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			811-07607
The Universal Institutional Funds, Inc.
(Exact name of registrant as specified in charter)
522 Fifth Avenue New York, NY					10036
(Address of principal executive offices)					(Zip code)
Randy Takian 522 Fifth Avenue New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code:				1-800-281-2715
Date of fiscal year end:	12/31
Date of reporting period:		12/31/09

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Fund’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:

	The Universal Institutional Funds, Inc.
	Annual Report — December 31, 2009

Core Plus Fixed Income Portfolio

The Portfolio is 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.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Expense Examples (unaudited)

Core Plus Fixed Income Portfolio

Expense Examples

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges, and (2) ongoing costs, including management fees, distribution (12b-1) fees (in the case of Class II shares) and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2009 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of Expense Offset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the table below is useful in comparing ongoing costs, but 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.

	Beginning Account Value 7/1/09		Actual Ending Account Value 12/31/09		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Core Plus Fixed Income Class I	$	1,000.00	$	1,056.00	$	1,021.73	$	3.58	$	3.52	0.69	%
Core Plus Fixed Income Class II	1,000.00		1,055.10		1,020.47		4.87		4.79		0.94

*	Expenses are calculated using each Portfolio Class shares’ annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 184/365 (to reflect the most recent one-half year period).
**	Annualized

1

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (unaudited)

Core Plus Fixed Income Portfolio

The Core Plus Fixed Income Portfolio (the “Portfolio”) seeks above-average total return over a market cycle of three to five years by investing primarily in a diversified portfolio of fixed income securities. The Portfolio invests primarily in a diversified mix of dollar denominated investment grade fixed income securities, particularly U.S. government, corporate, and mortgage securities. The Portfolio will ordinarily seek to maintain an average weighted maturity between five and ten years. Federal Home Loan Mortgage Corp., Federal National Mortgage Association, and Federal Home Loan Banks, although chartered and sponsored by Congress, are not funded by congressional appropriations and securities issued by them are neither guaranteed nor insured by the U.S. government. Fixed-income securities are subject to credit and interest-rate risk. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. In a declining interest-rate environment, the Portfolio may generate less income. In a rising interest-rate environment, bond prices fall.

Performance

For the fiscal year ended December 31, 2009, the Portfolio had a total return based on net asset value and reinvestment of distributions per share of 9.64%, net of fees, for Class I shares and 9.38%, net of fees, for Class II shares. The Portfolio’s Class I and Class II shares outperformed against its benchmark, the Barclays Capital U.S. Aggregate Index (the “Index”) which returned 5.93%.

Factors Affecting Performance

· Stronger than expected economic reports and corporate earnings in the first quarter of 2009 prompted speculation that the economy was stabilizing and growth would improve. The more optimistic outlook led to increased investor appetite for riskier assets and spread tightening in most fixed income asset classes throughout the rest of the year.

· Although Treasury securities performed well early in the year, as investors assumed more risk and shifted to other sectors of the market, performance began to wane and yields rose. In the third quarter, yields reversed course but rose again in the fourth quarter, ending the year higher across the curve. Yields on long-maturity issues increased more so than shorter maturities, causing the slope of the curve to further steepen. As of the end of December, yields on 2-, 5-, 10-, and 30-year Treasuries were 37, 113, 162, and 196 basis points higher, respectively, than at the start of the year.

· The agency sector performed relatively well during the year, thanks in part to growing investor interest in FDIC-backed bank notes, which were introduced in late 2008 as part of the Temporary Liquidity Guarantee Program.

· The Federal Reserve’s program of purchasing large quantities of agency mortgage-backed securities (MBS) and investors’ increasing confidence in credit-related securities led to much stronger performance for the residential mortgage sector in 2009. Despite lower interest rates and The Home Affordable Modification Program, refinancing activity remained low and mortgage prepayments only modestly increased.

· Investment grade corporate bond spreads widened in March to 561 basis points over equal duration Treasuries, then narrowed considerably over the remainder of the period, ending the year at 171 basis points over Treasuries. The best performing sectors for the year were those with the widest spreads at the start of 2009: real estate investment trusts (REITs), metals/mining, life insurance, financials and telecommunications.

· The Portfolio was overweight in the credit sector, which was the primary driver of outperformance. Within corporate credit, the Portfolio’s overweights in the banking, food and beverage, insurance, and media sectors were beneficial to relative returns as significant spread tightening in these sectors led to their strong performance during the period.

· Within agency MBS, the Portfolio’s focus on lower-coupon issues in the first half of the year was beneficial as the Federal Reserve’s MBS purchases were concentrated in this segment of the coupon stack. A move to higher-coupon (6.0 percent and 6.5 percent) issues mid-year was also advantageous as this segment of the coupon stack had low near-term prepayment expectations and a lower level of sensitivity to refinance activity, boosting their performance.

· The Portfolio’s interest rate swap trades were also advantageous to performance during the period.

· An underweight in commercial MBS in the first half of the year detracted from performance as spreads in this sector tightened considerably.

Management Strategies

· With regard to yield curve positioning during the year, we employed tactical strategies involving interest rates swaps that were designed to benefit from the convergence of market expectations regarding the likely path of monetary

2

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (cont’d)

Core Plus Fixed Income Portfolio

	policy tightening, and the Federal Reserve’s expressed views on policy tightening.
·	The Portfolio remained overweight in the investment-grade credit sector during the entire year, based on our view that this sector offered value at this point in the business cycle.
·	The Portfolio was underweight in the commercial MBS sector in the first half of the reporting period and ended the year with a neutral spread duration position.

Performance Compared to the Barclays Capital U.S. Aggregate Index(1)

	Total Returns(2)
			Average Annual
	One Year		Five Years		Ten Years		Since Inception(5)
Portfolio – Class I(3)	9.64	%	2.34	%	4.80	%	4.91	%
Barclays Capital U.S. Aggregate Index	5.93		4.97		6.33		6.23
Portfolio – Class II(4)	9.38		2.09		—		2.50
Barclays Capital U.S. Aggregate Index	5.93		4.97		—		4.65

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. Performance assumes that all dividends and distributions, if any, were reinvested. For the 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 so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance shown does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total returns would be lower.

(1)	The Barclays Capital U.S. Aggregate Index is an index comprised of approximately 6,000 publicly traded bonds including U.S. Government, mortgage-backed, corporate, and yankee bonds with an approximate average maturity of 10 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)	Total returns for the Portfolio reflect fees waived and expenses reimbursed, if applicable, by the Adviser. Without such waivers and reimbursements, total returns would have been lower. Fee waivers and/or expense reimbursements are voluntary and the Adviser reserves the right to commence or terminate any waiver and/or reimbursement at any time.
(3)	Commenced operations on January 2, 1997.
(4)	Commenced operations on May 1, 2003.
(5)	For comparative purposes, average annual since inception returns listed for the Index refers to the inception date or initial offering of the respective share class of the Portfolio, not the inception of the Index.

Portfolio Composition*

Classification	Percentage of Total Investments
Agency Fixed Rate Mortgages	32.3	%
U.S. Treasury Securities	21.2
Industrials	14.6
Finance	11.0
Other**	14.1
Short-Term Investments	6.8
Total Investments	100.0	%

*	Percentages indicated are based upon total investments (excluding Securities held as collateral on Loaned Securities) as of December 31, 2009.
**	Industries and/or investment types representing less than 5% of total investments.

3

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments

Core Plus Fixed Income Portfolio

	Face Amount (000)			Value (000)
Fixed Income Securities (97.0%)
Agency Adjustable Rate Mortgages (2.7%)
Federal Home Loan Mortgage Corp.,
Conventional Pools:
5.56%, 5/1/37	$	1,226		$	1,298
5.67%, 4/1/37	483			511
5.79%, 10/1/37	483			512
6.03%, 2/1/37	499			529
Federal National Mortgage Association,
Conventional Pools:
5.74%, 12/1/36	919			971
5.79%, 3/1/38	503			533
5.90%, 1/1/37	1,006			1,065
Government National Mortgage Association,
Various Pools:
3.63%, 9/20/27	8			8
4.13%, 12/20/25	18			19
4.38%, 1/20/25 - 6/20/25	388			401
				5,847
Agency Bonds — Banking (FDIC Guaranteed) (1.0%)
U.S. Central Federal Credit,
1.90%, 10/19/12	2,190			2,190
Agency Fixed Rate Mortgages (33.6%)
Federal Home Loan Mortgage Corp.,
Gold Pools:
4.50%, 5/1/23	1,678			1,730
5.00%, 1/1/37	4,817			4,949
5.50%, 5/1/38	4,024			4,220
6.00%, 8/1/37 - 5/1/38	443			471
6.50%, 9/1/32	163			176
7.50%, 6/1/20 - 5/1/35	272			305
8.00%, 8/1/32	119			137
8.50%, 8/1/31	141			163
January TBA:
6.00%, 1/15/39 (a)	3,275			3,473
Federal National Mortgage Association,
Conventional Pools:
5.00%, 10/1/35 - 4/1/39	9,638			9,909
5.50%, 5/1/37 - 8/1/38	19,337			20,279
6.00%, 11/1/37	14,224			15,090
6.50%, 8/1/27 - 10/1/38	3,572			3,836
7.00%, 6/1/29 - 11/1/32	105			116
7.50%, 8/1/37	384			433
8.00%, 4/1/33	288			331
8.50%, 10/1/32	268			309
9.50%, 4/1/30	88			103
13.00%, 10/1/15	—		@	—		@
January TBA:
4.50%, 1/25/39 (a)	4,725			4,718
5.00%, 1/25/39 (a)	625			641
6.00%, 1/25/39 (a)	800			847
Government National Mortgage Association,
Various Pools:
9.00%, 1/15/25	7			9
9.50%, 10/15/16	10			11
				72,256
Asset Backed Securities (0.5%)
Chrysler Financial Auto Securitization Trust,
1.01%, 7/15/10	465			465
SLM Student Loan Trust,
0.27%, 10/27/14 (b)	523			523
				988
Collateralized Mortgage Obligations — Agency Collateral Series (0.2%)
Federal Home Loan Mortgage Corp.,
IO STRIPS
7.50%, 12/1/29	21			4
8.00%, 1/1/28 - 6/1/31	41			9
Federal National Mortgage Association,
Inv Fl IO REMIC
7.32%, 2/17/31	120			12
IO REMIC
6.00%, 5/25/33 - 7/25/33	780			128
IO STRIPS
8.00%, 4/1/24 - 6/1/30	144			29
9.00%, 11/1/26	6			1
REMIC
7.00%, 9/25/32	233			255
Government National Mortgage Association,
Inv Fl IO
7.35%, 9/16/31	34			5
7.75%, 9/16/27	60			8
7.97%, 8/16/31	40			6
8.27%, 9/20/30	73			11
8.32%, 12/16/29	91			13
8.37%, 8/16/29	19			2
				483
Commercial Mortgage Backed Securities (3.1%)
Banc of America Commercial Mortgage, Inc.,
5.74%, 2/10/51 (b)	1,800			1,592
Citigroup Commercial Mortgage Trust,
5.43%, 10/15/49	950			884
5.73%, 3/15/49 (b)	1,175			1,128
6.09%, 12/10/49 (b)	450			405
Commercial Mortgage Pass-Through Certificates,
5.82%, 12/10/49 (b)	800			728
Greenwich Capital Commercial Funding Corp.,
5.44%, 3/10/39	1,425			1,262
Lehman Brothers-UBS Commercial Mortgage Trust,
5.16%, 2/15/31	755			732
				6,731
Finance (11.5%)
Abbey National Treasury Services plc,
3.88%, 11/10/14 (c)	330			332
AIG SunAmerica Global Financing VI,
6.30%, 5/10/11 (c)	835			831
Allstate Corp. (The),
7.45%, 5/16/19	200			233
American Express Credit Corp.,
7.30%, 8/20/13	520			585
AvalonBay Communities, Inc.,
6.10%, 3/15/20 (d)	330			338

4 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

	Face Amount (000)		Value (000)
Finance (cont’d)
Bank of America Corp.,
7.63%, 6/1/19	$	320	$	371
Barclays Bank plc,
6.75%, 5/22/19	535		598
BB&T Corp.,
6.85%, 4/30/19 (d)	295		331
Bear Stearns Cos. LLC (The),
7.25%, 2/1/18	320		368
Boston Properties LP,
5.88%, 10/15/19 (d)	350		352
Capital One Bank USA, N.A.,
8.80%, 7/15/19	425		503
Catlin Insurance Co., Ltd.,
7.25%, (b)(c)(e)	785		581
Citigroup, Inc.,
8.50%, 5/22/19	1,535		1,775
Commonwealth Bank of Australia,
5.00%, 10/15/19 (c)(d)	360		358
Credit Suisse USA, Inc.,
5.13%, 8/15/15	340		362
Credit Suisse, New York,
5.30%, 8/13/19	150		154
6.00%, 2/15/18	295		309
Farmers Exchange Capital,
7.05%, 7/15/28 (c)	605		528
Farmers Insurance Exchange,
8.63%, 5/1/24 (c)	250		242
General Electric Capital Corp.,
5.63%, 5/1/18	960		985
6.00%, 8/7/19	465		484
Goldman Sachs Group, Inc. (The),
6.15%, 4/1/18	1,020		1,094
HBOS plc,
6.75%, 5/21/18 (c)	790		734
HSBC Finance Corp.,
6.38%, 10/15/11	185		197
6.75%, 5/15/11	385		407
JPMorgan Chase & Co.,
6.00%, 1/15/18	1,210		1,303
6.30%, 4/23/19	115		127
Merrill Lynch & Co., Inc.,
6.88%, 4/25/18	1,360		1,468
MetLife, Inc.,
6.75%, 6/1/16 (d)	125		140
6.82%, 8/15/18	555		619
Nationwide Building Society,
4.25%, 2/1/10 (c)	425		425
Platinum Underwriters Finance, Inc.,
7.50%, 6/1/17	385		394
PNC Funding Corp.,
6.70%, 6/10/19 (d)	340		381
Principal Financial Group, Inc.,
8.88%, 5/15/19 (d)	235		271
Prudential Financial, Inc.,
4.75%, 9/17/15 (d)	430		437
6.63%, 12/1/37 (d)	130		134
7.38%, 6/15/19	100		112
Regions Financial Corp.,
7.75%, 11/10/14 (d)	330		326
Reinsurance Group of America, Inc.,
6.45%, 11/15/19	310		310
Royal Bank of Scotland plc (The),
4.88%, 8/25/14 (c)	215		218
Simon Property Group LP,
6.75%, 5/15/14	455		485
SLM Corp.,
4.00%, 1/15/10 (d)	540		540
TD Ameritrade Holding Co.,
5.60%, 12/1/19	560		557
UBS AG,
5.88%, 12/20/17	480		494
WEA Finance LLC/WT Finance (Aust) Pty Ltd.,
6.75%, 9/2/19 (c)(d)	400		430
Wells Fargo & Co.,
5.63%, 12/11/17	1,315		1,370
Westpac Banking Corp.,
4.20%, 2/27/15	325		331
Xlliac Global Funding,
4.80%, 8/10/10 (c)	825		830
			24,754
Industrials (15.2%)
Agilent Technologies, Inc.,
5.50%, 9/14/15	280		294
Altria Group, Inc.,
9.25%, 8/6/19	175		214
AmerisourceBergen Corp.,
4.88%, 11/15/19	235		232
Amphenol Corp.,
4.75%, 11/15/14	230		230
Anheuser-Busch InBev Worldwide, Inc.,
4.13%, 1/15/15 (c)	30		30
5.38%, 11/15/14 (c)	80		85
7.20%, 1/15/14 (c)	285		324
ArcelorMittal,
9.85%, 6/1/19	910		1,179
AT&T Corp.,
8.00%, 11/15/31	305		373
AT&T, Inc.,
6.15%, 9/15/34	415		412
6.30%, 1/15/38	170		173
BAT International Finance plc,
9.50%, 11/15/18 (c)(d)	330		420
Biogen Idec, Inc.,
6.88%, 3/1/18	333		359
Boston Scientific Corp.,
6.00%, 1/15/20	250		256
Brookfield Asset Management, Inc.,
5.80%, 4/25/17	455		415
Bunge Ltd. Finance Corp.,
8.50%, 6/15/19	195		223
CA, Inc.,
5.38%, 12/1/19	450		453

