution fee (Class Y Shares)		4,374			10,452		1,311			10,649
Trustees' fees		1,202			4,537		1,269			9,624
Variation margin on open futures contracts		8,033			1,423		—			—
Transfer agent fees		255			269		260			274
Accrued expenses and other payables		45,956			58,384		42,613			47,823
Total Liabilities		163,852			617,090		575,545			2,867,161
Net Assets	$	26,902,088		$	101,058,335	$	31,566,871		$	241,124,781
Composition of Net Assets:
Paid-in-capital	$	34,897,636		$	92,193,760	$	29,248,682		$	97,710,200
Net unrealized appreciation (depreciation)		214,519			2,970,285		8,668,169			101,930,482
Accumulated undistributed net investment income (net investment loss)		738,902			5,113,354		1,486,420			(450,259	)
Accumulated net realized gain (loss)		(8,948,969	)		780,936		(7,836,400	)		41,934,358
Net Assets	$	26,902,088		$	101,058,335	$	31,566,871		$	241,124,781
* Cost	$	26,021,636		$	95,192,958	$	22,432,277		$	132,537,550
** Affiliated Cost	$	554,055		$	2,276,011	$	388,667		$	8,978,707
Class X Shares:
Net Assets	$	5,727,224		$	51,158,076	$	25,274,768		$	190,767,682
Shares Outstanding (unlimited shares authorized, $0.01 par value)		740,183			4,391,167		1,441,817			3,648,212
Net Asset Value Per Share	$	7.74		$	11.65	$	17.53		$	52.29
Class Y Shares:
Net Assets	$	21,174,864		$	49,900,259	$	6,292,103		$	50,357,099
Shares Outstanding (unlimited shares authorized, $0.01 par value)		2,743,802			4,298,393		360,019			993,110
Net Asset Value Per Share	$	7.72		$	11.61	$	17.48		$	50.71

⁽¹⁾  Including securities loaned at value of $478,592 and $6,111,909.

See Notes to Financial Statements
39

Morgan Stanley Variable Investment Series

Financial Statements continued

Statement of Operations
For the six months ended June 30, 2017 (unaudited)

	Limited Duration			Income Plus			European Equity			Multi Cap Growth
Net Investment Income:
Income
Interest	$	352,815		$	1,994,516		$	—		$	—
Dividends†		—			—			760,969			165,683
Income from securities loaned - net		—			—			4,807			95,038
Interest and dividends from affiliates (Note 8)		3,509			17,636			641			15,178
Total Income		356,324			2,012,152			766,417			275,899
†Net of foreign withholding taxes		—			—			92,053			—
Expenses
Advisory fee (Note 4)		40,989			215,804			131,863			477,974
Professional fees		54,471			54,792			45,612			49,373
Distribution fee (Class Y shares) (Note 5)		27,000			64,109			7,545			59,975
Administration fee (Note 4)		10,930			41,105			12,125			91,043
Custodian fees		5,603			10,553			11,005			7,421
Shareholder reports and notices		3,979			8,742			4,036			15,357
Trustees' fees and expenses		1,688			1,682			1,695			3,778
Transfer agent fees and expenses (Note 6)		1,744			1,773			1,763			1,804
Other		18,359			26,302			7,377			12,240
Total Expenses		164,763			424,862			223,021			718,965
Less: amounts waived (Note 4)		—			—			(63,910	)		(10,265	)
Less: rebate from Morgan Stanley affiliated cash sweep (Note 8)		(201	)		(924	)		(221	)		(4,604	)
Net Expenses		164,562			423,938			158,890			704,096
Net Investment Income (Loss)		191,762			1,588,214			607,527			(428,197	)
Realized and Unrealized Gain (Loss):
Realized Gain (Loss) on:
Investments		14,564			1,136,587			744,120			19,229,848
Investments in affiliates (Note 8)		(417	)		—			—			—
Futures contracts		46,092			15,776			—			—
Swap agreements		—			(138,450	)		—			—
Foreign currency translation		—			—			5,123			(13	)
Net Realized Gain		60,239			1,013,913			749,243			19,229,835
Change in Unrealized Appreciation (Depreciation) on:
Investments		72,162			1,518,416			2,874,205			37,770,556
Investments in affiliates (Note 8)		2,249			28,052			—			—
Futures contracts		(7,875	)		38,180			—			—
Swap agreements		—			(66,845	)		—			—
Foreign currency translation		—			—			10,426			—
Net Change in Unrealized Appreciation (Depreciation)		66,536			1,517,803			2,884,631			37,770,556
Net Gain		126,775			2,531,716			3,633,874			57,000,391
Net Increase	$	318,537		$	4,119,930		$	4,241,401		$	56,572,194

See Notes to Financial Statements
40

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Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets

	Limited Duration						Income Plus
	For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016			For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	191,762		$	470,243		$	1,588,214		$	3,950,097
Net realized gain (loss)		60,239			718,166			1,013,913			(184,262	)
Net change in unrealized appreciation (depreciation)		66,536			281,564			1,517,803			3,769,020
Net Increase (Decrease)		318,537			1,469,973			4,119,930			7,534,855
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		—			(98,769	)		—			(2,195,894	)
Class Y shares		—			(286,780	)		—			(1,968,336	)
Net realized gain
Class X shares		—			—			—			(1,365,988	)
Class Y shares		—			—			—			(1,324,001	)
Total Dividends and Distributions		—			(385,549	)		—			(6,854,219	)
Net increase (decrease) from transactions in shares of beneficial interest		(1,463,233	)		(4,255,775	)		(9,196,044	)		(9,093,992	)
Net Increase (Decrease)		(1,144,696	)		(3,171,351	)		(5,076,114	)		(8,413,356	)
Net Assets:
Beginning of period		28,046,784			31,218,135			106,134,449			114,547,805
End of Period	$	26,902,088		$	28,046,784		$	101,058,335		$	106,134,449
Accumulated Undistributed Net Investment Income (Loss)	$	738,902		$	547,140		$	5,113,354		$	3,525,140

See Notes to Financial Statements
42

	European Equity						Multi Cap Growth
	For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016			For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	607,527		$	909,644		$	(428,197	)	$	(108,661	)
Net realized gain (loss)		749,243			24,461			19,229,835			22,946,720
Net change in unrealized appreciation (depreciation)		2,884,631			(1,898,801	)		37,770,556			(31,186,518	)
Net Increase (Decrease)		4,241,401			(964,696	)		56,572,194			(8,348,459	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		—			(747,146	)		—			—
Class Y shares		—			(157,314	)		—			—
Net realized gain
Class X shares		—			—			—			(27,887,923	)
Class Y shares		—			—			—			(7,755,377	)
Total Dividends and Distributions		—			(904,460	)		—			(35,643,300	)
Net increase (decrease) from transactions in shares of beneficial interest		(1,965,132	)		(3,964,224	)		(18,585,243	)		6,930,617
Net Increase (Decrease)		2,276,269			(5,833,380	)		37,986,951			(37,061,142	)
Net Assets:
Beginning of period		29,290,602			35,123,982			203,137,830			240,198,972
End of Period	$	31,566,871		$	29,290,602		$	241,124,781		$	203,137,830
Accumulated Undistributed Net Investment Income (Loss)	$	1,486,420		$	878,893		$	(450,259	)	$	(22,062	)

43

Morgan Stanley Variable Investment Series

Financial Statements continued

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

	Limited Duration						Income Plus
	For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016			For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016
	(unaudited)						(unaudited)
Class X Shares
Shares
Sold		16,126			25,123			44,578			60,941
Reinvestment of dividends and distributions		—			13,030			—			317,176
Redeemed		(52,649	)		(179,486	)		(438,546	)		(759,941	)
Net Increase (Decrease) - Class X		(36,523	)		(141,333	)		(393,968	)		(381,824	)
Amount
Sold	$	124,417		$	190,388		$	510,629		$	699,340
Reinvestment of dividends and distributions		—			98,769			—			3,561,882
Redeemed		(404,594	)		(1,359,299	)		(4,985,624	)		(8,655,005	)
Net Increase (Decrease) - Class X	$	(280,177	)	$	(1,070,142	)	$	(4,474,995	)	$	(4,393,783	)
Class Y Shares
Shares
Sold		46,211			65,366			34,236			151,270
Reinvestment of dividends and distributions		—			37,834			—			293,435
Redeemed		(199,994	)		(524,599	)		(447,458	)		(858,057	)
Net Increase (Decrease) - Class Y		(153,783	)		(421,399	)		(413,222	)		(413,352	)
Amount
Sold	$	353,667		$	495,273		$	387,997		$	1,718,702
Reinvestment of dividends and distributions		—			286,780			—			3,292,337
Redeemed		(1,536,723	)		(3,967,686	)		(5,109,046	)		(9,711,248	)
Net Increase (Decrease) - Class Y	$	(1,183,056	)	$	(3,185,633	)	$	(4,721,049	)	$	(4,700,209	)

See Notes to Financial Statements
44

	European Equity						Multi Cap Growth
	For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016			For The Six Months Ended June 30, 2017			For The Year Ended December 31, 2016
	(unaudited)						(unaudited)
Class X Shares
Shares
Sold		5,577			37,160			5,918			28,421
Reinvestment of dividends and distributions		—			49,611			—			697,896
Redeemed		(102,818	)		(306,282	)		(301,076	)		(520,195	)
Net Increase (Decrease) - Class X		(97,241	)		(219,511	)		(295,158	)		206,122
Amount
Sold	$	93,978		$	572,744		$	285,366		$	1,331,784
Reinvestment of dividends and distributions		—			747,146			—			27,887,923
Redeemed		(1,693,620	)		(4,676,503	)		(14,432,088	)		(22,959,763	)
Net Increase (Decrease) - Class X	$	(1,599,642	)	$	(3,356,613	)	$	(14,146,722	)	$	6,259,944
Class Y Shares
Shares
Sold		1,733			4,655			5,535			15,945
Reinvestment of dividends and distributions		—			10,453			—			199,624
Redeemed		(23,947	)		(54,254	)		(100,084	)		(180,778	)
Net Increase (Decrease) - Class Y		(22,214	)		(39,146	)		(94,549	)		34,791
Amount
Sold	$	30,386		$	69,645		$	238,964		$	689,556
Reinvestment of dividends and distributions		—			157,314			—			7,755,377
Redeemed		(395,876	)		(834,570	)		(4,677,485	)		(7,774,260	)
Net Increase (Decrease) - Class Y	$	(365,490	)	$	(607,611	)	$	(4,438,521	)	$	670,673

45

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited)

1. Organization and Accounting Policies

Morgan Stanley Variable Investment Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust is offered exclusively to life insurance companies in connection with particular life insurance and/or annuity contracts they offer. The Trust applies investment company accounting and reporting guidance.

The Trust, organized on February 25, 1983 as a Massachusetts business trust, consists of four funds ("Funds") which commenced operations as follows:

FUND	COMMENCEMENT OF OPERATIONS	FUND	COMMENCEMENT OF OPERATIONS
Limited Duration	May 4, 1999	European Equity	March 1, 1991
Income Plus	March 1, 1987	Multi Cap Growth	March 9, 1984

Each Fund is classified as diversified. On June 5, 2000, the Trust commenced offering one additional class of shares (Class Y shares). Each Fund currently offers two share classes — Class X shares and 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 Fund are as follows:

FUND	INVESTMENT OBJECTIVE
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 by investing primarily in U.S. government securities and other fixed-income securities. As a secondary objective, the Fund seeks capital appreciation but only when consistent with its primary objective.
European Equity	Seeks to maximize the capital appreciation of its investments.
Multi Cap Growth	Seeks, as its primary objective, growth of capital through investments in common stocks of companies believed by the "Adviser" Morgan Stanley Investment Management Inc. to have potential for superior growth. As a secondary objective, the Fund seeks income but only when consistent with its primary objective.

46

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

The following is a summary of significant accounting policies:

A. Valuation of Investments — (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (3) futures are valued at the settlement price on the exchange on which they trade or, if a settlement price is unavailable, at the last sale price on the exchange; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between its latest bid and ask prices. Unlisted options are valued at the mean between their latest bid and ask prices from a broker/dealer or valued by a pricing service/vendor; (5) OTC swaps may be valued by an outside pricing service approved by the Trust's Board of Trustees (the "Trustees") or quotes from a broker or dealer. Swaps cleared on a clearinghouse or exchange may be valued using the closing price provided by the clearinghouse or exchange; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the New York Stock Exchange ("NYSE"); (7) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Trustees. The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads, and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest

47

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available in the relevant exchanges; (8) when market quotations are not readily available, including circumstances under which the Adviser or Morgan Stanley Investment Management Limited (the "Sub-Adviser"), a wholly-owned subsidiary of Morgan Stanley, determine that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the 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 Trustees or by the Adviser using a pricing service and/or procedures approved by the Trustees; and (9) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day.

The Trustees have responsibility for determining in good faith the fair value of the investments, and the Trustees may appoint others, such as the Trust's Adviser or a valuation committee, to assist the Trustees in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Trustees. Under procedures approved by the Trustees, the Trust's Adviser has formed a Valuation Committee whose members are approved by the Trustees. The Valuation Committee provides administration and oversight of the Trust's valuation policies and procedures, which are reviewed at least annually by the Trustees. These procedures allow the Trust to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Trust has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which

48

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

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 Trust 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 — Certain Funds may enter into repurchase agreements under which the Fund lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis 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. In the event of default on the obligation to repurchase, the Fund 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 cost and delays. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

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.

49

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

E. Foreign Currency Translation and Foreign Investments — The books and records of the Funds are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

—  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

—  investment transactions and investment income at the prevailing rates of exchange on the dates of  such transactions.

Although the net assets of the Funds are presented at the foreign exchange rates and market values at the close of the period, the Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Funds do not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statements of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statements of Operations.

F. Restricted Securities — Certain Funds may invest in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that

50

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

the Fund can sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and the acquirer of the securities. The Fund would, in either case, bear market risks during that period. Restricted securities, if any, are identified in the Portfolio of Investments.

G. When-Issued/Delayed Delivery Securities — Certain Funds may purchase or sell when-issued and delayed delivery securities. Securities purchased on a when-issued or delayed delivery basis are purchased for delivery beyond the normal settlement date at a stated price, and no income accrues to the Fund on such securities prior to delivery date. Payment and delivery for when-issued and delayed delivery securities can take place a month or more after the date of the transaction. When a Fund enters into a purchase transaction on a when-issued or delayed delivery basis, securities are available for collateral in an amount at least equal in value to a Fund's commitments to purchase such securities. Purchasing securities on a when-issued or delayed delivery basis may involve a risk that the market price at the time of delivery may be lower than the agreed upon purchase price, in which case there could be an unrealized loss at the time of delivery. Purchasing investments on a when-issued or delayed delivery basis may be considered a form of leverage which may increase the impact that gains (losses) may have on a Fund.

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

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Fund's Statement of Operations.