The accompanying notes are an integral part of the financial statements. 5

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

	Face Amount (000)		Value (000)
Industrials (cont’d)
Case New Holland, Inc.,
7.75%, 9/1/13 (c)	$	220	$	226
CenturyTel, Inc.,
6.15%, 9/15/19	120		123
Chesapeake Energy Corp.,
6.88%, 1/15/16	450		452
Comcast Corp.,
5.70%, 5/15/18	470		495
ConAgra Foods, Inc.,
8.25%, 9/15/30	360		433
Constellation Brands, Inc.,
7.25%, 9/1/16 (d)	140		143
Cooper U.S., Inc.,
5.25%, 11/15/12	290		311
Corning, Inc.,
6.63%, 5/15/19	385		420
COX Communications, Inc.,
8.38%, 3/1/39 (c)	520		649
CRH America, Inc.,
6.00%, 9/30/16	325		340
CSC Holdings, Inc.,
7.63%, 7/15/18	265		274
CSX Corp.,
7.38%, 2/1/19	195		223
CVS Pass-Through Trust,
6.04%, 12/10/28 (d)	348		330
8.35%, 7/10/31 (c)	397		438
Daimler Finance North America LLC,
7.30%, 1/15/12	190		207
Delhaize America, Inc.,
9.00%, 4/15/31	258		331
Deutsche Telekom International Finance B.V.,
8.75%, 6/15/30	450		580
DirecTV Holdings LLC/DirecTV Financing Co., Inc.,
5.88%, 10/1/19 (c)	160		163
7.63%, 5/15/16	150		164
FBG Finance Ltd.,
5.13%, 6/15/15 (c)	320		332
Fiserv, Inc.,
6.80%, 11/20/17	235		260
Freeport-McMoRan Copper & Gold, Inc.,
8.38%, 4/1/17	130		143
Gaz Capital S.A.,
6.51%, 3/7/22 (c)(d)	165		152
General Electric Co.,
5.25%, 12/6/17	1,025		1,049
Grupo Televisa S.A.,
6.00%, 5/15/18	200		202
Harley-Davidson Funding Corp.,
6.80%, 6/15/18 (c)	380		380
HCA, Inc.,
8.50%, 4/15/19 (c)	225		244
Hess Corp.,
6.00%, 1/15/40	250		248
Holcim U.S. Finance Sarl & Cie SCS,
6.00%, 12/30/19 (c)	180		188
Home Depot, Inc.,
5.88%, 12/16/36	435		421
International Paper Co.,
7.30%, 11/15/39	195		208
7.50%, 8/15/21	215		241
KLA-Tencor Corp.,
6.90%, 5/1/18	400		422
Kohl’s Corp.,
6.88%, 12/15/37	395		449
Kraft Foods, Inc.,
6.13%, 8/23/18 (d)	620		655
7.00%, 8/11/37	115		123
Kroger Co. (The),
3.90%, 10/1/15	30		30
6.40%, 8/15/17	340		372
Medco Health Solutions, Inc.,
7.13%, 3/15/18	630		709
MGM Mirage, Inc.,
13.00%, 11/15/13	435		501
Newmont Mining Corp.,
5.13%, 10/1/19	650		652
News America, Inc.,
7.85%, 3/1/39 (d)	460		540
Pearson Dollar Finance Two plc,
6.25%, 5/6/18 (c)	290		305
Petrobras International Finance Co.,
5.75%, 1/20/20 (d)	405		414
Pioneer Natural Resources Co.,
6.65%, 3/15/17	150		149
Potash Corp. of Saskatchewan, Inc.,
4.88%, 3/30/20	80		79
5.88%, 12/1/36	90		89
Quest Diagnostics, Inc.,
4.75%, 1/30/20	290		284
Questar Market Resources, Inc.,
6.80%, 4/1/18	295		308
Qwest Corp.,
6.50%, 6/1/17	210		207
6.88%, 9/15/33	495		438
Republic Services, Inc.,
5.50%, 9/15/19 (c)	310		315
Rio Tinto Finance USA Ltd.,
9.00%, 5/1/19	160		203
SBA Telecommunications, Inc.,
8.25%, 8/15/19 (c)	255		272
Systems 2001 Asset Trust LLC,
6.66%, 9/15/13 (c)	401		410
Teck Resources Ltd.,
10.25%, 5/15/16	355		415
Telecom Italia Capital S.A.,
7.00%, 6/4/18	760		838
7.18%, 6/18/19	20		22
Telefonica Europe B.V.,
8.25%, 9/15/30	555		693
Time Warner Cable, Inc.,
8.75%, 2/14/19	650		793
Time Warner, Inc.,
5.88%, 11/15/16 (d)	220		238
7.70%, 5/1/32	40		47

6 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

	Face Amount (000)		Value (000)
Industrials (cont’d)
UnitedHealth Group, Inc.,
6.00%, 2/15/18	$	165	$	171
Vale Overseas Ltd.,
5.63%, 9/15/19 (d)	250		254
6.88%, 11/10/39 (d)	75		76
Verizon Communications, Inc.,
6.35%, 4/1/19 (d)	785		867
8.95%, 3/1/39 (d)	405		550
Viacom, Inc.,
5.63%, 9/15/19 (d)	140		147
6.88%, 4/30/36	275		298
Vivendi,
6.63%, 4/4/18 (c)	240		261
Vodafone Group plc,
5.63%, 2/27/17 (d)	215		229
Waste Management, Inc.,
6.13%, 11/30/39 (d)	410		409
Watson Pharmaceuticals, Inc.,
6.13%, 8/15/19	330		341
Weatherford International Ltd.,
9.63%, 3/1/19 (d)	450		562
WellPoint, Inc.,
7.00%, 2/15/19	160		179
WPP Finance,
8.00%, 9/15/14 (d)	270		307
Wyeth,
5.45%, 4/1/17	80		85
5.50%, 2/15/16	100		108
6.45%, 2/1/24	175		195
Xerox Corp.,
5.63%, 12/15/19	100		100
6.35%, 5/15/18	135		141
Yum! Brands, Inc.,
5.30%, 9/15/19	100		101
6.25%, 3/15/18 (d)	345		377
			32,772
Mortgages — Other (0.1%)
Mastr Adjustable Rate Mortgages Trust,
1.48%, 4/25/46 (b)	1,188		130
Municipal Bonds (0.9%)
Illinois State Toll Highway Authority,
Highway Revenue, Build America Bonds,
6.18%, 1/1/34	630		642
State of California, General Obligation Bonds,
5.95%, 4/1/16	1,195		1,207
			1,849
Sovereign (0.4%)
Federative Republic of Brazil,
6.00%, 1/17/17	560		608
State of Qatar,
4.00%, 1/20/15 (c)	275		277
			885
U.S. Agency Securities (3.2%)
Federal Home Loan Mortgage Corp.,
4.88%, 6/13/18	2,500		2,679
6.75%, 3/15/31 (d)	800		977
Federal National Mortgage Association,
2.50%, 5/15/14 (d)	2,000		1,998
4.38%, 10/15/15	1,080		1,151
			6,805
U.S. Treasury Securities (22.0%)
U.S. Treasury Bond Coupon STRIPS,
Zero Coupon, 11/15/21	11,670		6,858
U.S. Treasury Bonds,
3.50%, 2/15/39	600		492
4.25%, 5/15/39	6,700		6,287
U.S. Treasury Notes,
0.75%, 11/30/11	1,250		1,242
1.75%, 3/31/14 (d)	4,000		3,906
2.13%, 11/30/14 (d)	2,500		2,442
2.38%, 10/31/14 (d)	7,000		6,926
2.63%, 6/30/14	2,000		2,015
2.75%, 11/30/16 - 2/15/19 (d)	3,700		3,513
3.00%, 8/31/16 (d)	4,200		4,132
3.38%, 11/15/19 (d)	2,200		2,117
3.75%, 11/15/18	7,450		7,452
			47,382
Utilities (2.6%)
AES Corp. (The),
8.75%, 5/15/13 (c)	425		438
CenterPoint Energy Resources Corp.,
6.25%, 2/1/37	185		180
7.88%, 4/1/13	180		203
Colorado Interstate Gas Co.,
6.80%, 11/15/15	275		305
El Paso Corp.,
8.25%, 2/15/16	230		247
Enterprise Products Operating LLC,
5.25%, 1/31/20	110		109
6.50%, 1/31/19	370		400
Exelon Generation Co. LLC,
5.20%, 10/1/19	650		651
FirstEnergy Solutions Corp.,
6.05%, 8/15/21 (d)	525		531
Kinder Morgan Finance Co. ULC,
5.70%, 1/5/16	570		550
NiSource Finance Corp.,
6.80%, 1/15/19	395		423
NRG Energy, Inc.,
8.50%, 6/15/19 (d)	245		252
Ohio Power Co.,
5.38%, 10/1/21	200		201
Plains All American Pipeline LP/PAA Finance Corp.,
6.70%, 5/15/36	310		317
8.75%, 5/1/19	185		218
PPL Energy Supply LLC,
6.30%, 7/15/13	390		420
Texas Eastern Transmission LP,
7.00%, 7/15/32	210		237
			5,682
Total Fixed Income Securities (Cost $205,466)			208,754

The accompanying notes are an integral part of the financial statements. 7

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

	Shares		Value (000)
Short-Term Investments (14.4%)
Securities held as Collateral on Loaned Securities (7.3%)
Investment Company (6.3%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (f)	13,647,750		$	13,648
	Face Amount (000)
Repurchase Agreement (1.0%)
Deutsche Bank Securities, Inc., 0.01%, dated 12/31/09, due 1/4/10, repurchase price $2,149; fully collateralized by U.S. government agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Corp., Adjustable Rate Mortgages, 2.63% to 6.56%, due 11/1/22 to 6/1/38; Federal Home Loan Mortgage Corp., Gold Pool, Fixed Rate Mortgages, 3.50% to 7.50%, due 8/1/13 to 2/1/48; Federal National Mortgage Association, Adjustable Rate Mortgages, 2.52% to 6.29%, due 3/1/18 to 9/1/47; Federal National Mortgage Association, Fixed Rate Mortgages, 4.31% to 4.92%, due 6/1/19 to 12/1/19; Government National Mortgage Association, Adjustable Rate Mortgages, 0.86% to 4.38%, due 8/20/27 to 12/20/58; Government National Mortgage Association, Fixed Rate Mortgages, 3.50% to 7.50%, due 10/15/18 to 5/15/44, valued at $2,193.	$	2,149	2,149
			15,797
	Shares
Investment Company (2.1%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (f)	4,560,799		4,561
	Face Amount (000)
U.S. Agency Security (4.2%)
Federal Home Loan Mortgage Corp.,
0.02%, 1/26/10 (g)	$	9,000	9,000
U.S. Treasury Security (0.8%)
U.S. Treasury Bill,
0.10%, 5/6/10 (d)(h)(i)	1,705		1,704
Total Short-Term Investments (Cost $31,062)			31,062
Total Investments (111.4%) (Cost $236,528) — Including $25,125 of Securities Loaned			239,816
Liabilities in Excess of Other Assets (-11.4%)			(24,591		)
Net Assets (100%)			$	215,225

(a)	Security is subject to delayed delivery.
(b)	Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated rate. The rates shown are those in effect on December 31, 2009.
(c)	144A Security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.
(d)	All or a portion of security on loan at December 31, 2009.
(e)	Perpetual — Security does not have a predetermined maturity date. Rate for this security is fixed for a period of time then reverts to a floating rate. The interest shown is the rate in effect at December 31, 2009.
(f)	See Note I within the Notes to Financial Statements regarding investment in Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class.
(g)	Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield.
(h)	Rate shown is the yield to maturity at December 31, 2009.
(i)	All or a portion of the security was pledged to cover margin requirements for futures contracts.
@	Face Amount/Value is less than $500.
Inv Fl	Inverse Floating Rate — Interest rate fluctuates with an inverse relationship to an associated interest rate. Indicated rate is the effective rate at December 31, 2009.
IO	Interest Only
REMIC	Real Estate Mortgage Investment Conduit
STRIPS	Separate Trading of Registered Interest and Principal of Securities
TBA	To Be Announced

Futures Contracts:

The Portfolio had the following futures contract(s) open at period end:

	Number of Contracts	Value (000)		Expiration Date	Net Unrealized Appreciation (Depreciation) (000)
Long:
U.S. Treasury 5 yr. Note	281	$	32,142	Mar-10	$	(549	)
Short:
U.S. Treasury 2 yr. Note	61	13,192		Mar-10	68
U.S. Treasury 10 yr. Note	263	30,364		Mar-10	734
U.S. Treasury 30 yr. Bond	37	4,269		Mar-10	180
					$	433

8 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

Interest Rate Swap Agreements

The Portfolio had the following interest rate swap agreement(s) open at period end:

Swap Counterparty	Floating Rate Index	Pay/Receive Floating Rate	Fixed Rate		Termination Date	Notional Amount (000)		Unrealized Appreciation (Depreciation) (000)
Credit Suisse	3 Month LIBOR	Pay	5.09	%	12/23/19	$	13,400	$	(64	)
	3 Month LIBOR	Receive	4.39		12/23/39	3,215		71
Deutsche Bank	3 Month LIBOR	Pay	4.40		10/1/16	44,356		(272		)
	3 Month LIBOR	Receive	4.41		10/3/18	23,863		283
								$	18

Zero Coupon Swap Agreements

The Portfolio had the following zero coupon swap agreement(s) open at period end:

Swap Counterparty	Notional Amount (000)			Pay/Receive Floating Rate	Termination Date	Unrealized Appreciation (Depreciation) (000)
Deutsche Bank	$	5,488	3 Month LIBOR	Receive	11/15/21	$	98
JPMorgan Chase	1,125		3 Month LIBOR	Receive	11/15/21	(2		)
						$	96

LIBOR   — London Interbank Offered Rate

Fair Value Measurement Information:

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009. (See Note A-6 to the financial statements for further information regarding fair value measurement.)

Investment Type	Level 1 Quotedprices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Fixed Income Securities
Agency Adjustable Rate Mortgages	$	—	$	5,847	$	—	$	5,847
Agency Bonds — Banking (FDIC Guaranteed)	—		2,190		—		2,190
Agency Fixed Rate Mortgages	—		72,256		—		72,256
Asset Backed Securities	—		988		—		988
Collateralized Mortgage Obligations — Agency Collateral Series	—		483		—		483
Commercial Mortgage Backed Securities	—		6,731		—		6,731
Finance	—		24,754		—		24,754
Industrials	—		32,772		—		32,772
Mortgages — Other	—		130		—		130
Municipal Bonds	—		1,849		—		1,849
Sovereign	—		885		—		885
U.S. Agency Securities	—		6,805		—		6,805
U.S. Treasury Securities	—		47,382		—		47,382
Utilities	—		5,682		—		5,682
Total Fixed Income Securities	—		208,754		—		208,754
Futures Contracts	982		—		—		982
Interest Rate Swap Agreements	—		354		—		354
Short-Term Investments
Investment Company	18,209		—		—		18,209
Repurchase Agreement	—		2,149		—		2,149
U.S. Agency Security	—		9,000		—		9,000
U.S. Treasury Security	—		1,704		—		1,704
Total Short-Term Investments	18,209		12,853		—		31,062
Zero Coupon Swap Agreements	—		98		—		98
Total Assets	19,191		222,059		—		241,250
Liabilities:
Futures Contracts	549		—		—		549
Interest Rate Swap Agreements	—		336		—		336
Zero Coupon Swap Agreements	—		2		—		2
Total Liabilities	549		338		—		887
Total	$	18,642	$	221,721	$	—	$	240,363

The accompanying notes are an integral part of the financial statements. 9

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Core Plus Fixed Income Portfolio

Fair Value Measurement Information: (cont’d)

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

	Fixed Income Securities (000)
Balance as of 12/31/08	$	3,090
Accrued discounts/premiums	12
Realized gain (loss)	(15,750		)
Change in unrealized appreciation (depreciation)	16,164
Net purchases (sales)	(2,856		)
Net transfers in and/or out of Level 3	(660		)
Balance as of 12/31/09	$	—
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at Level 3 at 12/31/09.	$	—

10 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Core Plus Fixed Income Portfolio

Statement of Assets and Liabilities

	December 31, 2009 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $218,319)	$	221,607
Investment in Security of Affiliated Issuer, at Value (Cost $18,209)	18,209
Total Investments in Securities, at Value (Cost $236,528)	239,816
Interest Receivable	1,588
Receivable for Forward Commitments	553
Unrealized Appreciation on Swap Agreements	452
Receivable for Portfolio Shares Sold	120
Receivable for Investments Sold	93
Receivable from Affiliate	2
Dividends Receivable	1
Foreign Currency, at Value (Cost $—@)	—		@
Other Assets	5
Total Assets	242,630
Liabilities:
Collateral on Securities Loaned, at Value	15,797
Payable for Forward Commitments	10,299
Unrealized Depreciation on Swap Agreements	338
Payable for Lehman Brothers Closed Swap Transactions	305
Due to Broker	295
Investment Advisory Fees Payable	158
Payable for Portfolio Shares Redeemed	92
Administration Fees Payable	47
Distribution Fees — Class II Shares	9
Custodian Fees Payable	3
Directors’ Fees and Expenses Payable	2
Bank Overdraft	—		@
Other Liabilities	60
Total Liabilities	27,405
NET ASSETS	$	215,225
Net Assets Consist of:
Paid-in Capital	$	287,454
Undistributed Net Investment Income	12,187
Accumulated Net Realized Loss	(88,251		)
Unrealized Appreciation (Depreciation) on:
Investments	3,288
Futures Contracts	433
Swaps	114
Net Assets	$	215,225
CLASS I:
Net Assets	$	171,120
Net Asset Value, Offering and Redemption Price Per Share Applicable to 17,245,116 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	9.92
CLASS II:
Net Assets	$	44,105
Net Asset Value, Offering and Redemption Price Per Share Applicable to 4,481,063 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	9.84
(1)  Including:
Securities on Loan, at Value	$	25,125

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements. 11

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Core Plus Fixed Income Portfolio

Statement of Operations

	Year Ended December 31, 2009 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers	$	13,438
Dividends from Security of Affiliated Issuer	63
Total Investment Income	13,501
Expenses:
Investment Advisory Fees (Note B)	1,289
Administration Fees (Note C)	861
Distribution Fees — Class II Shares (Note D)	592
Shareholder Reporting Fees	212
Professional Fees	57
Custodian Fees (Note F)	34
Directors’ Fees and Expenses	11
Transfer Agency Fees (Note E)	3
Other	31
Total Expenses	3,090
Distribution Fees — Class II Shares Waived (Note D)	(169		)
Investment Advisory Fees Voluntarily Waived (Note B)	(88		)
Rebate from Morgan Stanley Affiliates (Note I)	(22		)
Expense Offset (Note F)	—		@
Net Expenses	2,811
Net Investment Income	10,690
Realized Gain (Loss) on:
Investments Sold	(13,474		)
Foreign Currency Exchange Contracts	2
Foreign Currency Transactions	320
Futures Contracts	4,142
Options Written	(362		)
Swap Agreements	3,292
Net Realized Loss	(6,080		)
Change in Unrealized Appreciation (Depreciation) on:
Investments	22,803
Foreign Currency Translations	(1		)
Futures Contracts	(1,182		)
Options Written	426
Swap Agreements	3,843
Net Change in Unrealized Appreciation (Depreciation)	25,889
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)	19,809
Net Increase in Net Assets Resulting from Operations	$	30,499

@   Amount is less than $500.

12 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Core Plus Fixed Income Portfolio

Statements of Changes in Net Assets

	Year Ended December 31, 2009 (000)			Year Ended December 31, 2008 (000)
Increase (Decrease) in Net Assets
Operations:
Net Investment Income	$	10,690		$	26,812
Net Realized Loss	(6,080		)	(73,856		)
Net Change in Unrealized Appreciation (Depreciation)	25,889			(21,719		)
Net Increase (Decrease) in Net Assets Resulting from Operations	30,499			(68,763		)
Distributions from and/or in Excess of:
Class I:
Net Investment Income	(15,216		)	(11,183		)
Class II:
Net Investment Income	(14,650		)	(15,697		)
Total Distributions	(29,866		)	(26,880		)
Capital Share Transactions:(1)
Class I:
Subscriptions	27,540			40,763
Distributions Reinvested	15,216			11,183
Redemptions	(65,794		)	(90,468		)
Class II:
Subscriptions	73,715			144,401
Distributions Reinvested	14,650			15,697
Redemptions	(371,431		)	(140,547		)
Net Decrease in Net Assets Resulting from Capital Share Transactions	(306,104		)	(18,971		)
Total Decrease in Net Assets	(305,471		)	(114,614		)
Net Assets:
Beginning of Period	520,696			635,310
End of Period (Including Undistributed Net Investment Income of $12,187 and $29,766)	$	215,225		$	520,696
(1)  Capital Share Transactions:
Class I:
Shares Subscribed	2,784			3,823
Shares Issued on Distributions Reinvested	1,615			1,081
Shares Redeemed	(6,675		)	(8,750		)
Net Decrease in Class I Shares Outstanding	(2,276		)	(3,846		)
Class II:
Shares Subscribed	7,451			13,591
Shares Issued on Distributions Reinvested	1,565			1,531
Shares Redeemed	(37,921		)	(13,486		)
Net Increase (Decrease) in Class II Shares Outstanding	(28,905		)	1,636

The accompanying notes are an integral part of the financial statements. 13

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Core Plus Fixed Income Portfolio

	Class I
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	9.90		$	11.59		$	11.40		$	11.52		$	11.55
Income (Loss) from Investment Operations
Net Investment Income#	0.33			0.49			0.55			0.42			0.33
Net Realized and Unrealized Gain (Loss)	0.58			(1.67		)	0.06			(0.01		)	0.15
Total from Investment Operations	0.91			(1.18		)	0.61			0.41			0.48
Distributions from and/or in Excess of:
Net Investment Income	(0.89		)	(0.51		)	(0.42		)	(0.47		)	(0.42		)
Net Realized Gain	—			—			—			(0.06		)	(0.09		)
Total Distributions	(0.89		)	(0.51		)	(0.42		)	(0.53		)	(0.51		)
Net Asset Value, End of Period	$	9.92		$	9.90		$	11.59		$	11.40		$	11.52
Total Return ±	9.64		%	(10.20		)%	5.46		%	3.73		%	4.21		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	171,120		$	193,344		$	270,733		$	284,764		$	290,727
Ratio of Expenses to Average Net Assets(1)	0.69		%+	0.66		%+	0.65		%+	0.68		%	0.68		%
Ratio of Net Investment Income to Average Net Assets(1)	3.34		%+	4.65		%+	4.83		%+	3.72		%	2.89		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.01		%	0.01		%	0.01		%	N/A			N/A
Portfolio Turnover Rate	433		%	447		%	162		%	141		%	172		%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser:
Expenses to Average Net Assets	0.72		%+	N/A			N/A			N/A			N/A
Net Investment Income to Average Net Assets	3.31		%+	N/A			N/A			N/A			N/A

#	Per share amount is based on average shares outstanding.
±	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.

14 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Core Plus Fixed Income Portfolio

	Class II
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	9.81		$	11.48		$	11.31		$	11.46		$	11.51
Income (Loss) from Investment Operations
Net Investment Income#	0.28			0.46			0.50			0.40			0.31
Net Realized and Unrealized Gain (Loss)	0.59			(1.64		)	0.08			(0.03		)	0.14
Total from Investment Operations	0.87			(1.18		)	0.58			0.37			0.45
Distributions from and/or in Excess of:
Net Investment Income	(0.84		)	(0.49		)	(0.41		)	(0.46		)	(0.41		)
Net Realized Gain	—			—			—			(0.06		)	(0.09		)
Total Distributions	(0.84		)	(0.49		)	(0.41		)	(0.52		)	(0.50		)
Net Asset Value, End of Period	$	9.84		$	9.81		$	11.48		$	11.31		$	11.46
Total Return ±	9.38		%	(10.46		)%	5.22		%	3.56		%	3.93		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	44,105		$	327,352		$	364,577		$	139,715		$	44,822
Ratio of Expenses to Average Net Assets(1)	0.94		%+	0.91		%+	0.90		%+	0.93		%	0.93		%
Ratio of Net Investment Income to Average Net Assets(1)	2.87		%+	4.38		%+	4.42		%+	3.58		%	2.69		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.01		%	0.01		%	0.01		%	N/A			N/A
Portfolio Turnover Rate	433		%	447		%	162		%	141		%	172		%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser and/or Distributor:
Expenses to Average Net Assets	1.07		%+	1.01		%+	1.00		%+	1.03		%	1.03		%
Net Investment Income to Average Net Assets	2.74		%+	4.28		%+	4.32		%+	3.48		%	2.59		%

#	Per share amount is based on average shares outstanding.
±	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.

The accompanying notes are an integral part of the financial statements. 15

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements

The Universal Institutional Funds, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund is comprised of sixteen separate active, diversified and non-diversified portfolios (individually referred to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Core Plus Fixed Income Portfolio. The Portfolio seeks above-average total return over a market cycle of three to five years by investing primarily in a diversified portfolio of fixed income securities. The Portfolio invests primarily in a diversified mix of dollar denominated investment grade fixed income securities, particularly U.S. government, corporate and mortgage securities. The Portfolio offers two classes of shares — Class I and Class II. Both classes of shares have identical voting rights (except that shareholders of a Class have exclusive voting rights regarding any matter relating solely to that Class of shares), dividend, liquidation and other rights.

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

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles. Such policies are consistently followed by the Fund in the preparation of the financial statements. U.S. generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.Security Valuation: Bonds and other fixed income securities may be valued according to the broadest and most representative market. In addition, bonds and other fixed income securities may be valued on the basis of prices provided by a pricing service. The prices provided by a pricing service take into account broker dealer market price quotations for institutional size trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities. Debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors (the “Directors”) determines such valuation does not reflect the securities’ market value, in which case these securities will be valued at their fair value as determined by the Directors. Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NASDAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Securities listed on a foreign exchange are valued at their closing price. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the current bid and asked prices obtained from reputable brokers.

All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Directors, although the actual calculations may be done by others. 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.

Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect 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 these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.

2.Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the mean of the bid and asked prices of such currencies against U.S. dollars last quoted by a major bank as follows:

·investments, other assets and liabilities at the prevailing rates 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of the securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from

16

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

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 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 Fund’s 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) on the Statement of Assets and Liabilities. The change in net unrealized currency gains (losses) for the period is reflected on the Statement of Operations.

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, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violation of foreign investment limitations. As a result, an additional class of shares (identified as “Foreign” in the Portfolio of Investments) may be created and offered for investment. The “local” and “foreign” shares’ market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares. Such securities, if any, are identified as fair valued in the Portfolio of Investments.

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

Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Portfolio 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 SEC rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio’s investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio may use and their associated risks:

Foreign Currency Forward Contracts. In connection with its investments in foreign securities, the Portfolio also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date (“forward contracts”). A foreign currency forward contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Forward foreign currency exchange contracts may be used to protect against uncertainty in the level of future

17

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Portfolio may use cross currency hedging or proxy hedging with respect to currencies in which the Portfolio has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. A currency exchange contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain (loss). The Portfolio records realized gains (losses) when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Hedging the Portfolio’s currency risks involves the risk of mismatching the Portfolio’s objectives under a forward or futures contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Portfolio’s securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts.