A Fund has the right under the lending agreement to recover the securities from the borrower on demand.

51

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2017.

	GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES
FUND	GROSS ASSET AMOUNTS PRESENTED IN STATEMENTS OF ASSETS AND LIABILITIES			FINANCIAL INSTRUMENT		COLLATERAL RECEIVED			NET AMOUNT (NOT LESS THAN 0)
European Equity	$	478,592	(a)	$	—	$	(478,592	)(b)(d)	$	0
Multi Cap Growth		6,111,909	(a)		—		(6,111,909	)(c)(d)		0

^(a)  Represents market value of loaned securities at period end.

^(b)  The Fund received cash collateral of $509,730, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments.

^(c)  The Fund received cash collateral of $2,540,909, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Fund received non-cash collateral of $3,709,072 in the form of U.S. Government obligations, which the Fund cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investment.

^(d)  The actual collateral received is greater than the amount shown here due to overcollateralization.

FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures", is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following tables display a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2017.

	REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS
FUND	OVERNIGHT AND CONTINUOUS		<30 DAYS		BETWEEN 30 & 90 DAYS		>90 DAYS		TOTAL
European Equity
Securities Lending Transactions
Common Stocks	$	509,730	$	—	$	—	$	—	$	509,730
Total Borrowings	$	509,730	$	—	$	—	$	—	$	509,730
Gross amount of recognized liabilities for securities lending transactions									$	509,730

52

Morgan Stanley Variable Investment Series

Notes to Financial Statements nJune 30, 2017 (unaudited) continued

	REMAINING CONTRACTUAL MATURITY OF THE AGREEMENTS
FUND	OVERNIGHT AND CONTINUOUS		<30 DAYS		BETWEEN 30 & 90 DAYS		>90 DAYS		TOTAL
Multi Cap Growth
Securities Lending Transactions
Common Stocks	$	2,540,909	$	—	$	—	$	—	$	2,540,909
Total Borrowings	$	2,540,909	$	—	$	—	$	—	$	2,540,909
Gross amount of recognized liabilities for securities lending transactions									$	2,540,909

I. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid annually. Net realized capital gains, if any, are distributed at least annually.

J. Expenses — Direct expenses are charged to the respective Fund and general Trust expenses are allocated on the basis of relative net assets or equally among the Funds.

K. 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.

L. Indemnifications — The Trust enters into contracts that contain a variety of indemnifications. The Trust's maximum exposure under these arrangements is unknown. However, the Trust 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^TM ("ASC") 820, "Fair Value Measurement" ("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

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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.)

•  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 each Fund's investments as of June 30, 2017.

Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Limited Duration
Assets:
Fixed Income Securities
Corporate Bonds	$	—	$	19,771,602	$	—	$	19,771,602
Asset-Backed Securities		—		4,368,302		—		4,368,302
Mortgages — Other		—		1,153,641		—		1,153,641
Commercial Mortgage-Backed Securities		—		663,236		—		663,236
Sovereign		—		244,578		—		244,578
Collateralized Mortgage Obligations — Agency Collateral Series		—		239,621		—		239,621
Agency Fixed Rate Mortgages		—		81,014		—		81,014
Total Fixed Income Securities		—		26,521,994		—		26,521,994

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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	$	—		$	50,513		$	—	$	50,513
Investment Company		229,828			—			—		229,828
Total Short-Term Investments		229,828			50,513			—		280,341
Total Assets		229,828			26,572,507			—		26,802,335
Liabilities:
Futures Contracts		(12,125	)		—			—		(12,125	)
Total	$	217,703		$	26,572,507		$	—	$	26,790,210
Income Plus
Assets:
Fixed Income Securities
Corporate Bonds	$	—		$	97,375,996		$	—	$	97,375,996
Sovereign		—			552,963			—		552,963
Asset-Backed Security		—			126,230			—		126,230
Total Fixed Income Securities		—			98,055,189			—		98,055,189
Short-Term Investments
U.S. Treasury Security		—			880,512			—		880,512
Investment Company		1,661,891			—			—		1,661,891
Total Short-Term Investments		1,661,891			880,512			—		2,542,403
Futures Contracts		79,282			—			—		79,282
Total Assets		1,741,173			98,935,701			—		100,676,874
Liabilities:
Futures Contract		(25,094	)		—			—		(25,094	)
Credit Default Swap Agreements		—			(101,549	)		—		(101,549	)
Interest Rate Swap Agreement		—			(110,977	)		—		(110,977	)
Total Liabilities		(25,094	)		(212,526	)		—		(237,620	)
Total	$	1,716,079		$	98,723,175		$	—	$	100,439,254

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Investment Type	Level 1 Unadjusted Quoted Prices		Level 2 Other Significant Observable Inputs		Level 3 Significant Unobservable Inputs		Total
European Equity
Assets:
Common Stocks
Aerospace & Defense	$	872,264	$	—	$	—	$	872,264
Auto Components		502,835		—		—		502,835
Automobiles		582,933		—		—		582,933
Banks		2,978,139		—		—		2,978,139
Capital Markets		473,496		—		—		473,496
Chemicals		513,349		—		—		513,349
Construction Materials		609,600		—		—		609,600
Diversified Telecommunication Services		994,698		—		—		994,698
Electrical Equipment		795,062		—		—		795,062
Equity Real Estate Investment Trusts (REITs)		331,584		—		—		331,584
Food Products		1,592,329		—		—		1,592,329
Health Care Providers & Services		816,233		—		—		816,233
Hotels, Restaurants & Leisure		627,857		—		—		627,857
Household Products		900,582		—		—		900,582
Industrial Conglomerates		989,421		—		—		989,421
Information Technology Services		315,639		—		—		315,639
Insurance		2,518,969		—		—		2,518,969
Machinery		626,664		—		—		626,664
Media		623,082		—		—		623,082
Multi-Utilities		609,807		—		—		609,807
Oil, Gas & Consumable Fuels		1,843,019		—		—		1,843,019
Personal Products		829,320		—		—		829,320
Pharmaceuticals		4,563,709		—		—		4,563,709
Professional Services		735,837		—		—		735,837
Semiconductors & Semiconductor Equipment		771,360		—		—		771,360
Software		951,954		—		—		951,954
Textiles, Apparel & Luxury Goods		425,038		—		—		425,038
Tobacco		1,770,650		—		—		1,770,650
Wireless Telecommunication Services		811,662		—		—		811,662
Total Common Stocks		30,977,092		—		—		30,977,092

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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
Investment Company	$	388,667	$	—	$	—	$	388,667
Repurchase Agreements		—		121,063		—		121,063
Total Short-Term Investments		388,667		121,063		—		509,730
Total Assets	$	31,365,759	$	121,063	$	—	$	31,486,822
Multi Cap Growth
Assets:
Common Stocks
Automobiles	$	3,644,667	$	—	$	—	$	3,644,667
Biotechnology		2,810,240		—		—		2,810,240
Health Care Equipment & Supplies		11,862,362		—		—		11,862,362
Health Care Technology		29,444,897		—		—		29,444,897
Hotels, Restaurants & Leisure		19,930,811		—		—		19,930,811
Information Technology Services		17,473,147		—		—		17,473,147
Internet & Direct Marketing Retail		32,664,338		—		—		32,664,338
Internet Software & Services		48,996,224		—		—		48,996,224
Life Sciences Tools & Services		11,797,972		—		—		11,797,972
Semiconductors & Semiconductor Equipment		7,716,179		—		—		7,716,179
Software		35,897,158		—		—		35,897,158
Total Common Stocks		222,237,995		—		—		222,237,995
Preferred Stocks		—		—		11,604,037		11,604,037
Call Option Purchased		—		22,526		—		22,526
Short-Term Investments
Investment Company		8,978,707		—		—		8,978,707
Repurchase Agreements		—		603,474		—		603,474
Total Short-Term Investments		8,978,707		603,474		—		9,582,181
Total Assets	$	231,216,702	$	626,000	$	11,604,037	$	243,446,739

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Trust recognizes transfers between the levels as of the end of the period. As of June 30, 2017, the Trust did not have any investments transfer between investment levels.