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

Options. In respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If a Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument such as a security, currency or index, at an agreed upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase put and call options. Purchasing call options tends to increase the Portfolio’s exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio’s exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio 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” on the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If a Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed upon price typically in exchange for a premium received by the Portfolio. The Portfolio may write call and put options on stock indexes, futures, securities or currencies it owns or in which it may invest. Writing put options tend to increase the Portfolio’s exposure to the underlying instrument. Writing a call options tend to decrease the Portfolio’s exposure to the underlying instruments. When the Portfolio writes a call or put option, an amount equal to the premium received is recorded as a liability. Any liability recorded is subsequently adjusted to reflect the current value of the options written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the net realized gain (loss). The Portfolio as a writer of an option has no control over whether the underlying future, security or

18

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

currency may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future, security or currency underlying the written option. There is the risk the Portfolio may not be able to enter into a closing transaction because of an illiquid market. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Options written for the year ended December 31, 2009 were as follows:

	Total Number of Contracts		Total Premiums Received (000)
Options Outstanding - January 1, 2009	450		$	224
Options Written	1,389		262
Options Terminated in Closing Purchase Transactions	(1,839	)	(486		)
Options Outstanding - December 31, 2009	—		$	—

Swaps. In respect to swaps, the Portfolio is subject to equity risk, interest rate risk and credit risk in the normal course of pursuing its investment objectives. A swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Portfolio’s obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. In a zero-coupon interest rate swap, payment only occurs at maturity, at which time one counterparty pays the total compounded fixed rate over the life of the swap and the other pays the total compounded floating rate that would have been earned had a series of floating rate investments been rolled over through the life of the swap. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Portfolio or if the reference index, security or investments do not perform as expected. When the Portfolio has an unrealized loss on a swap agreement, the Portfolio has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Cash collateral is included with “Due from (to) Broker” on the Statement of Assets and Liabilities. Cash collateral has been offset against open swap agreements under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) “Balance Sheet” (ASC 210) (formerly known as FIN 39). Offsetting of Amounts Related to Certain Contracts an interpretation of ASC 210-20 (formerly known as APB No. 10 and SFAS 105) and are included within “Swap Agreements, at Value” on the Statement of Assets and Liabilities. For cash collateral received, the Portfolio pays a monthly fee to the counterparty based on the effective rate for Federal Funds. This fee, when paid, is included within realized gain (loss) on swap agreements on the Statement of Operations.

The Portfolio adopted the provisions of the FASB ASC 815-10, “Derivatives and Hedging” (“ASC 815-10”) (formerly known as SFAS 133-1) and ASC 460-10, “Guarantees” (“ASC 460-10”) (formerly known as FIN 45-4): An Amendment of FASB ASC 815 (formerly known as SFAS 133) and ASC 460 (formerly known as FIN 45), effective December 31, 2008. ASC 815-10 and ASC 460-10 require the seller of credit derivatives to provide additional disclosure about its credit derivatives. The Portfolio’s use of swaps may include those based on the credit of an underlying security and commonly referred to as credit default swaps. Where the Portfolio is the buyer of a credit default swap agreement, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the agreement only in the event of a default by a third party on the debt obligation. If no default occurs, the Portfolio would have paid to the counterparty a periodic stream of payments over the term of the agreement and received no benefit from the agreement. When the Portfolio is the seller of a credit default swap agreement, it receives the stream of payments but is obligated to pay upon default of the referenced debt obligation. The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as an indicator of the current

19

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.

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

Structured Investments. The Portfolio also may invest a portion of its assets in structured notes and other types of structured investments. A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more “factors.” These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Changes in interest rates and movement of the factor may cause significant price fluctuations and changes in the reference factor may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference factor may then reduce the principal amount payable on maturity. Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. These investment entities may be structured as trusts or other types of pooled investment vehicles. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio’s illiquidity to the extent that the Portfolio, at a particular point in time, may be unable to find qualified buyers for these securities.

The Portfolio adopted the provisions of FASB ASC 815, “Derivatives and Hedging: Overall” (“ASC 815”) (formerly known as SFAS 161), effective December 31, 2008. ASC 815 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio’s financial position and results of operations.

The following table sets forth the fair value of the Portfolio’s derivative contracts by primary risk exposure as of December 31, 2009.

Primary Risk Exposure	Statement of Assets and Liabilities	Futures Contracts (000)(a)		Swap Agreements (000)
Assets:
Interest Rate Risk	Receivables	$	982	$	452
Liabilities:
Interest Rate Risk	Payables	$	549	$	338

(a)This amount represents the cumulative appreciation (depreciation) of futures contracts as reported in the Portfolio of Investments. The Statement of Assets and Liabilities only reflect the current day variation margin, receivable/payable to brokers.

The following tables set forth by primary risk exposure the Portfolio’s realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2009 in accordance with ASC 815.

Realized Gain (Loss)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency	Foreign Currency
Contracts Risk	Exchange Contracts	$	2
Interest Rate Risk	Futures Contracts	4,142
Interest Rate Risk	Purchased and Written Options(b)	(271		)
Credit Risk	Swap Agreements	596
Interest Rate Risk	Swap Agreements	2,696
Total		$	7,165

Change in Unrealized Appreciation (Depreciation)

Primary Risk Exposure	Derivative Type	Value (000)
Interest Rate Risk	Futures Contracts	$	(1,182	)
Interest Rate Risk	Purchased and Written Options(b)	(214		)
Credit Risk	Swap Agreements	(92		)
Interest Risk Rate	Swap Agreements	3,935
Total		$	2,447

(b)  The realized gain (loss) for purchased options is reported within realized gains (losses) on investments sold, at value on the Statement of Operations. The unrealized gain (loss) for purchased options is reported within unrealized gains (losses) on investments, at value on the Statements of Operations.

All open derivative positions at period end are reflected on the Portfolio’s Portfolio of Investments and the volume of these open positions relative to the net assets of the Portfolio is generally representative of open positions throughout the reporting period.

4.When-Issued/Delayed Delivery Securities: The Portfolio 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 yield, and

20

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

no income accrues to the Portfolio on such securities prior to delivery. Payment and delivery for when-issued and delayed delivery securities can take place up to 120 days after the date of the transaction. When the Portfolio enters into a purchase transaction on a when-issued or delayed delivery basis, it establishes either a segregated account in which it maintains liquid assets in an amount at least equal in value to the Portfolio’s commitments to purchase such securities or designates such assets as segregated on the Portfolio’s records. 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 the Portfolio.

5.Securities Lending: The Portfolio 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 Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked to market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements backed by U.S. Treasury and Agency Securities. 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 included in the Portfolio’s Statement of Operations in affiliated dividend income and interest 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.

The value of the loaned securities was approximately $25,125,000 and related collateral outstanding at December 31, 2009 was approximately $25,751,000, included approximately $9,954,000 which was received in the form of short-term pooled securities which the Portfolio cannot sell or pledge and accordingly is not reflected in the Portfolio of Investments. For the year ended December 31, 2009, the Portfolio had income from securities lending (after rebates to borrowers and allocation to the securities lending agent) of approximately $15,000.

6.Fair Value Measurement: In accordance with FASB ASC 820 “Fair Value Measurements and Disclosure” (“ASC 820”) (formerly known as SFAS 157), fair value is defined as the price that the Portfolio would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Portfolio’s investments. The inputs are summarized in the three broad levels listed below.

Level 1 — quoted prices in active markets for identical securities

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

Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

7.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains (losses) on the sale of investment securities are determined on the specific identified cost basis. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts and premiums on securities purchased are amortized according to the effective yield method over their respective lives. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets. Income, expenses (other

21

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

than class specific expenses) and realized and unrealized gains (losses) are allocated to each class of shares based upon their relative net assets or other appropriate measures.

B. Investment Advisory Fees: Morgan Stanley Investment Management Inc. (the “Adviser” or “MS Investment Management”), a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with investment advisory services for a fee, paid quarterly, at the annual rate based on average daily net assets as follows:

First $1 billion		Over $1 billion
0.375	%	0.30	%

MS Investment Management has voluntarily agreed to waive fees payable to it and/or reimburse the Portfolio for certain expenses, after giving effect to custody fee offsets, if necessary, to the extent that the total annual operating expenses, excluding bank overdraft, certain foreign taxes and extraordinary expenses, expressed as a percentage of average daily net assets, exceed the maximum ratio of 0.70% for Class I shares and 0.95% for Class II shares. Fee waivers and/or expense reimbursements are voluntary and may be terminated at any time. For the year ended December 31, 2009, this waiver amounted to approximately $88,000.

C. Administration Fees: MS Investment Management (the “Administrator”) also provides the Portfolio with administrative services pursuant to an administration agreement for a monthly fee, which on an annual basis equals 0.25% of the average daily net assets of the Portfolio, plus reimbursement of out-of-pocket expenses. Under an agreement between the Administrator and JPMorgan Investor Services Co. (“JPMIS”), a corporate affiliate of JPMorgan Chase Bank, N.A., JPMIS provides certain administrative services to the Fund. For such services, the Administrator pays JPMIS a portion of the fee the Administrator receives from the Fund.

D. Distribution Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund and provides the Portfolio’s Class II shareholders with distribution services pursuant to a Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio is authorized to pay the Distributor a distribution fee, which is accrued daily and paid monthly, at an annual rate of 0.35% of the Portfolio’s average daily net assets attributable to Class II shares. The Distributor has voluntarily agreed to waive 0.10% of the 0.35% distribution fee that it may receive. For the year ended December 31, 2009, this waiver amounted to approximately $169,000.

E. Dividend Disbursing and Transfer Agent: The Fund dividend disbursing and transfer agent is Morgan Stanley Services Company Inc. (“Morgan Stanley Services”). Pursuant to a Transfer Agency Agreement, the Fund pays Morgan Stanley Services a fee generally based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: JPMorgan Chase Bank, N.A. (the “Custodian”) serves as Custodian for the Fund in accordance with a custodian agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the 1940 Act.

The Fund has entered into an arrangement with its Custodian whereby credits realized on uninvested cash balances were used to offset a portion of the Portfolio’s expenses. These custodian credits are shown as “Expense Offset” on the Statement of Operations.

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

H. Federal Income Taxes: It is the Portfolio’s intention to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements. Distributions to shareholders are recorded on the ex-dividend date.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation as these amounts 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.

FASB ASC 740-10 “Income Taxes — Overall” (formerly known as FIN 48) 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 Portfolio recognizes interest accrued related to unrecognized tax benefits in “Interest Expense” and penalties in “Other” expenses on the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four year period ended December 31, 2009, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown on the Statements of Changes in Net Assets due to short-term capital gains being treated as

22

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

ordinary income for tax purposes. The tax character of distributions paid during fiscal 2009 and 2008 was as follows:

2009 Distributions Paid From:				2008 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	29,866	$	—	$	26,880	$	—

The amount and character of income and capital gain distributions to be paid by the Portfolio are determined in accordance with Federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable 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 and paydown adjustments, resulted in the following reclassifications among the components of net assets at December 31, 2009:

Undistributed (Distributions in Excess of) Net Investment Income (Loss) (000)		Accumulated Net Realized Gain (Loss) (000)			Paid-in Capital (000)
$	1,597	$	(1,597	)	$	—

At December 31, 2009, the Portfolio had distributable earnings on a tax basis as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	12,195	$	—

At December 31, 2009, cost and unrealized appreciation (depreciation) for U.S. Federal income tax purposes of the investments of the Portfolio were:

Cost (000)		Appreciation (000)		Depreciation (000)			Net Appreciation (Depreciation) (000)
$	236,534	$	6,464	$	(3,182	)	$	3,282

At December 31, 2009, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, of approximately $87,613,000, of which $509,000 will expire on December 31, 2014, $55,992,000 will expire on December 31, 2016 and $31,112,000 will expire on December 31, 2017.

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

I. Security Transactions and Transactions with Affiliates: The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the “Liquidity Funds”), an open-end management investment company managed by the Adviser. Investment Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the year ended December 31, 2009, advisory fees paid were reduced by approximately $22,000 relating to the Portfolio’s investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the Liquidity Funds during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)		Sales Proceeds (000)		Dividend Income (000)		Market Value December 31, 2009 (000)
$	23,007	$	645,915	$	650,713	$	63	$	18,209

For the year ended December 31, 2009, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $1,196,866,000 and $1,452,258,000, respectively. For the year ended December 31, 2009, purchases and sales of long-term U.S. Government securities were approximately $214,141,000 and $226,961,000, respectively.

J. Other (unaudited): At December 31, 2009, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 60.1% and 94.7%, for Class I and Class II shares, respectively.

K. Subsequent Events: In accordance with the provisions set forth in FASB ASC 855 “Subsequent Events” (formerly known as SFAS 165), adopted by the Portfolio as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Portfolio’s financial statements through February 19, 2010.

On January 8, 2010, the Directors of the Portfolio approved the conversion for Fund Accounting, Custody, Fund Administration and Securities Lending services from JPMorgan Investor Services Co. to State Street Bank and Trust Company. The conversion is expected to be completed in or about the second quarter of 2010.

23

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
The Universal Institutional Funds, Inc. —
Core Plus Fixed Income Portfolio

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Core Plus Fixed Income Portfolio (one of the portfolios constituting The Universal Institutional Funds, Inc.) (the “Portfolio”) as of December 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Core Plus Fixed Income Portfolio of The Universal Institutional Funds, Inc. at December 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
February 19, 2010

24

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Federal Income Tax Information (unaudited)

For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during its taxable year ended December 31, 2009.

24.0% of the Portfolio’s dividends was attributable to qualifying U.S. Government obligations. (Please consult your tax advisor to determine if any portion of the dividends you received is exempt from state income tax.)

In January, the Portfolio provides tax information to shareholders for the preceding calendar year.

25

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (unaudited)

Independent Directors:

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Frank L. Bowman (65) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004); Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l’Orde National du Mérite by the French Government.	162	Director of Armed Services YMCA of the USA; member, BP America External Advisory Council (energy); member, National Academy of Engineers.
Michael Bozic (68) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since April 1994	Private Investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006), Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears Roebuck & Co.	164	Director of various business organizations.
Kathleen A. Dennis (56) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).	162	Director of various non-profit organizations.
Dr. Manuel H. Johnson (60) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006	Director	Since July  1991	Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.	164	Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings.
Joseph J. Kearns (67) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265	Director	Since August 1994	President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); CFO of the J. Paul Getty Trust.	165	Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation.