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

	Multi Cap Growth
	Preferred Stocks
Beginning Balance	$	12,235,135
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(631,098	)
Realized gains (losses)		—
Ending Balance	$	11,604,037
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2017	$	(631,098	)

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2017. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

Multi Cap Growth

	Fair Value at June 30, 2017		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Electronic Equipment, Instuments & Components
Preferred Stock	$	471,955	Discounted Cash Flow	Weighted Average Cost of Capital		25.0	%	27.0	%		26.0	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		12.0	x	20.8	x		12.0	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease

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	Fair Value at June 30, 2017		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Hotels, Restaurants &Leisure
Preferred Stock	$	1,489,293	Discounted Cash Flow	Weighted Average Cost of Capital		20.0	%	22.0	%		21.0	%	Decrease
				Perpetual Growth Rate		2.5	%	3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.2	x	5.7	x		2.5	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Internet & Direct Marketing Retail
Preferred Stocks	$	4,600,621	Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%	17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		9.7	x	15.5	x		9.7	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
	$	2,091,321	Discounted Cash Flow	Weighted Average Cost of Capital		17.0	%	19.0	%		18.0	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.1	x	8.3	x		2.2	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease

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	Fair Value at June 30, 2017		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Life Sciences Tools &Services
Preferred Stock	$	2,517,514	Discounted Cash Flow	Weighted Average Cost of Capital		25.5	%	27.5	%		26.5	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.4	x	3.3	x		3.2	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Software
Preferred Stock	$	433,333	Discounted Cash Flow	Weighted Average Cost of Capital		19.0	%	21.0	%		20.0	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		4.8	x	6.6	x		5.0	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease

3. Derivatives

Certain Funds may, but are not required to, 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, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. 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

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investment techniques and risk analyses different from those associated with other portfolio investments. All of a Fund'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 magnifies the potential for gain and risk of loss. Leverage associated with derivative transactions may cause a Fund 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 ("SEC") rules and regulations, or may cause a Fund to be more volatile than if the Fund had not been leveraged. Although the Adviser and/or Sub-Adviser seek to use derivatives to further the Fund's investment objectives, there is no assurance that the use of derivatives will achieve this result.

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

Options — With respect to options, certain Funds are subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If a Fund buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price during a period of time or on a specified date typically in exchange for a premium paid by a Fund. A Fund may purchase and/or sell put and call options. Purchasing call options tends to increase a Fund's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease a Fund's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, a Fund bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, a Fund may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statements of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If a Fund sells an option, it sells to another party the right to buy from or sell to a Fund a specific amount of the underlying instrument or foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed upon price during a period of time or on a specified date typically in exchange for a premium received by a Fund. When options are purchased OTC, a Fund bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and a Fund may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment

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and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Futures — A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index 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. 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 contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed a Fund's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by a Fund of margin deposits in the event of bankruptcy of a broker with which a Fund has open positions in the futures contract.

Swaps — A Fund may enter into OTC swap contracts or cleared swap transactions. A swap contract 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, indices, reference rates, currencies or other instruments. Typically 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 Fund's obligations or rights under a swap contract 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 party. Cleared swap transactions help reduce counterparty credit risk. In a cleared swap, a Fund's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for OTC swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by a Fund or if the reference index, security or investments do not perform as expected. During the period swap agreements are open, payments are received from or made to the clearinghouse or counterparty based upon changes in the value of the

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contract (variation margin). The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange-trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis.

A Fund's use of swaps during the period included those based on the credit of an underlying security commonly referred to as credit default swaps. A Fund may be either the buyer or seller in a credit default swap. As the buyer in a credit default swap, a Fund would pay to the counterparty the periodic stream of payments. If no default occurs, a Fund would receive no benefit from the contract. As the seller in a credit default swap, a Fund would receive the stream of payments but would be subject to exposure on the notional amount of the swap, which it would be required to pay in the event of default. The use of credit default swaps could result in losses to a Fund if the Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap agreement and take delivery of the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap agreement less the recovery value of the referenced obligation or underlying securities comprising the referenced index. If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap agreement and deliver the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap agreement less the recovery value of the referenced obligation or underlying securities comprising the referenced index. Recovery values are estimated by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specified valuation method, are used to calculate the settlement value. The Fund's maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the swap agreement.

The current credit rating of each individual issuer is listed in the table following the Fund 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.

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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 Fund has an unrealized loss on a swap agreement, the Fund 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.

Upfront payments received or paid by a Fund will be reflected as an asset or liability, respectively, in the Statements of Assets and Liabilities.

FASB ASC 815, "Derivatives and Hedging" ("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 Fund uses derivative instruments, how these derivative instruments are accounted for and their effects on a Fund's financial position and results of operations.

The following table sets forth the fair value of each Fund's derivative contracts by primary risk exposure as of June 30, 2017.

FUND		PRIMARY RISK EXPOSURE	ASSET DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE			LIABILITY DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE
	Limited Duration	Interest Rate Risk	Variation margin on open futures contracts	$	—		Variation margin on open futures contract	$	(12,125	)(e)
	Income Plus	Interest Rate Risk	Variation margin on open futures contracts	$	79,282	(e)	Variation margin on open futures contract	$	(25,094	)(e)
		Credit Risk	Variation margin on open swap agreements		—		Variation margin on open swap agreement		(71,682	)(e)
			Unrealized appreciation on open swap agreements		—		Unrealized depreciation on open swap agreement		(29,867	)
		Interest Rate Risk	Variation margin on open swap agreements		—		Variation margin on open swap agreement		(110,977	)(e)
				$	79,282			$	(237,620	)
	Multi Cap Growth	Currency Risk	Investments, at Value (Option Purchased)	$	22,526	(f)

^(e)  Includes cumulative appreciation (depreciation) as reported in the Portfolio of Investments. Only current day's net variation margin is reported within the Statements of Assets and Liabilities.

^(f)  Amounts are included in Investments in securities in the Statements of Assets and Liabilities.

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The following tables set forth by primary risk exposure of each Fund's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2017 in accordance with ASC 815.

	AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES
FUND	PRIMARY RISK EXPOSURE	FUTURES CONTRACTS			OPTION PURCHASED(g)			SWAP AGREEMENTS
Limited Duration	Interest Rate Risk	$	46,092		$	—		$	—
	Credit Risk		—			—			—
	Total	$	46,092		$	—		$	—
Income Plus	Interest Rate Risk	$	15,776		$	—		$	(53,882	)
	Credit Risk		—			—			(84,568	)
	Currency Risk		—			—			—
	Total	$	15,776		$	—		$	(138,450	)
Multi Cap Growth	Currency Risk	$	—		$	(109,344	)	$	—
	CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
FUND	PRIMARY RISK EXPOSURE	FUTURES CONTRACTS			OPTIONS PURCHASED(g)			SWAP AGREEMENTS
Limited Duration	Interest Rate Risk	$	(7,875	)	$	—		$	—
	Credit Risk		—			—			—
	Total	$	(7,875	)	$	—		$	—
Income Plus	Interest Rate Risk	$	38,180		$	—		$	(56,417	)
	Credit Risk		—			—			(10,428	)
	Currency Risk		—			—			—
	Total	$	38,180		$	—		$	(66,845	)
Multi Cap Growth	Currency Risk	$	—		$	(90,238	)	$	—

^(g)  Amounts are included in Investments in the Statements of Operations.

At June 30, 2017, each Fund's derivative assets and liabilities are as follows:

	GROSS AMOUNTS OF ASSETS AND LIABILITIES PRESENTED IN THE STATEMENTS OF ASSETS AND LIABILITIES
FUND	DERIVATIVES(h)	ASSETS(i)			LIABILITIES(i)
Income Plus	Swap Agreement	$	—		$	29,867
Multi Cap Growth	Option Purchased	$	22,526	(f)	$	—

^(f)  Amounts are included in Investments in securities in the Statements of Assets and Liabilities.

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^(h)  Excludes exchange traded derivatives.

⁽ⁱ⁾  Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.

Certain Funds typically enter into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with their respective contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, a Fund typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between a Fund and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event a Fund exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of a Fund's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2017.

  GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES

FUND	COUNTERPARTY	GROSS ASSET DERIVATIVES PRESENTED IN STATEMENTS OF ASSETS AND LIABILITIES		FINANCIAL INSTRUMENT		COLLATERAL RECEIVED		NET AMOUNT (NOT LESS THAN $0)
Multi Cap Growth	Royal Bank of Scotland	$	22,526	$	—	$	—	$	22,526

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  GROSS AMOUNTS NOT OFFSET IN THE STATEMENTS OF ASSETS AND LIABILITIES

FUND	COUNTERPARTY	GROSS LIABILITIES DERIVATIVES PRESENTED IN STATEMENTS OF ASSETS AND LIABILITIES		FINANCIAL INSTRUMENT		COLLATERAL PLEDGED		NET AMOUNT (NOT LESS THAN $0)
Income Plus	Barclays Bank PLC	$	29,867	$	—	$	—	$	29,867

For the six months ended June 30, 2017, the average monthly amount outstanding for each derivative type is as follows:

Limited Duration:
Futures Contracts:
Average monthly original value	$	7,278,022
Income Plus:
Future Contracts:
Average monthly original value	$	32,275,955
Swap Agreements:
Average monthly notional amount	$	13,183,499
Multi Cap Growth:
Options Purchased:
Average monthly notional amount		29,964,215

4. Advisory/Administration and Sub-Advisory Agreements

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

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. For the six months ended June 30, 2017, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.42% of the Fund's average daily net assets.

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

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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. For the six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.45% of the Fund's average daily net assets.

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. For the six months ended June 30, 2017, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.41% of the Fund's average daily net assets.

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

The Adviser also serves as the Administrator to the Trust and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of each Fund's average daily net assets.

The Adviser/Administrator has agreed to reduce its advisory fee, its administration fee and/or reimburse European Equity Portfolio so that total annual Fund operating expenses, excluding certain investment related expenses, 12b-1 fees, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00%. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus(es) or until such time that the Trustees act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2017, $63,910 of advisory fees were waived pursuant to this arrangement.

The Adviser/Administrator has agreed to reduce its advisory fee, its administration fee and/or reimburse Multi Cap Growth Portfolio so that total Fund operating expenses, excluding certain investment related expenses, 12b-1 fees, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.57%. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Fund's prospectus(es) or until such time that the Trustees act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2017, $10,265 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

Under a Sub-Administration agreement between the Administrator and State Street, State Street provides certain administrative services to the Trust. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from each Fund.

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5. Plan of Distribution

Shares of the Trust are distributed by Morgan Stanley Distribution, Inc. (the "Distributor"), an affiliate of the Adviser/Administrator and Sub-Adviser. The Trust has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. Under the Plan, Class Y shares of each Fund 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.

6. Dividend Disbursing and Transfer Agent

The Trust's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Trust pays BFDS a fee based on the number of classes, accounts and transactions relating to the Funds of the Trust.

7. Custodian Fees

State Street (the "Custodian") serves as Custodian for the Trust in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Trust as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

8. Security Transactions and Transactions with Affiliates

For the six months ended June 30, 2017, purchases and sales of investment securities, excluding short-term investments, were as follows:

	U.S. GOVERNMENT SECURITIES				OTHER
FUND	PURCHASES		SALES		PURCHASES		SALES
Limited Duration	$	807,272	$	1,004,542	$	4,772,661	$	5,533,261
Income Plus		—		—		31,357,238		37,230,738
European Equity		—		—		2,180,713		3,513,792
Multi Cap Growth		—		—		38,885,447		58,663,026

Each Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (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. Advisory fees paid by each Fund are reduced by an amount equal to its pro-rata share of advisory and administrative fees paid by the Fund due to its investment in the Liquidity Funds.

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A summary of each Fund's transactions in shares of the Liquidity Funds during the six months ended June 30, 2017 is as follows:

FUND	VALUE DECEMBER 31, 2016		PURCHASES AT COST		SALES		DIVIDEND INCOME		VALUE JUNE 30, 2017
Limited Duration	$	479,800	$	4,334,603	$	4,584,575	$	708	$	229,828
Income Plus		2,416,859		16,591,169		17,346,137		3,386		1,661,891
European Equity		500,504		2,468,191		2,580,028		641		388,667
Multi Cap Growth		11,483,070		40,651,956		43,156,319		15,178		8,978,707

For the six months ended June 30, 2017, advisory fees paid were reduced by the following relating to each Fund's investment in the Liquidity Funds:

FUND	ADVISORY FEE REDUCTION
Limited Duration	$	201
Income Plus		924
European Equity		221
Multi Cap Growth		4,604

The Trust is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Trustees in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2017, the Trust did not engage in any cross-trade transactions.

The following Funds had transactions with the following affiliates of the Trust:

FUND	ISSUER	VALUE DECEMBER 31, 2016		PURCHASES AT COST		SALES			NET REALIZED GAIN (LOSS)			INTEREST INCOME		VALUE JUNE 30, 2017
Limited Duration	Metropolitan Life Global Funding I	$	322,190	$	149,996	$	(149,513	)	$	(417	)	$	2,801	$	324,505
Income Plus	MetLife, Inc.		589,376		—		—			—			14,250		617,428

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For the six months ended June 30, 2017, the Multi Cap Growth Portfolio incurred $5,117 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

The Trust has an unfunded noncontributory defined benefit pension plan covering certain independent Trustees of the Trust 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.

At June 30, 2017, the accrued pension liability reflected as "Trustees' fees" in the Statements of Assets and Liabilities is as follows:

		AGGREGATE PENSION LIABILITY
LIMITED DURATION			INCOME PLUS		EUROPEAN EQUITY		MULTI CAP GROWTH
$	1,202		$	4,537	$	1,269	$	9,624

The Trust 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 NAV of the Trust.

9. Federal Income Tax Status

It is the Funds' 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.