26

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Independent Directors (cont’d):

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Michael F. Klein (51) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chief Operating Officer and Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).	162	Director of certain investment funds managed or sponsored by Aetos Capital LLC; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).
Michael E. Nugent (73) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022	Chairperson of the Board and Director	Chairperson of the Boards since July 2006 and Director since July 1991	General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006).	164	None.
W. Allen Reed (62) † c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (July 1994-December 2005).	162	Director of Temple-Inland Industries (packaging and forest products), Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006).
Fergus Reid (77) c/o Joe Pietryka, Inc. 85 Charles Coleman Blvd. Pawling, NY 12564	Director	Since June 1992	Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992).	165	Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc.

Interested Directors:

Name, Age and Address of Interested Director	Position(s) Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Interested Director**	Other Directorships Held by Interested Director***
James F. Higgins (61) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311	Director	Since June 2000	Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000).	163	Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

*	This is the earliest date the Director began serving the Retail Funds or Institutional Funds. Each Director serves an indefinite term, until his or her successor is elected.
**	The Fund Complex includes all funds advised by MS Investment Management that have an investment advisor that is an affiliated entity of MSIM (including but not limited to, Morgan Stanley Investment Advisors Inc. (“MSIA”) and Morgan Stanley AIP GP LP). The Retail Funds are those funds advised by MSIA. The Institutional Funds are certain U.S. registered funds advised by MS Investment Management and Morgan Stanley AIP GP LP.
***	This includes any directorships at public companies and registered investment companies held by the Directors at any time during the past five years.
†	For the period September 26, 2008 through February 5, 2009 W. Allen Reed was an Interested Director. At all other times covered by this report, Mr. Reed was an Independent Director.

27

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Executive Officers:

Name, Age and Address of Executive Officer	Position(s) Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years
Randy Takian (35) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	President and Principal Executive Officer	Since September 2008	President and Principal Executive Officer (since September 2008) of funds in the Fund Complex; President and Chief Executive Officer of Morgan Stanley Services Company Inc. (since September 2008). President of Morgan Stanley Investment Advisors Inc. (since July 2008). Head of the Retail and Intermediary business within Morgan Stanley Investment Management (since July 2008). Head of Liquidity and Bank Trust business (since July 2008) and the Latin American franchise (since July 2008) at Morgan Stanley Investment Management. Managing Director, Director and/or Officer of the Adviser and various entities affiliated with the Adviser. Formerly, Head of Strategy and Product Development for the Alternatives Group and Senior Loan Investment Management. Formerly with Bank of America (July 1996-March 2006), most recently as Head of the Strategy, Mergers and Acquisitions team for Global Wealth and Investment Management.
Kevin Klingert (47) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since June 2008	Head, Chief Operating Officer and acting Chief Investment Officer of the Global Fixed Income Group of the Adviser and Morgan Stanley Investment Advisors Inc. (since April 2008). Head of Global Liquidity Portfolio Management and co-Head of Liquidity Credit Research of Morgan Stanley Investment Management (since December 2007). Managing Director of the Adviser and Morgan Stanley Investment Advisors Inc. (since December 2007). Previously, Managing Director on the Management Committee and head of Municipal Portfolio Management and Liquidity at BlackRock (October 1991 to January 2007).
Carsten Otto (46) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Chief Compliance Officer	Since October 2004	Managing Director and Global Head of Compliance for Morgan Stanley Investment Management (since April 2007) and Chief Compliance Officer of the Retail Funds and Institutional Funds (since October 2004). Formerly, U.S. Director of Compliance (October 2004-April 2007) and Assistant Secretary and Assistant General Counsel of the Retail Funds.
Stefanie V. Chang Yu (43) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since December 1997	Managing Director and Secretary of the Adviser and various entities affiliated with the Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997).
Mary E. Mullin (42) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Secretary	Since June 1999	Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999).
James W. Garrett (41) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Treasurer and Chief Financial Officer	Treasurer since February 2002 and Chief Financial Officer since July 2003	Head of Global Fund Administration for the Morgan Stanley Investment Management; Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer and Chief Financial Officer of the Institutional Funds.

* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds. Each Officer serves an indefinite term, until his or her successor is elected.

28

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Adviser and Administrator	Custodian
Morgan Stanley Investment Management Inc.	JPMorgan Chase Bank, N.A.
522 Fifth Avenue	270 Park Avenue
New York, New York 10036	New York, New York 10017
Distributor	Legal Counsel
Morgan Stanley Distribution, Inc.	Dechert LLP
One Tower Bridge	1095 Avenue of the Americas
100 Front Street, Suite 1100	New York, New York 10036
West Conshohocken, PA 19428-2899
	Independent Registered Public Accounting Firm
Dividend Disbursing and Transfer Agent	Ernst & Young LLP
Morgan Stanley Services Company Inc.	200 Clarendon Street
P.O. Box 219804	Boston, Massachusetts 02116-5072
Kansas City, MO 64121-9804

The Investment Adviser, Morgan Stanley Investment Management Inc., does business in certain instances as Van Kampen or Morgan Stanley Asset Management.

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund’s second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.vankampen.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public website. 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 website, 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 toll free at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102.

The Fund’s Statement of Additional Information contains additional information about the Fund, including its Directors. It is available, without charge, by calling toll free 1-800-281-2715.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free 1-800-281-2715 or by visiting our website at www.vankampen.com. It is also available on the SEC’s website at www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 by calling toll free 1-800-281-2715. This information is also available on the SEC’s website at www.sec.gov.

UIFCPFIANN

IU10-00716P-Y12/09

29

The Universal Institutional Funds, Inc. Annual Report — December 31, 2009

Emerging Markets Debt Portfolio

The Portfolio is 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.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Expense Examples (unaudited)

Emerging Markets Debt Portfolio

Expense Examples

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges, and (2) ongoing costs, including management fees, distribution (12b-1) fees (in the case of Class II shares) and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2009 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of Expense Offset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the table below is useful in comparing ongoing costs, but 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.

	Beginning Account Value 7/1/09		Actual Ending Account Value 12/31/09		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Debt Class I	$	1,000.00	$	1,136.90	$	1,019.76	$	5.82	$	5.50	1.08	%
Emerging Markets Debt Class II	1,000.00		1,136.90		1,019.51		6.09		5.75		1.13

*	Expenses are calculated using each Portfolio Class’ annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 184/365 (to reflect the most recent one-half year period).
**	Annualized

1

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (unaudited)

Emerging Markets Debt Portfolio

The Emerging Markets Debt Portfolio (the “Portfolio”) seeks high total return by investing primarily in fixed income securities of government and government-related issuers and, to a lesser extent, of corporate issuers in emerging market countries. Fixed income securities are subject to credit and interest-rate risk. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest-rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. In a declining interest-rate environment, the Portfolio may generate less income. In a rising interest-rate environment, bond prices fall. Foreign investing involves certain risks, including currency fluctuations and controls, restrictions on foreign investments, less liquidity and the potential for market volatility and political instability. In addition, investing in emerging markets may involve a relative higher degree of volatility.

Performance

For the fiscal year ended December 31, 2009, the Portfolio had a total return based on net asset value and reinvestment of distributions per share of 30.21%, net of fees, for Class I shares and 30.11%, net of fees, for Class II shares. The Portfolio’s Class I and Class II shares outperformed against its benchmark, the J.P. Morgan Emerging Markets Bond Global Index (the “Index”) which returned 28.18%.

Factors Affecting Performance

·The first months of 2009 were characterized by unprecedented government intervention in the financial markets, with policy moves ranging from bank nationalizations to fiscal and monetary activism. Widespread easing of monetary policy announced by numerous governments around the world complemented this fiscal support, while monetary authorities that had limited scope for further rate cuts moved to quantitative easing. In addition, leaders from the G-20 pledged to support a package of measures which provided funding of more than $1 trillion to contain the global downturn.

·The second quarter of 2009 was characterized by signs of a rebound in economic activity (“green shoots”) and increased risk appetite in the financial markets. Financial conditions improved and markets started to normalize. Emerging markets debt (“EMD”) staged a strong rally, benefiting from expectations that downside risks for the global economy had diminished. EMD fund flows turned positive after losing $3.8 billion since the beginning of the year.

·This “market normalization” was driven by the massive injection of liquidity on the part of world’s central banks, the sharp easing of monetary policy, and the recent stabilization of supply side variables such as industrial production. However, negative news at the global level, particularly from the demand side (retail sales, auto sales, exports, etc), still indicated that the real economy remained stressed and the recovery would likely be slow and fragile.

·In the third and the last quarters of the year, asset performance was supported by fundamentals. In this period, economic recovery was underway and financial risks diminished. However, trades in riskier assets that were popular during the rally months were crowded by investors and valuations were not that compelling. This was a period of consolidation, not only from an economic point of view (as economic recovery in systemically important countries consolidated) but also from an asset performance point of view, with returns moving toward more “normal” levels (that is, single digits or low double digits).

·EMD hard currency debt, as measured by the JP Morgan EMBI Global, returned 28.18% for the year. External debt yields stood at 6.71%, with a spread of 294 basis points above U.S Treasuries as of year end.

·In the Portfolio, security selection in Ivory Coast and Russia aided relative returns. Overweight positions in Kazakhstan and Venezuela also contributed. Conversely, security selection in Indonesia, an underweight exposure to Iraq, and exposure to the Mexican peso detracted from relative returns.

Management Strategies

·Markets seem to keep building positions based on an optimistic growth outlook for emerging markets for 2010. In addition, the environment is broadly constructive for emerging markets currencies, which are supported by their higher carry and continued portfolio inflows. However, there should be a strong distinction between pricing assets for a more stable environment (our base case) and pricing assets for a strong growth environment. On average, our valuation models point to many emerging markets credits being near fair value at current levels. We expect that some lower beta credits will be constrained by valuations and the strength in the emerging markets corporate market to dissipate over the next few months. As such, we maintain overweights in select relatively lower credit quality countries experiencing positive rates of change. In addition, we see opportunities in select local currency markets where real rates are high and the currency undervalued.

2

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (cont’d)

Emerging Markets Debt Portfolio

Performance Compared to J.P. Morgan Emerging Markets Bond Global Index(1)

	Total Returns(2)
			Average Annual
	One Year		Five Years		Ten Years		Since Inception(5)
Portfolio — Class I(3)	30.21	%	7.97	%	10.71	%	7.86	%
J.P. Morgan Emerging Markets Bond Global Index	28.18		8.11		10.52		9.21
Portfolio — Class II(4)	30.11		7.90		—		10.80
J.P. Morgan Emerging Markets Bond Global Index	28.18		8.11		—		11.01

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. Performance assumes that all dividends and distributions, if any, were reinvested. For the 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 so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance shown does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total returns would be lower.

(1)The J.P. Morgan Emerging Markets Bond Global (“EMBG”) Index tracks total returns for U.S. dollar-denominated debt instruments issued by emerging markets sovereign and quasi-sovereign entities: Brady Bonds, loans, Eurobonds and local market instruments for over 30 emerging market countries. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)Total returns for the Portfolio reflect fees waived and expenses reimbursed, if applicable, by the Adviser. Without such waivers and reimbursements, total returns would have been lower. Fee waivers and/or expense reimbursements are voluntary and the Adviser reserves the right to commence or terminate any waiver and/or reimbursement at any time.

(3)Commenced operations on June 16, 1997.

(4)Commenced operations on December 19, 2002.

(5)For comparative purposes, average annual since inception returns listed for the Index refers to the inception date or initial offering of the respective share class of the Portfolio, not the inception of the Index.

In accordance with SEC regulations, Portfolio performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class II shares will vary from the Class I shares based upon its different inception date and will be negatively impacted by additional fees assessed to that class.

Portfolio Composition*

Classification	Percentage of Total Investments
Sovereign	97.3	%
Other**	0.6
Short-Term Investment	2.1
Total Investments	100.0	%

*	Percentages indicated are based upon total investments (excluding Securities held as collateral on Loaned Securities) as of December 31, 2009.
**	Industries representing less than 5% of total investments.

3

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments

Emerging Markets Debt Portfolio

	Face Amount (000)			Value (000)
Fixed Income Securities (95.8%)
Argentina (3.5%)
Sovereign (3.5%)
Republic of Argentina,
1.68%, 8/3/12 (a)	$	5,787		$	5,320
8.28%, 12/31/33 (b)	1,152			867
				6,187
Brazil (14.0%)
Sovereign (14.0%)
Banco Nacional de Desenvolvimento Economico e Social,
6.37%, 6/16/18 (c)	3,400			3,659
Federative Republic of Brazil,
5.88%, 1/15/19 (b)	1,060			1,134
7.13%, 1/20/37 (b)	350			404
8.00%, 1/15/18	4,328			4,960
8.88%, 10/14/19 - 4/15/24	3,765			4,883
10.00%, 1/1/17	BRL		7,028	3,475
10.50%, 7/14/14	$	1,270		1,626
11.00%, 8/17/40 (b)	3,180			4,253
				24,394
Bulgaria (0.3%)
Sovereign (0.3%)
Republic of Bulgaria,
8.25%, 1/15/15 (c)	493			578
Chile (0.6%)
Sovereign (0.6%)
Empresa Nacional de Petroleo,
6.75%, 11/15/12 (c)	910			987
Colombia (3.2%)
Sovereign (3.2%)
Republic of Colombia,
7.38%, 3/18/19 (b)	2,820			3,208
11.75%, 2/25/20 (b)	1,690			2,446
				5,654
Croatia (0.5%)
Sovereign (0.5%)
Republic of Croatia,
6.75%, 11/5/19 (c)	760			820
Dominican Republic (0.2%)
Sovereign (0.2%)
Dominican Republic,
9.04%, 1/23/18	317			345
Ecuador (0.4%)
Sovereign (0.4%)
Republic of Ecuador,
9.38%, 12/15/15	780			737
Georgia (0.3%)
Sovereign (0.3%)
Republic of Georgia,
7.50%, 4/15/13	500			513
Ghana (0.8%)
Sovereign (0.8%)
Republic of Ghana,
8.50%, 10/4/17 (c)	1,296			1,332
Indonesia (8.3%)
Corporate (0.4%)
Pindo Deli Finance Mauritius,
Tranche A, Zero Coupon, 4/28/15 (a)(c)(d)(e)	195			47
Tranche B, Zero Coupon, 4/28/18 (a)(c)(d)(e)	1,640			205
Tranche C, Zero Coupon, 4/28/25 (a)(c)(d)	2,691			47
Tjiwi Kimia Finance Mauritius Ltd.,
Tranche A, Zero Coupon, 4/28/15 (a)(d)(e)	781			180
Tranche B, Zero Coupon, 4/28/18 (a)(c)(d)(e)	1,433			251
Tranche C, Zero Coupon, 4/28/27 (a)(c)(d)(e)	2,923			51
				781
Sovereign (7.9%)
Republic of Indonesia,
6.88%, 1/17/18	1,500			1,658
6.88%, 1/17/18 (c)	250			276
7.75%, 1/17/38	1,230			1,396
7.75%, 1/17/38 (c)	2,926			3,321
11.63%, 3/4/19	4,250			6,120
11.63%, 3/4/19 (b)(c)	640			921
				13,692
				14,473
Ivory Coast (0.5%)
Sovereign (0.5%)
Ivory Coast,
Zero Coupon, 3/31/18 (e)	1,530			842
Kazakhstan (3.4%)
Sovereign (3.4%)
Intergas Finance BV,
6.38%, 5/14/17	410			387
KazMunaiGaz Finance Sub BV,
9.13%, 7/2/18 (c)	4,930			5,497
				5,884
Lithuania (0.5%)
Sovereign (0.5%)
Republic of Lithuania,
6.75%, 1/15/15 (c)	770			788