A Fund 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 Funds recognize interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statements of Operations. The Funds 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, 2016 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 years 2016 and 2015 was as follows:

	2016 DISTRIBUTIONS PAID FROM:				2015 DISTRIBUTIONS PAID FROM:
FUND	ORDINARY INCOME		LONG-TERM CAPITAL GAIN		ORDINARY INCOME		LONG-TERM CAPITAL GAIN
Limited Duration	$	385,549	$	—	$	369,128	$	—
Income Plus		4,164,323		2,689,896		4,860,741		79,353
European Equity		904,460		—		2,049,674		—
Multi Cap Growth		—		35,643,300		1,218,034		42,696,379

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, a net operating losses, book amortization of premium on debt securities and nondeductible expenses, resulted in the following reclassifications among the Funds' components of net assets at December 31, 2016:

FUND	ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)			ACCUMULATED NET REALIZED GAIN (LOSS)		PAID-IN-CAPITAL
Limited Duration	$	71,265		$	16,908,820	$	(16,980,085	)
Income Plus		(219,233	)		219,233		—
European Equity		(26,135	)		26,135		—
Multi Cap Growth		111,188			250,524		(361,712	)

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At December 31, 2016, the components of distributable earnings on a tax basis were as follows:

FUND	UNDISTRIBUTED ORDINARY INCOME		UNDISTRIBUTED LONG-TERM CAPITAL GAIN
Limited Duration	$	551,050	$	—
Income Plus		3,452,812		—
European Equity		882,962		—
Multi Cap Growth		—		24,057,579

At December 31, 2016, the following Funds had available for federal income tax purposes unused short term and/or long term capital losses that will not expire:

FUND	SHORT TERM LOSSES (NO EXPIRATION)		LONG TERM LOSSES (NO EXPIRATION)
Income Plus	$	7,544	$	—
European Equity		767,923		—

In addition, at December 31, 2016, the following Funds 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,
FUND	2017		2018		TOTAL
Limited Duration	$	8,980	$	—	$	8,980
European Equity		4,122		3,315		7,437

During the year ended December 31, 2016, the following Funds expired capital loss carryforwards for U.S. federal income tax purposes of:

FUND	EXPIRED CAPITAL LOSS CARRYFORWARDS
Limited Duration	$	16,980,085

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 Fund for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

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During the year ended December 31, 2016, the following Funds utilized capital loss carryforwards for U.S. federal income tax purposes of:

FUND	UTILIZED CAPITAL LOSS CARRYFORWARDS
Limited Duration	$	622,822
European Equity		6,478

10. Purposes of and Risks Relating to Certain Financial Instruments

Certain Funds 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 Funds may invest in mortgage securities, including securities issued by the 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 Funds. The risk of such defaults is generally higher in the case of mortgage pools that include sub-prime mortgages. Sub-prime 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 Funds 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.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

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At June 30, 2017, European Equity Portfolio's investments in securities of issuers in the United Kingdom, Germany, France and Switzerland represented 28.4%, 16.6%, 16.6% and 15.8%, respectively, of the Fund'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.

11. Credit Facility

The Trust and other Morgan Stanley funds participated in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the six months ended June 30, 2017, the Funds did not have any borrowings under the facility.

12. Other

At June 30, 2017, certain Funds had record owners of 10% or greater. Investment activities of these shareholders could have a material impact on these Funds. These Funds and the aggregate percentage of such owners were as follows:

	PERCENTAGE OF OWNERSHIP
Limited Duration		96.5	%
Income Plus		94.6
European Equity		93.1
Multi Cap Growth		95.2

13. Accounting Pronouncement

In October 2016, the SEC issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is effective for financial statements with reports ending on or after August 1, 2017; adoption will have no effect on the Funds' net assets or results of operations. Although still evaluating the potential impact of the Investment Company Reporting Modernization to the Funds, management expects that the impact of the Funds' adoption will be limited to additional financial statement disclosures.

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Financial Highlights

FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME(1)		NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
LIMITED DURATION CLASS X SHARES
	2012		$	7.69	$	0.12	$	0.13		$	0.25		$	(0.23	)		—		$	(0.23	)
	2013			7.71		0.10		(0.07	)		0.03			(0.20	)		—			(0.20	)
	2014			7.54		0.08		0.01			0.09			(0.14	)		—			(0.14	)
	2015			7.49		0.10		(0.11	)		(0.01	)		(0.10	)		—			(0.10	)
	2016	(2)		7.38		0.13		0.24			0.37			(0.11	)		—			(0.11	)
	2017	(3)		7.64		0.06		0.04			0.10			—			—			—
CLASS Y SHARES
	2012			7.67		0.10		0.13			0.23			(0.21	)		—			(0.21	)
	2013			7.69		0.08		(0.07	)		0.01			(0.18	)		—			(0.18	)
	2014			7.52		0.06		—			0.06			(0.11	)		—			(0.11	)
	2015			7.47		0.08		(0.10	)		(0.02	)		(0.08	)		—			(0.08	)
	2016	(2)		7.37		0.11		0.24			0.35			(0.09	)		—			(0.09	)
	2017	(3)		7.63		0.05		0.04			0.09			—			—			—
INCOME PLUS CLASS X SHARES
	2012			11.13		0.48		1.04			1.52			(0.68	)		—			(0.68	)
	2013			11.97		0.45		(0.35	)		0.10			(0.59	)		—			(0.59	)
	2014			11.48		0.42		0.47			0.89			(0.51	)		—			(0.51	)
	2015			11.86		0.42		(0.66	)		(0.24	)		(0.47	)	$	(0.01	)		(0.48	)
	2016	(2)		11.14		0.42		0.37			0.79			(0.46	)		(0.28	)		(0.74	)
	2017	(3)		11.19		0.18		0.28			0.46			—			—			—
CLASS Y SHARES
	2012			11.09		0.45		1.04			1.49			(0.65	)		—			(0.65	)
	2013			11.93		0.41		(0.33	)		0.08			(0.56	)		—			(0.56	)
	2014			11.45		0.39		0.45			0.84			(0.47	)		—			(0.47	)
	2015			11.82		0.39		(0.64	)		(0.25	)		(0.44	)		(0.01	)		(0.45	)
	2016	(2)		11.12		0.39		0.35			0.74			(0.42	)		(0.28	)		(0.70	)
	2017	(3)		11.16		0.17		0.28			0.45			—			—			—

See Notes to Financial Statements
76

										RATIO TO AVERAGE NET ASSETS
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN(7)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
LIMITED DURATION CLASS X SHARES
	2012		$	7.71		3.34	%	$	10,628		0.63	%(8)		1.52	%(8)		0.00	%(6)		58	%
	2013			7.54		0.39			9,346		0.75	(8)		1.27	(8)		0.00	(6)		53
	2014			7.49		1.13			7,986		0.80	(8)		1.09	(8)		0.00	(6)		51
	2015			7.38		(0.16	)		6,773		0.94	(8)		1.38	(8)		0.00	(6)		39
	2016	(2)		7.64		5.09	(13)		5,935		0.75	(8)(9)		1.77	(8)(9)		0.00	(6)		22
	2017	(3)		7.74		1.31	(14)		5,727		1.01	(8)(15)		1.60	(8)(15)		0.00	(6)(15)		21	(14)
CLASS Y SHARES
	2012			7.69		3.05			38,736		0.88	(8)		1.27	(8)		0.00	(6)		58
	2013			7.52		0.09			32,974		1.00	(8)		1.02	(8)		0.00	(6)		53
	2014			7.47		0.84			28,244		1.05	(8)		0.84	(8)		0.00	(6)		51
	2015			7.37		(0.32	)		24,445		1.19	(8)		1.13	(8)		0.00	(6)		39
	2016	(2)		7.63		4.80	(13)		22,112		1.00	(8)(9)		1.52	(8)(9)		0.00	(6)		22
	2017	(3)		7.72		1.18	(14)		21,175		1.26	(8)(15)		1.35	(8)(15)		0.00	(6)(15)		21	(14)
INCOME PLUS CLASS X SHARES
	2012			11.97		14.09			86,765		0.61	(8)		4.14	(8)		0.00	(6)		68
	2013			11.48		1.03			73,998		0.62	(8)		3.82	(8)		0.00	(6)		55
	2014			11.86		7.79			68,129		0.64	(8)		3.52	(8)		0.00	(6)		43
	2015			11.14		(2.09	)		57,579		0.68	(8)		3.56	(8)		0.00	(6)		44
	2016	(2)		11.19		7.08			53,539		0.63	(8)(10)		3.67	(8)(10)		0.00	(6)		39
	2017	(3)		11.65		4.11	(14)		51,158		0.70	(8)(15)		3.22	(8)(15)		0.00	(6)(15)		31	(14)
CLASS Y SHARES
	2012			11.93		13.82			97,579		0.86	(8)		3.89	(8)		0.00	(6)		68
	2013			11.45		0.81			82,429		0.87	(8)		3.57	(8)		0.00	(6)		55
	2014			11.82		7.40			69,491		0.89	(8)		3.27	(8)		0.00	(6)		43
	2015			11.12		(2.22	)		56,969		0.93	(8)		3.31	(8)		0.00	(6)		44
	2016	(2)		11.16		6.68			52,595		0.88	(8)(10)		3.42	(8)(10)		0.00	(6)		39
	2017	(3)		11.61		4.03	(14)		49,900		0.95	(8)(15)		2.97	(8)(15)		0.00	(6)(15)		31	(14)

77

Morgan Stanley Variable Investment Series

Financial Highlights continued

FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME (LOSS)(1)			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
EUROPEAN EQUITY CLASS X SHARES
	2012		$	14.19	$	0.53		$	2.03		$	2.56		$	(0.43	)		—		$	(0.43	)
	2013			16.32		0.42			3.95			4.37			(0.53	)		—			(0.53	)
	2014			20.16		0.82			(2.61	)		(1.79	)		(0.48	)		—			(0.48	)
	2015			17.89		0.41			(1.24	)		(0.83	)		(0.94	)		—			(0.94	)
	2016	(4)		16.12		0.45			(0.87	)		(0.42	)		(0.45	)		—			(0.45	)
	2017	(3)		15.25		0.33			1.95			2.28			—			—			—
CLASS Y SHARES
	2012			14.12		0.49			2.03			2.52			(0.38	)		—			(0.38	)
	2013			16.26		0.33			3.98			4.31			(0.48	)		—			(0.48	)
	2014			20.09		0.77			(2.60	)		(1.83	)		(0.43	)		—			(0.43	)
	2015			17.83		0.37			(1.24	)		(0.87	)		(0.88	)		—			(0.88	)
	2016	(4)		16.08		0.41			(0.87	)		(0.46	)		(0.40	)		—			(0.40	)
	2017	(3)		15.22		0.31			1.95			2.26			—			—			—
MULTI CAP GROWTH CLASS X SHARES
	2012			37.31		0.20			4.40			4.60			—		$	(0.90	)		(0.90	)
	2013			41.01		(0.03	)		20.55			20.52			(0.20	)		(0.66	)		(0.86	)
	2014			60.67		(0.06	)		3.23			3.17			—			(7.79	)		(7.79	)
	2015			56.05		(0.15	)		4.86			4.71			—			(10.37	)		(10.37	)
	2016	(4)		50.39		0.00	(5)		(1.85	)		(1.85	)		—			(7.91	)		(7.91	)
	2017	(3)		40.63		(0.08	)		11.74			11.66			—			—			—
CLASS Y SHARES
	2012			37.00		0.09			4.37			4.46			—			(0.90	)		(0.90	)
	2013			40.56		(0.15	)		20.32			20.17			(0.11	)		(0.66	)		(0.77	)
	2014			59.96		(0.20	)		3.18			2.98			—			(7.79	)		(7.79	)
	2015			55.15		(0.28	)		4.78			4.50			—			(10.37	)		(10.37	)
	2016	(4)		49.28		(0.11	)		(1.81	)		(1.92	)		—			(7.91	)		(7.91	)
	2017	(3)		39.45		(0.13	)		11.39			11.26			—			—			—

See Notes to Financial Statements
78

										RATIO TO AVERAGE NET ASSETS
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN(7)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME (LOSS)			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
EUROPEAN EQUITY CLASS X SHARES
	2012		$	16.32		18.51	%	$	40,141		1.00	%(8)(11)		3.50	%(8)(11)		0.00	%(6)		11	%
	2013			20.16		27.50			43,414		1.00	(8)(11)		2.32	(8)(11)		0.00	(6)		10
	2014			17.89		(9.14	)		33,884		1.00	(8)(11)		4.17	(8)(11)		0.00	(6)		21
	2015			16.12		(5.17	)		28,348		1.00	(8)(11)		2.29	(8)(11)		0.00	(6)		21
	2016	(4)		15.25		(2.54	)		23,472		1.00	(8)(11)		2.94	(8)(11)		0.00	(6)		22
	2017	(3)		17.53		14.95	(14)		25,275		1.00	(8)(11)(15)		4.06	(8)(11)(15)		0.00	(6)(15)		7	(14)
CLASS Y SHARES
	2012			16.26		18.16			11,773		1.25	(8)(11)		3.25	(8)(11)		0.00	(6)		11
	2013			20.09		27.20			11,807		1.25	(8)(11)		2.07	(8)(11)		0.00	(6)		10
	2014			17.83		(9.37	)		8,518		1.25	(8)(11)		3.92	(8)(11)		0.00	(6)		21
	2015			16.08		(5.39	)		6,776		1.25	(8)(11)		2.04	(8)(11)		0.00	(6)		21
	2016	(4)		15.22		(2.75	)		5,819		1.25	(8)(11)		2.69	(8)(11)		0.00	(6)		22
	2017	(3)		17.48		14.77	(14)		6,292		1.25	(8)(11)(15)		3.81	(8)(11)(15)		0.00	(6)(15)		7	(14)
MULTI CAP GROWTH CLASS X SHARES
	2012			41.01		12.37			164,917		0.58	(8)		0.48	(8)		0.00	(6)		44
	2013			60.67		50.76			223,689		0.57	(8)		(0.06	)(8)		0.00	(6)		34
	2014			56.05		5.71			200,910		0.54	(8)		(0.11	)(8)		0.00	(6)		29
	2015			50.39		8.60			188,317		0.57	(8)(12)		(0.27	)(8)(12)		0.00	(6)		34
	2016	(4)		40.63		(3.41	)		160,229		0.56	(8)(12)		0.01	(8)(12)		0.00	(6)		42
	2017	(3)		52.29		28.70	(14)		190,768		0.57	(8)(12)(15)		(0.33	)(8)(12)(15)		0.00	(6)(15)		18	(14)
CLASS Y SHARES
	2012			40.56		12.09			45,556		0.83	(8)		0.23	(8)		0.00	(6)		44
	2013			59.96		50.37			72,135		0.82	(8)		(0.31	)(8)		0.00	(6)		34
	2014			55.15		5.44			56,027		0.79	(8)		(0.36	)(8)		0.00	(6)		29
	2015			49.28		8.34			51,882		0.82	(8)(12)		(0.52	)(8)(12)		0.00	(6)		34
	2016	(4)		39.45		(3.65	)		42,909		0.81	(8)(12)		(0.24	)(8)(12)		0.00	(6)		42
	2017	(3)		50.71		28.54	(14)		50,357		0.82	(8)(12)(15)		(0.58	)(8)(12)(15)		0.00	(6)(15)		18	(14)

79

Morgan Stanley Variable Investment Series

Financial Highlights continued

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

  (2)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of the Fund.