4 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Debt Portfolio

	Face Amount (000)			Value (000)
Mexico (11.9%)
Sovereign (11.9%)
Mexican Bonos,
8.50%, 11/18/38	MXN		46,630	$	3,475
10.00%, 12/5/24	19,190			1,684
Pemex Project Funding Master Trust,
1.55%, 6/15/10 (a)(c)	$	1,290		1,293
8.63%, 12/1/23	1,350			1,590
United Mexican States,
5.63%, 1/15/17 (b)	689			722
5.95%, 3/19/19	6,732			7,153
6.05%, 1/11/40 (b)	1,140			1,102
6.75%, 9/27/34	3,591			3,806
				20,825
Pakistan (0.4%)
Sovereign (0.4%)
Republic of Pakistan,
6.88%, 6/1/17	370			301
7.13%, 3/31/16	310			269
7.13%, 3/31/16 (c)	130			110
				680
Panama (1.7%)
Sovereign (1.7%)
Republic of Panama,
5.20%, 1/30/20	1,490			1,501
8.88%, 9/30/27	383			500
9.38%, 4/1/29	740			988
				2,989
Peru (5.1%)
Sovereign (5.1%)
Republic of Peru,
7.13%, 3/30/19 (b)	2,070			2,391
7.35%, 7/21/25	2,170			2,495
8.75%, 11/21/33	3,005			3,922
				8,808
Philippines (4.4%)
Sovereign (4.4%)
Republic of Philippines,
8.38%, 6/17/19	672			817
8.88%, 3/17/15	2,128			2,591
9.00%, 2/15/13	2,180			2,540
9.50%, 2/2/30 (b)	1,321			1,760
				7,708
Qatar (0.5%)
Sovereign (0.5%)
State of Qatar (Registered),
9.75%, 6/15/30	660			934
Russia (12.1%)
Sovereign (12.1%)
RSHB Capital S.A. for OJSC Russian Agricultural Bank,
6.30%, 5/15/17 (c)	1,401			1,418
7.18%, 5/16/13	10			10
7.18%, 5/16/13 (c)	1,210			1,289
Russian Federation,
7.50%, 3/31/30 (c)(f)	591			669
Russian Federation (Registered),
7.50%, 3/31/30 (f)	11,562			13,166
12.75%, 6/24/28	2,700			4,603
				21,155
South Africa (0.2%)
Sovereign (0.2%)
Republic of South Africa,
6.88%, 5/27/19	320			361
South Korea (1.3%)
Sovereign (1.3%)
Export-Import Bank of Korea,
5.88%, 1/14/15	1,150			1,237
Korea Development Bank,
8.00%, 1/23/14	510			588
Republic of Korea,
5.75%, 4/16/14	350			383
				2,208
Sri Lanka (0.4%)
Sovereign (0.4%)
Republic of Sri Lanka,
7.40%, 1/22/15 (c)	550			573
8.25%, 10/24/12	200			210
				783
Trinidad (1.1%)
Sovereign (1.1%)
National Gas Co. of Trinidad &Tobago Ltd.,
6.05%, 1/15/36 (c)	2,069			1,881
Turkey (10.9%)
Sovereign (10.9%)
Republic of Turkey,
Zero Coupon, 5/11/11 (g)	TRY		5,490	3,288
6.75%, 4/3/18	$	2,882		3,141
6.88%, 3/17/36 (b)	679			694
7.50%, 7/14/17 - 11/7/19	3,408			3,867
8.00%, 2/14/34	551			639
11.00%, 1/14/13	617			745
11.00%, 8/6/14	TRY		2,230	1,526
11.88%, 1/15/30	$	2,340		3,791
16.00%, 3/7/12	TRY		1,850	1,395
				19,086
Ukraine (0.7%)
Sovereign (0.7%)
Ukraine Government,
6.58%, 11/21/16	$	486		377
6.75%, 11/14/17	120			92
7.65%, 6/11/13	776			669
				1,138

The accompanying notes are an integral part of the financial statements. 5

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Debt Portfolio

	Face Amount (000)		Value (000)
Uruguay (0.2%)
Sovereign (0.2%)
Republic of Uruguay,
8.00%, 11/18/22	$	340	$	391
Venezuela (8.4%)
Sovereign (8.4%)
Republic of Venezuela,
5.75%, 2/26/16	1,634		1,071
6.00%, 12/9/20	880		486
7.00%, 3/31/38	1,079		599
7.65%, 4/21/25	1,850		1,096
8.50%, 10/8/14	770		610
9.00%, 5/7/23	1,423		964
9.25%, 9/15/27 - 5/7/28	9,111		6,476
10.75%, 9/19/13	3,760		3,328
			14,630
Total Fixed Income Securities (Cost $160,279)			167,111

	No. of Warrants
Warrants (0.1%)
Nigeria (0.0%)
Central Bank of Nigeria, expires 11/15/20 (a)(d)	750	86
Venezuela (0.1%)
Republic of Venezuela, Oil-Linked Payment Obligation, expires 4/15/20 (a)(d)	3,750	102
Total Warrants (Cost $—)		188

	Shares
Short-Term Investments (8.4%)
Securities held as Collateral on Loaned Securities (6.3%)
Investment Company (5.5%)
Morgan Stanley Institutional Liquidity Funds —  Money Market Portfolio — Institutional Class (h)	9,537,995	9,538

	Face Amount (000)
Repurchase Agreement (0.8%)
Deutsche Bank Securities, Inc., 0.01%, dated 12/31/09, due 1/4/10, repurchase price $1,502; fully collateralized by U.S. government agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Corp., Adjustable Rate Mortgages, 2.63% to 6.56%, due 11/1/22 to 6/1/38; Federal Home Loan Mortgage Corp., Gold Pool, Fixed Rate Mortgages, 3.50% to 7.50%, due 8/1/13 to 2/1/48; Federal National Mortgage Association, Adjustable Rate Mortgages, 2.52% to 6.29%, due 3/1/18 to 9/1/47; Federal National MortgageAssociation, Fixed Rate Mortgages, 4.31% to 4.92%, due 6/1/19 to 12/1/19; Government National Mortgage Association, Adjustable Rate Mortgages, 0.86% to 4.38%, due 8/20/27 to 12/20/58; Government National Mortgage Association, Fixed Rate Mortgages, 3.50% to 7.50%, due 10/15/18 to 5/15/44, valued at $1,532.	$	1,502	1,502
			11,040

	Shares
Investment Company (2.1%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (h)	3,623,104	3,623
Total Short-Term Investments (Cost $14,663)		14,663
Total Investments (104.3%) (Cost $174,942) — Including $10,977 of Securities Loaned		181,962
Liabilities in Excess of Other Assets (-4.3%)		(7,583		)
Net Assets (100%)		$	174,379

(a)	Variable/Floating Rate Security — Interest rate changes are based on changes in a designated base rate. The rates shown are those in effect on December 31, 2009.
(b)	All or a portion of security on loan at December 31, 2009.
(c)	144A Security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.
(d)	Security has been deemed illiquid at December 31, 2009.
(e)	Issuer is in default.
(f)	Step Bond — Coupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2009. Maturity date disclosed is the ultimate maturity date.
(g)	Non-income producing security.
(h)	See Note I within the Notes to Financial Statements regarding investment in Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class.

Foreign Currency Exchange Contracts Information:

The Portfolio had the following foreign currency exchange contract(s) open at period end:

Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Net Unrealized Appreciation (Depreciation) (000)
USD	3,127	$	3,127	1/28/10	KRW	3,695,400	$	3,171	$	44
USD	1,618	1,618		3/24/10	RUB	49,550	1,614		(4		)
		$	4,745				$	4,785	$	40

BRL	— Brazilian Real
KRW	— Korean Won
MXN	— Mexican Peso
RUB	— Russian Ruble
TRY	— Turkish Lira
USD	— Dollar

6 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Debt Portfolio

Fair Value Measurement Information:

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009. (See Note A-8 to the financial statements for further information regarding fair value measurement.)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Debt Instruments
Corporate	$	—	$	781	$	—	$	781
Sovereign	—		166,330		—		166,330
Total Debt Instruments	—		167,111		—		167,111
Foreign Currency Exchange Contracts	—		44		—		44
Short-Term Investments
Investment Company	13,161		—		—		13,161
Repurchase Agreement	—		1,502		—		1,502
Total Short-Term Investments	13,161		1,502		—		14,663
Warrants	—		188		—		188
Total Assets	13,161		168,845		—		182,006
Liabilities:
Foreign Currency Exchange Contracts	—		4		—		4
Total Liabilities	—		4		—		4
Total	$	13,161	$	168,841	$	—	$	182,002

The accompanying notes are an integral part of the financial statements. 7

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Debt Portfolio

Statement of Assets and Liabilities

	December 31, 2009 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $161,781)	$	168,801
Investment in Security of Affiliated Issuer, at Value (Cost $13,161)	13,161
Total Investments in Securities, at Value (Cost $174,942)	181,962
Interest Receivable	3,416
Foreign Currency, at Value (Cost $465)	472
Receivable for Portfolio Shares Sold	144
Unrealized Appreciation on Foreign Currency Exchange Contracts	44
Receivable from Affiliate	2
Dividends Receivable	—		@
Other Assets	4
Total Assets	186,044
Liabilities:
Collateral on Securities Loaned, at Value	11,040
Investment Advisory Fees Payable	322
Payable for Portfolio Shares Redeemed	229
Administration Fees Payable	37
Unrealized Depreciation on Foreign Currency Exchange Contracts	4
Custodian Fees Payable	4
Distribution Fees — Class II Shares	2
Directors’ Fees and Expenses Payable	1
Other Liabilities	26
Total Liabilities	11,665
NET ASSETS	$	174,379
Net Assets Consist of:
Paid-in Capital	$	171,106
Undistributed Net Investment Income	4,913
Accumulated Net Realized Loss	(8,709		)
Unrealized Appreciation (Depreciation) on:
Investments	7,020
Foreign Currency Exchange Contracts and Translations	49
Net Assets	$	174,379
CLASS I:
Net Assets	$	138,080
Net Asset Value, Offering and Redemption Price Per Share Applicable to 17,822,909 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	7.75
CLASS II:
Net Assets	$	36,299
Net Asset Value, Offering and Redemption Price Per Share Applicable to 4,709,494 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	7.71
(1) Including:
Securities on Loan, at Value	$	10,977

@  Amount is less than $500.

8 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Debt Portfolio

Statement of Operations

	Year Ended December 31, 2009 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers	$	10,697
Dividends from Security of Affiliated Issuer	27
Total Investment Income	10,724
Expenses:
Investment Advisory Fees (Note B)	1,058
Administration Fees (Note C)	354
Distribution Fees — Class II Shares (Note D)	110
Shareholder Reporting Fees	56
Professional Fees	36
Custodian Fees (Note F)	19
Directors’ Fees and Expenses	4
Transfer Agency Fees (Note E)	1
Other	10
Total Expenses	1,648
Distribution Fees — Class II Shares Waived (Note D)	(94		)
Rebate from Morgan Stanley Affiliates (Note I)	(6		)
Expense Offset (Note F)	—		@
Net Expenses	1,548
Net Investment Income	9,176
Realized Gain (Loss) on:
Investments Sold	(1,344		)
Foreign Currency Exchange Contracts	105
Foreign Currency Transactions	(2,520		)
Futures Contracts	(112		)
Net Realized Loss	(3,871		)
Change in Unrealized Appreciation (Depreciation) on:
Investments	30,622
Foreign Currency Exchange Contracts	57
Foreign Currency Translations	76
Net Change in Unrealized Appreciation (Depreciation)	30,755
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)	26,884
Net Increase in Net Assets Resulting from Operations	$	36,060

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements. 9

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Debt Portfolio

Statements of Changes in Net Assets

		Year Ended December 31, 2009 (000)			Year Ended December 31, 2008 (000)
Increase (Decrease) in Net Assets
Operations:
Net Investment Income		$	9,176		$	9,449
Net Realized Loss		(3,871		)	(5,498		)
Net Change in Unrealized Appreciation (Depreciation)		30,755			(29,196		)
Net Increase (Decrease) in Net Assets Resulting from Operations		36,060			(25,245		)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(8,421		)	(8,762		)
Net Realized Gain		—			(5,057		)
Class II:
Net Investment Income		(2,546		)	(2,577		)
Net Realized Gain		—			(1,499		)
Total Distributions		(10,967		)	(17,895		)
Capital Share Transactions:(1)
Class I:
Subscriptions		48,827			34,544
Distributions Reinvested		8,421			13,819
Redemptions		(31,529		)	(50,363		)
Class II:
Subscriptions		8,361			2,898
Distributions Reinvested		2,546			4,076
Redemptions		(7,459		)	(10,421		)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		29,167			(5,447		)
Total Increase (Decrease) in Net Assets		54,260			(48,587		)
Net Assets:
Beginning of Period		120,119			168,706
End of Period (Including Undistributed Net Investment Income of $4,913 and $9,023)		$	174,379		$	120,119
(1)	Capital Share Transactions:
	Class I:
	Shares Subscribed	6,698			4,265
	Shares Issued on Distributions Reinvested	1,231			1,840
	Shares Redeemed	(4,441		)	(6,792		)
	Net Increase (Decrease) in Class I Shares Outstanding	3,488			(687		)
	Class II:
	Shares Subscribed	1,155			354
	Shares Issued on Distributions Reinvested	374			545
	Shares Redeemed	(1,085		)	(1,412		)
	Net Increase (Decrease) in Class II Shares Outstanding	444			(513		)

10 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Emerging Markets Debt Portfolio

	Class I
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	6.47		$	8.53		$	8.92		$	9.04		$	8.89
Income (Loss) from Investment Operations
Net Investment Income#	0.47			0.46			0.54			0.53			0.73
Net Realized and Unrealized Gain (Loss)	1.41			(1.61		)	0.01			0.32			0.30
Total from Investment Operations	1.88			(1.15		)	0.55			0.85			1.03
Distributions from and/or in Excess of:
Net Investment Income	(0.60		)	(0.58		)	(0.66		)	(0.80		)	(0.73		)
Net Realized Gain	—			(0.33		)	(0.28		)	(0.17		)	(0.15		)
Total Distributions	(0.60		)	(0.91		)	(0.94		)	(0.97		)	(0.88		)
Net Asset Value, End of Period	$	7.75		$	6.47		$	8.53		$	8.92		$	9.04
Total Return ±	30.21		%	(14.98		)%	6.55		%	10.81		%	12.25		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	138,080		$	92,681		$	128,135		$	136,167		$	155,945
Ratio of Expenses to Average Net Assets	1.08		%+	1.10		%+	1.06		%+	1.10		%	1.09		%
Ratio of Net Investment Income to Average Net Assets	6.50		%+	6.00		%+	6.15		%+	5.98		%	8.18		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.00		%§	0.00		%§	0.00		%§	N/A			N/A
Portfolio Turnover Rate	97		%	70		%	59		%	57		%	63		%

#	Per share amount is based on average shares outstanding.
±	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.
§	Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements. 11

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Emerging Markets Debt Portfolio

	Class II
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	6.43		$	8.49		$	8.88		$	9.01		$	8.87
Income (Loss) from Investment Operations
Net Investment Income#	0.46			0.46			0.53			0.50			0.71
Net Realized and Unrealized Gain (Loss)	1.41			(1.62		)	0.02			0.34			0.30
Total from Investment Operations	1.87			(1.16		)	0.55			0.84			1.01
Distributions from and/or in Excess of:
Net Investment Income	(0.59		)	(0.57		)	(0.66		)	(0.80		)	(0.72		)
Net Realized Gain	—			(0.33		)	(0.28		)	(0.17		)	(0.15		)
Total Distributions	(0.59		)	(0.90		)	(0.94		)	(0.97		)	(0.87		)
Net Asset Value, End of Period	$	7.71		$	6.43		$	8.49		$	8.88		$	9.01
Total Return ±	30.11		%	(14.98		)%	6.39		%	10.80		%	12.14		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	36,299		$	27,438		$	40,571		$	38,329		$	33,994
Ratio of Expenses to Average Net Assets(1)	1.13		%+	1.15		%+	1.11		%+	1.15		%	1.14		%
Ratio of Net Investment Income to Average Net Assets(1)	6.48		%+	5.97		%+	6.10		%+	5.69		%	8.08		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.00		%§	0.00		%§	0.00		%§	N/A			N/A
Portfolio Turnover Rate	97		%	70		%	59		%	57		%	63		%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser and/or Distributor:
Expenses to Average Net Assets	1.43		%+	1.45		%+	1.41		%+	1.45		%	1.44		%
Net Investment Income to Average Net Assets	6.18		%+	5.67		%+	5.80		%+	5.39		%	7.78		%

#	Per share amount is based on average shares outstanding.
±	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.
§	Amount is less than 0.005%.

12 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements

The Universal Institutional Funds, Inc., (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund is comprised of sixteen separate active, diversified and non-diversified portfolios (individually referred to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Emerging Markets Debt Portfolio. The Portfolio seeks high total return by investing primarily in fixed income securities of government and government-related issuers and, to a lesser extent, of corporate issuers in emerging market countries. The Portfolio offers two classes of shares — Class I and Class II. Both classes of shares have identical voting rights (except that shareholders of a Class have exclusive voting rights regarding any matter relating solely to that Class of shares), dividend, liquidation and other rights.

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

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles. Such policies are consistently followed by the Fund in the preparation of the financial statements. U.S. generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.Security Valuation: Securities listed on a foreign exchange are valued at their closing price. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the current bid and asked prices obtained from reputable brokers. Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NASDAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Bonds and other fixed income securities may be valued according to the broadest and most representative market. In addition, bonds and other fixed income securities may be valued on the basis of prices provided by a pricing service. The prices provided by a pricing service take into account broker dealer market price quotations for institutional size trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities. Debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors (the “Directors”) determines such valuation does not reflect the securities’ market value, in which case these securities will be valued at their fair value as determined by the Directors.

All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Directors, although the actual calculations may be done by others. 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.

Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect 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 these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.

2.Foreign Currency Translation and Foreign Investments: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the mean of the bid and asked prices of such currencies against U.S. dollars last quoted by a major bank as follows:

·investments, other assets and liabilities at the prevailing rates 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of the securities held at period end. Similarly, the Fund does 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

13

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

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 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 Fund’s 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) on the Statement of Assets and Liabilities. The change in net unrealized currency gains (losses) for the period is reflected on the Statement of Operations.

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, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violation of foreign investment limitations. As a result, an additional class of shares (identified as “Foreign” in the Portfolio of Investments) may be created and offered for investment. The “local” and “foreign” shares’ market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares. Such securities, if any, are identified as fair valued in the Portfolio of Investments.

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

Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Portfolio 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 SEC rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio’s investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio may use and their associated risks:

Foreign Currency Forward Contracts. In connection with its investments in foreign securities, the Portfolio also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date (“forward contracts”). A foreign currency forward contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Forward foreign currency exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Portfolio may use cross currency hedging or proxy hedging with respect to

14

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

currencies in which the Portfolio has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. A currency exchange contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain (loss). The Portfolio records realized gains (losses) when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Hedging the Portfolio’s currency risks involves the risk of mismatching the Portfolio’s objectives under a forward or futures contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Portfolio’s securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts.

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

Options. In respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If a Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument such as a security, currency or index, at an agreed upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase put and call options. Purchasing call options tends to increase the Portfolio’s exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio’s exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio 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” on the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If a Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed upon price typically in exchange for a premium received by the Portfolio. The Portfolio may write call and put options on stock indexes, futures, securities or currencies it owns or in which it may invest. Writing put options tend to increase the Portfolio’s exposure to the underlying instrument. Writing a call options tend to decrease the Portfolio’s exposure to the underlying instruments. When the Portfolio writes a call or put option, an amount equal to the premium received is recorded as a liability. Any liability recorded is subsequently adjusted to reflect the current value of the options written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the net realized gain (loss). The Portfolio as a writer of an option has no control over whether the underlying future, security or currency may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future, security or currency underlying the written option. There is the risk the Portfolio may not be able to enter into a closing

15

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

transaction because of an illiquid market. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Swaps: In respect to swaps, the Portfolio is subject to equity risk, interest rate risk and credit risk in the normal course of pursuing its investment objectives. A swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Portfolio’s obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. In a zero-coupon interest rate swap, payment only occurs at maturity, at which time one counterparty pays the total compounded fixed rate over the life of the swap and the other pays the total compounded floating rate that would have been earned had a series of floating rate investments been rolled over through the life of the swap. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality changes are not correctly anticipated by the Portfolio or if the reference index, security or investments do not perform as expected. When the Portfolio has an unrealized loss on a swap agreement, the Portfolio has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Cash collateral is included with “Due from (to) Broker” on the Statement of Assets and Liabilities. Cash collateral has been offset against open swap agreements under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) “Balance Sheet” (ASC 210) (formerly known as FIN 39). Offsetting of Amounts Related to Certain Contracts an interpretation of ASC 210-20 (formerly known as APB No. 10 and SFAS 105) and are included within “Swap Agreements, at Value” on the Statement of Assets and Liabilities. For cash collateral received, the Portfolio pays a monthly fee to the counterparty based on the effective rate for Federal Funds. This fee, when paid, is included within realized gain (loss) on swap agreements on the Statement of Operations.

The Portfolio adopted the provisions of the FASB ASC 815-10, “Derivatives and Hedging” (“ASC 815-10”) (formerly known as SFAS 133-1) and ASC 460-10, “Guarantees” (“ASC 460-10”) (formerly known as FIN 45-4): An Amendment of FASB ASC 815 (formerly known as SFAS 133) and ASC 460 (formerly known as FIN 45), effective December 31, 2008. ASC 815-10 and ASC 460-10 require the seller of credit derivatives to provide additional disclosure about its credit derivatives. The Portfolio’s use of swaps may include those based on the credit of an underlying security and commonly referred to as credit default swaps. Where the Portfolio is the buyer of a credit default swap agreement, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the agreement only in the event of a default by a third party on the debt obligation. If no default occurs, the Portfolio would have paid to the counterparty a periodic stream of payments over the term of the agreement and received no benefit from the agreement. When the Portfolio is the seller of a credit default swap agreement, it receives the stream of payments but is obligated to pay upon default of the referenced debt obligation. The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as an indicator of the current status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.

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

Structured Investments. The Portfolio also may invest a portion of its assets in structured notes and other types of

16

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

structured investments. A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more “factors.” These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Changes in interest rates and movement of the factor may cause significant price fluctuations and changes in the reference factor may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference factor may then reduce the principal amount payable on maturity. Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. These investment entities may be structured as trusts or other types of pooled investment vehicles. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio’s illiquidity to the extent that the Portfolio, at a particular point in time, may be unable to find qualified buyers for these securities.

The Portfolio adopted the provisions of FASB ASC 815, “Derivatives and Hedging: Overall” (“ASC 815”) (formerly known as SFAS 161), effective December 31, 2008. ASC 815 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio’s financial position and results of operations.

The following table sets forth the fair value of the Portfolio’s derivative contracts by primary risk exposure as of December 31, 2009.

Primary Risk Exposure	Statement of Assets and Liabilities	Foreign Currency Exchange Contracts (000)
Assets:
Foreign Currency
Contracts Risk	Receivables	$	44
Liabilities:
Foreign Currency
Contracts Risk	Payables	$	4

The following tables set forth by primary risk exposure the Portfolio’s realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2009 in accordance with ASC 815.

Realized Gain (Loss)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency	Foreign Currency
Contracts Risk	Exchange Contracts	$	105
Interest Rate Risk	Futures Contracts	(112		)
Total		$	(7	)

Change in Unrealized Appreciation (Depreciation)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency	Foreign Currency
Contracts Risk	Exchange Contracts	$	57

All open derivative positions at period end are reflected on the Portfolio’s Portfolio of Investments and the volume of these open positions relative to the net assets of the Portfolio is generally representative of open positions throughout the reporting period.

4.When-Issued/Delayed Delivery Securities: The Portfolio 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 yield, and no income accrues to the Portfolio on such securities prior to delivery. Payment and delivery for when-issued and delayed delivery securities can take place up to 120 days after the date of the transaction. When the Portfolio enters into a purchase transaction on a when-issued or delayed delivery basis, it establishes either a segregated account in which it maintains liquid assets in an amount at least equal in value to the Portfolio’s commitments to purchase such securities or designates such assets as segregated on the Portfolio’s records. 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 the Portfolio.

5.Loan Agreements: The Portfolio may invest in fixed and floating rate loans (“Loans”) arranged through private negotiations between an issuer of sovereign debt (“Lenders”) deemed to be creditworthy by the investment adviser. The Portfolio’s investments in Loans may be in the form of participations in Loans (“Participations”) or

17

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

assignments of all or a portion of Loans (“Assignments”) from third parties. The Portfolio’s investment in Participations typically results in the Portfolio having a contractual relationship with only the Lender and not with the borrower. The Portfolio has the right to receive payments of principal, interest and any fees to which it is entitled only upon receipt by the Lender of the payments from the borrower. The Portfolio generally has no right to enforce compliance by the borrower with the terms of the loan agreement. As a result, the Portfolio may be subject to the credit risk of both the borrower and the Lender that is selling the Participation. When the Portfolio purchases Assignments from Lenders, it typically acquires direct rights against the borrower on the Loan. Because Assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by the Portfolio as the purchaser of an Assignment may differ from, and be more limited than, those held by the assigning Lender.

6.Securities Lending: The Portfolio 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 Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked to market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements backed by U.S. Treasury and Agency securities. 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 included in the Portfolio’s Statement of Operations in affiliated dividend income and interest 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.

The value of the loaned securities was approximately $10,977,000 and related collateral outstanding at December 31, 2009 was approximately $11,040,000. For the year ended December 31, 2009, the Portfolio had income from securities lending (after rebates to borrowers and allocation to the securities lending agent) of approximately $20,000.

7.Repurchase Agreements: The Portfolio may enter into repurchase agreements under which a Portfolio lends excess cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In 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 the adequacy of the collateral. 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 and/or retention of the collateral or proceeds may be subject to legal proceedings. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

8.Fair Value Measurement: In accordance with FASB ASC 820 “Fair Value Measurements and Disclosure” (“ASC 820”) (formerly known as SFAS 157), fair value is defined as the price that the Portfolio would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Portfolio’s investments. The inputs are summarized in the three broad levels listed below.

18

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

Level 1 — quoted prices in active markets for identical securities

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

Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

9.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains (losses) on the sale of investment securities are determined on the specific identified cost basis. Dividend income and distributions are recorded on the ex-dividend date (except for certain foreign dividends that may be recorded as soon as the Fund is informed of such dividends), net of applicable withholding taxes where recovery of such taxes is not reasonably assured. Interest income is recognized on the accrual basis except where collection is in doubt and is recorded net of foreign withholding tax. Discounts and premiums on securities purchased are amortized according to the effective yield method over their respective lives. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets. Income, expenses (other than class specific expenses) and realized and unrealized gains (losses) are allocated to each class of shares based upon their relative net assets or other appropriate measures.

Settlement and registration of foreign securities transactions may be subject to significant risks not normally associated with investments in the United States. In certain markets, ownership of shares is defined according to entries in the issuer’s share register. It is possible that a Portfolio holding these securities could lose its share registration through fraud, negligence or even mere oversight. In addition, shares being delivered for sales and cash being paid for purchases may be delivered before the exchange is complete. This may subject the Portfolio to further risk of loss in the event of a failure to complete the transaction by the counterparty.

B. Investment Advisory Fees: Morgan Stanley Investment Management Inc. (the “Adviser” or “MS Investment Management”), a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with investment advisory services for a fee, paid quarterly, at the annual rate based on average daily net assets as follows:

First $500 million		Next $500 million		Over $1 billion
0.75	%	0.70	%	0.65	%

MS Investment Management has voluntarily agreed to waive fees payable to it and/or reimburse the Portfolio for certain expenses, after giving effect to custody fee offsets, if necessary, to the extent that the total annual operating expenses, excluding bank overdraft, certain foreign taxes and extraordinary expenses, expressed as a percentage of average daily net assets, exceed the maximum ratio of 1.30% for Class I shares and 1.35% for Class II shares. Fee waivers and/or expense reimbursements are voluntary and may be terminated at any time.