  (3)  For the six months ended June 30, 2017 (unaudited).

  (4)  Reflects prior period custodian out-of-pocket expenses that were reimbursed in September 2016. The amount of the reimbursement was immaterial on a per share basis and did not impact the total return of the Fund. The annualized expense and net investment income (loss) ratios would be unchanged as the reimbursement of custodian fees was offset against expense waivers/reimbursements with no impact to net expenses or net investment income (loss).

  (5)  Amount is less than $0.001.

  (6)  Amount is less than 0.005%.

  (7)  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.

  (8)  The ratios reflect the rebate of certain Fund 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."

  (9)  If the Fund had not received the reimbursement from the custodian, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
December 31, 2016
Class X		0.92	%		1.60	%
Class Y		1.17			1.35

  (10)  If the Fund had not received the reimbursement from the custodian, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
December 31, 2016
Class X		0.68	%		3.62	%
Class Y		0.93			3.37

See Notes to Financial Statements
80

  (11)  If the Fund had borne all of its expenses that were reimbursed or waived by the Adviser/Administrator, the annualized expense and net investment income ratios, would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
June 30, 2017
Class X		1.42	%		3.64	%
Class Y		1.67			3.39
December 31, 2016
Class X		1.42			2.52
Class Y		1.67			2.27
December 31, 2015
Class X		1.32			1.97
Class Y		1.57			1.72
December 31, 2014
Class X		1.26			3.91
Class Y		1.51			3.66
December 31, 2013
Class X		1.22			2.10
Class Y		1.47			1.85
December 31, 2012
Class X		1.22			3.28
Class Y		1.47			3.03

  (12)  If the Fund had borne all of its expenses that were reimbursed or waived by the Adviser/Administrator, the annualized expense and net investment loss ratios, would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT LOSS RATIO
June 30, 2017
Class X		0.58	%		(0.34	)%
Class Y		0.83			(0.59	)
December 31, 2016
Class X		0.58			(0.01	)
Class Y		0.83			(0.26	)
December 31, 2015
Class X		0.58			(0.28	)
Class Y		0.83			(0.53	)

  (13)  Performance was positively impacted for Class X and Class Y Shares due to the receipt of proceeds from the settlement of a class action suit involving the Fund's past holdings by approximately 3.28% and 3.40%, respectively. 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 Class Y shares would have been approximately 1.81% and 1.40%, respectively.

  (14)  Not Annualized.

(15)  Annualized.

81

Morgan Stanley Variable Investment Series

Investment Advisory Agreement Approval nJune 30, 2017 (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Adviser (as defined herein) for the European Equity Portfolio. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Funds. (The Adviser and Sub-Adviser together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as presented to the Board by Broadridge Financial Solutions, Inc. ("Broadridge").

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the administrative and advisory services to the Funds. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Funds and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Funds

The Board reviewed the performance, fees and expenses of the Funds compared to their peers, as presented by Broadridge, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Funds. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2016, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel.

Performance

The Board noted that the performance of the Multi Cap Growth Portfolio was below its peer group average for the one- and three-year periods but better than its peer group average for the five-year period.

82

Morgan Stanley Variable Investment Series

Investment Advisory Agreement Approval nJune 30, 2017 (unaudited) continued

The Board noted that the performance of the European Equity Portfolio was below its peer group average for the one-, three- and five-year periods.

The Board noted that the performance of each of the Income Plus and Limited Duration Portfolios was better than its respective peer group averages for the one-, three- and five-year periods.

Performance Conclusions

With respect to the Income Plus and Limited Duration Portfolios, after discussion, the Board concluded that performance was competitive with their respective peer group averages.

With respect to the Multi Cap Growth and European Equity Portfolios, after discussion, the Board concluded that performance was acceptable.

Fees and Expenses

The Board members discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for the Funds relative to comparable funds and/or other accounts advised by the Adviser and/or compared to their respective peers as presented by Broadridge. In addition to the management fee, the Board also reviewed the Funds' total expense ratios. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps.

The Board noted that the contractual management fee for the European Equity Portfolio was higher than but close to its peer group average, the actual management fee was lower than its peer group average and the total expense ratio was higher than but close to its peer group average.

The Board noted that the management fee and total expense ratio for the Multi Cap Growth Portfolio were lower than its peer group averages.

The Board noted that while the management fees for the Income Plus and Limited Duration Portfolios were lower than their respective peer group averages, the total expense ratios were higher than their respective peer group averages.

Fee and Expense Conclusions

With respect to the European Equity and Multi Cap Growth Portfolios, after discussion, the Board concluded that the management fees and total expense ratios were competitive with their respective peer group averages.

83

Morgan Stanley Variable Investment Series

Investment Advisory Agreement Approval nJune 30, 2017 (unaudited) continued

With respect to the Income Plus and Limited Duration Portfolios, after discussion, the Board concluded that (i) the management fees were competitive with their respective peer group averages and (ii) the total expense ratios were acceptable.

Economies of Scale

The Board considered the size and growth prospects of the Funds and how that relates to the Funds' total expense ratios and particularly the Funds' management fee rates (which, for all of the Funds except the Limited Duration Portfolio, include one or more breakpoints). In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Funds and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of each Fund supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the Funds and during the last two years from their relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser and affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Funds and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Funds and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Funds and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Funds' operations and the Board's confidence in the

84

Morgan Stanley Variable Investment Series

Investment Advisory Agreement Approval nJune 30, 2017 (unaudited) continued

competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the Funds to continue their relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund's Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Funds' business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Funds and their shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

85

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Trustees
Frank L. Bowman	Joseph J. Kearns
Kathleen A. Dennis	Michael F. Klein
Nancy C. Everett	Patricia Maleski
Jakki L. Haussler	Michael E. Nugent
Dr. Manuel H. Johnson	Chair of the Board
	W. Allen Reed
	Fergus Reid

Officers

John H. Gernon
President and Principal Executive Officer

Timothy J. Knierim
Chief Compliance Officer

Francis J. Smith
Treasurer and Principal Financial Officer

Mary E. Mullin
Secretary

Michael J. Key
Vice President

Transfer Agent	Custodian
Boston Financial Data Services, Inc. 2000 Crown Colony Drive Quincy, Massachusetts 02169	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	Adviser and Administrator
Perkins Coie LLP 30 Rockefeller Plaza New York, New York 10112	Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, New York 10036
Sub-Adviser (solely with respect to European Equity Portfolio)

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

This report is submitted for the general information of shareholders of the Trust. For more detailed information about the Trust, its fees and expenses and other pertinent information, please read its Prospectus. The Trust's Statement of Additional Information contains additional information about the Trust, including its trustees. It is available without charge, by calling (800) 548-7786.

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

Morgan Stanley Distribution, Inc., member FINRA.

VARINSAN
1857760 EXP 08.31.18

#40113A

Item 2.  Code of Ethics.

Not applicable for semiannual reports.

Item 3.  Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

(a) Refer to Item 1.

(b) Not applicable.

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

Not applicable for semiannual reports.

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

Applicable only to annual reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable to reports filed by closed-end funds.

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

Not applicable.

Item 11. Controls and Procedures

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

(b)  There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

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

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Morgan Stanley Variable Investment Series

/s/ John H. Gernon

John H. Gernon

Principal Executive Officer

August 17, 2017

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/ John H. Gernon

John H. Gernon

Principal Executive Officer

August 17, 2017

/s/ Francis Smith

Francis Smith

Principal Financial Officer

August 17, 2017