C. Administration Fees: MS Investment Management (the “Administrator”) also provides the Portfolio with administrative services pursuant to an administration agreement for a monthly fee, which on an annual basis equals 0.25% of the average daily net assets of the Portfolio, plus reimbursement of out-of-pocket expenses. Under an agreement between the Administrator and JPMorgan Investor Services Co. (“JPMIS”), a corporate affiliate of JPMorgan Chase Bank, N.A., JPMIS provides certain administrative services to the Fund. For such services, the Administrator pays JPMIS a portion of the fee the Administrator receives from the Fund. In addition, the Fund incurs local administration fees in connection with doing business in certain emerging market countries.

D. Distribution Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund and provides the Portfolio’s Class II shareholders with distribution services pursuant to a Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio is authorized to pay the Distributor a distribution fee, which is accrued daily and paid monthly, at an annual rate of 0.35% of the Portfolio’s average daily net assets attributable to Class II shares. The Distributor has voluntarily agreed to waive 0.30% of the 0.35% distribution fee that it may receive. For the year ended December 31, 2009, this waiver amounted to approximately $94,000.

E. Dividend Disbursing and Transfer Agent: The Fund dividend disbursing and transfer agent is Morgan Stanley Services Company Inc. (“Morgan Stanley Services”). Pursuant to a Transfer Agency Agreement, the Fund pays Morgan Stanley Services a fee generally based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: JPMorgan Chase Bank, N.A. (the “Custodian”) serves as Custodian for the Fund in accordance

19

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

with a custodian agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the 1940 Act.

The Fund has entered into an arrangement with its Custodian whereby credits realized on uninvested cash balances were used to offset a portion of the Portfolio’s expenses. These custodian credits are shown as “Expense Offset” on the Statement of Operations.

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

H. Federal Income Taxes: It is the Portfolio’s intention to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements. Distributions to shareholder are recorded on the ex-dividend date.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation as these amounts 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.

FASB ASC 740-10 “Income Taxes — Overall” (formerly known as FIN 48) 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 Portfolio recognizes interest accrued related to unrecognized tax benefits in “Interest Expense” and penalties in “Other” expenses on the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four year period ended December 31, 2009, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown on the Statement 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 2009 and 2008 was as follows:

2009 Distributions Paid From:				2008 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	10,967	$	—	$	14,632	$	3,263

The amount and character of income and capital gain distributions to be paid by the Portfolio are determined in accordance with Federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable 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, paydown adjustments and defaulted bonds, resulted in the following reclassifications among the components of net assets at December 31, 2009:

Undistributed (Distributions in Excess of) Net Investment Income (Loss) (000)			Accumulated Net Realized Gain (Loss) (000)		Paid-in Capital (000)
$	(2,319	)	$	2,319	$	(—	@)

@ Amount is less than $500.

At December 31, 2009, the Portfolio had distributable earnings on a tax basis as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	7,646	$	—

At December 31, 2009, cost and unrealized appreciation (depreciation) for U.S. Federal income tax purposes of the investments of the Portfolio were:

Cost (000)		Appreciation (000)		Depreciation (000)			Net Appreciation (Depreciation) (000)
$	178,809	$	9,741	$	(6,588	)	$	3,153

At December 31, 2009, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, of approximately $7,308,000, of

20

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

which, $4,779,000 will expire on December 31, 2016 and $2,529,000 will expire on December 31, 2017.

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

I. Security Transactions and Transactions with Affiliates: The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the “Liquidity Funds”), an open-end management investment company managed by the Adviser both directly, and as a portion of the securities held as collateral on loaned securities. Investment Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the year ended December 31, 2009, advisory fees paid were reduced by approximately $6,000 relating to the Portfolio’s investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the Liquidity Funds during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)		Sales Proceeds (000)		Dividend Income (000)		Market Value December 31, 2009 (000)
$	4,039	$	177,703	$	168,581	$	27	$	13,161

For the year ended December 31, 2009, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $156,667,000 and $131,655,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2009.

During the year ended December 31, 2009, the Portfolio incurred no brokerage commissions with Morgan Stanley & Co. Incorporated, an affiliated broker/dealer.

J. Other (unaudited): At December 31, 2009, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 56.3% and 93.0% for Class I and Class II shares, respectively.

K. Subsequent Events: In accordance with the provisions set forth in FASB ASC 855 “Subsequent Events” (formerly known as SFAS 165), adopted by the Portfolio as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Portfolio’s financial statements through February 19, 2010.

On January 8, 2010, the Directors of the Portfolio approved the conversion for Fund Accounting, Custody, Fund Administration and Securities Lending services from JPMorgan Investor Services Co. to State Street Bank and Trust Company. The conversion is expected to be completed in or about the second quarter of 2010.

21

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
The Universal Institutional Funds, Inc. —
Emerging Markets Debt Portfolio

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Emerging Markets Debt Portfolio (one of the portfolios constituting The Universal Institutional Funds, Inc.) (the “Portfolio”) as of December 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Emerging Markets Debt Portfolio of The Universal Institutional Funds, Inc. at December 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
February 19, 2010

22

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Federal Income Tax Information (unaudited)

For Federal income tax purposes, the following information is furnished with respect to the Portfolio’s earnings for its taxable year ended December 31, 2009.

The Portfolio may designate up to a maximum of $9,000 as qualifying as interest-related dividends.

In January, the Portfolio provides tax information to shareholders for the preceding calendar year.

23

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (unaudited)

Independent Directors:

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund  Complex Overseen by  Independent Director**	Other Directorships Held by Independent Directors***
Frank L. Bowman (65) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004); Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l’Orde National du Mérite by the French Government.	162	Director of Armed Services YMCA of the USA; member, BP America External Advisory Council (energy); member, National Academy of Engineers.
Michael Bozic (68) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since April 1994	Private Investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006), Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears Roebuck & Co.	164	Director of various business organizations.
Kathleen A. Dennis (56) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).	162	Director of various non-profit organizations.
Dr. Manuel H. Johnson (60) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006	Director	Since July 1991	Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.	164	Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings.
Joseph J. Kearns (67) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265	Director	Since August 1994	President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); CFO of the J. Paul Getty Trust.	165	Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation.

24

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Independent Directors (cont’d):

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Michael F. Klein (51) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chief Operating Officer and Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).	162	Director of certain investment funds managed or sponsored by Aetos Capital LLC; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).
Michael E. Nugent (73) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022	Chairperson of the Board and Director	Chairperson of the Boards since July 2006 and Director since July 1991	General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006).	164	None.
W. Allen Reed (62) † c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (July 1994-December 2005).	162	Director of Temple-Inland Industries (packaging and forest products), Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006).
Fergus Reid (77) c/o Joe Pietryka, Inc. 85 Charles Coleman Blvd. Pawling, NY 12564	Director	Since June 1992	Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992).	165	Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc.

Interested Directors:

Name, Age and Address of  Interested Director	Position(s)  Held with  Registrant	Term of  Office and  Length of  Time  Served*	Principal Occupation(s) During Past 5 Years	Number of  Portfolios in  Fund  Complex  Overseen by  Interested  Director**	Other Directorships Held by Interested  Director***
James F. Higgins (61) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311	Director	Since June 2000	Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000).	163	Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

*	This is the earliest date the Director began serving the Retail Funds or Institutional Funds. Each Director serves an indefinite term, until his or her successor is elected.
**	The Fund Complex includes all funds advised by MS Investment Management that have an investment advisor that is an affiliated entity of MSIM (including but not limited to, Morgan Stanley Investment Advisors Inc. (“MSIA”) and Morgan Stanley AIP GP LP). The Retail Funds are those funds advised by MSIA. The Institutional Funds are certain U.S. registered funds advised by MS Investment Management and Morgan Stanley AIP GP LP.
***	This includes any directorships at public companies and registered investment companies held by the Directors at any time during the past five years.
†	For the period September 26, 2008 through February 5, 2009 W. Allen Reed was an Interested Director. At all other times covered by this report, Mr. Reed was an Independent Director.

25

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Executive Officers:

Name, Age and Address of Executive Officer	Position(s) Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years
Randy Takian (35) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	President and Principal Executive Officer	Since September 2008	President and Principal Executive Officer (since September 2008) of funds in the Fund Complex; President and Chief Executive Officer of Morgan Stanley Services Company Inc. (since September 2008). President of Morgan Stanley Investment Advisors Inc. (since July 2008). Head of the Retail and Intermediary business within Morgan Stanley Investment Management (since July 2008). Head of Liquidity and Bank Trust business (since July 2008) and the Latin American franchise (since July 2008) at Morgan Stanley Investment Management. Managing Director, Director and/or Officer of the Adviser and various entities affiliated with the Adviser. Formerly, Head of Strategy and Product Development for the Alternatives Group and Senior Loan Investment Management. Formerly with Bank of America (July 1996-March 2006), most recently as Head of the Strategy, Mergers and Acquisitions team for Global Wealth and Investment Management.
Kevin Klingert (47) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since June 2008	Head, Chief Operating Officer and acting Chief Investment Officer of the Global Fixed Income Group of the Adviser and Morgan Stanley Investment Advisors Inc. (since April 2008). Head of Global Liquidity Portfolio Management and co-Head of Liquidity Credit Research of Morgan Stanley Investment Management (since December 2007). Managing Director of the Adviser and Morgan Stanley Investment Advisors Inc. (since December 2007). Previously, Managing Director on the Management Committee and head of Municipal Portfolio Management and Liquidity at BlackRock (October 1991 to January 2007).
Carsten Otto (46) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Chief Compliance Officer	Since October 2004	Managing Director and Global Head of Compliance for Morgan Stanley Investment Management (since April 2007) and Chief Compliance Officer of the Retail Funds and Institutional Funds (since October 2004). Formerly, U.S. Director of Compliance (October 2004-April 2007) and Assistant Secretary and Assistant General Counsel of the Retail Funds.
Stefanie V. Chang Yu (43) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since December 1997	Managing Director and Secretary of the Adviser and various entities affiliated with the Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997).
Mary E. Mullin (42) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Secretary	Since June 1999	Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999).
James W. Garrett (41) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Treasurer and Chief Financial Officer	Treasurer since February 2002 and Chief Financial Officer since July 2003	Head of Global Fund Administration for the Morgan Stanley Investment Management; Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer and Chief Financial Officer of the Institutional Funds.

*This is the earliest date the Officer began serving the Retail Funds or Institutional Funds. Each Officer serves an indefinite term, until his or her successor is elected.

26

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Adviser and Administrator	Custodian
Morgan Stanley Investment Management Inc.	JPMorgan Chase Bank, N.A.
522 Fifth Avenue	270 Park Avenue
New York, New York 10036	New York, New York 10017
Distributor	Legal Counsel
Morgan Stanley Distribution, Inc.	Dechert LLP
One Tower Bridge	1095 Avenue of the Americas
100 Front Street, Suite 1100	New York, New York 10036
West Conshohocken, PA 19428-2899
	Independent Registered Public Accounting Firm
Dividend Disbursing and Transfer Agent	Ernst & Young LLP
Morgan Stanley Services Company Inc.	200 Clarendon Street
P.O. Box 219804	Boston, Massachusetts 02116-5072
Kansas City, MO 64121-9804

The Investment Adviser, Morgan Stanley Investment Management Inc., does business in certain instances as Van Kampen or Morgan Stanley Asset Management.

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund’s second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.vankampen.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public website. 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 website, 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 toll free at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102.

The Fund’s Statement of Additional Information contains additional information about the Fund, including its Directors. It is available, without charge, by calling 1-800-281-2715.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free 1-800-281-2715 or by visiting our website at www.vankampen.com. It is also available on the Securities and Exchange Commission’s website at www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 by calling toll fee 1-800-281-2715. This information is also available on the SEC’s website at www.sec.gov.

UIFEMDANN

IU10-00613P-Y12/09

27

	The Universal Institutional Funds, Inc.
	Annual Report — December 31, 2009

Emerging Markets Equity Portfolio

The Portfolio is 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.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Expense Examples (unaudited)

Emerging Markets Equity Portfolio

Expense Examples

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges, and (2) ongoing costs, including management fees, distribution (12b-1) fees (in the case of Class II shares) and other Portfolio expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

These examples are based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2009 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of Expense Offset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the table below is useful in comparing ongoing costs, but 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.

	Beginning Account Value 7/1/09		Actual Ending Account Value 12/31/09		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Equity Class I	$	1,000.00	$	1,302.30	$	1,017.14	$	9.28	$	8.13	1.60	%
Emerging Markets Equity Class II	1,000.00		1,303.20		1,016.89		9.58		8.39		1.65

*	Expenses are calculated using each Portfolio Class’ annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 184/365 (to reflect the most recent one-half year period).
**	Annualized

1

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (unaudited)

Emerging Markets Equity Portfolio

The Emerging Markets Equity Portfolio (the “Portfolio”) seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries. Foreign investing involves certain risks, including currency fluctuations and controls, restrictions on foreign investments, less liquidity and the potential for market volatility and political instability. In addition, investing in emerging markets may involve a relative higher degree of volatility.

Performance

For the fiscal year ended December 31, 2009, the Portfolio had a total return based on net asset value and reinvestment of distributions per share of 69.84%, net of fees, for Class I shares and 70.12%, net of fees, for Class II shares. The Portfolio’s Class I and Class II shares underperformed against its benchmark, the Morgan Stanley Capital International (MSCI) Emerging Markets Net Index (the “Index”) which returned 78.51%.

Factors Affecting Performance

·In 2009 emerging markets equities rebounded from an unprecedented collapse in global financial markets and significant declines in economic activity. The asset class, as measured by the MSCI Emerging Markets Index, posted a 78.5% return for the year and outperformed the developed markets (as measured by the MSCI World Index) by 48.5 percentage points. A healthy banking system across several emerging market countries, strong corporate and government balance sheets, a low interest rate environment, strong current account and fiscal balances, and positive economic momentum from China helped boost commodity prices and equity performance in all regions. The materials, energy, technology and consumer discretionary sectors led the emerging market recovery. On a regional basis, Latin America was the top performer, outperforming the MSCI Emerging Markets Index, followed by Asia and the Europe, Middle East and Africa (EMEA) region, both of which underperformed the Index.

·The Portfolio’s relative performance was driven by positive contributions from an overweight allocation to Indonesia and stock selection there.

·Underweight allocations to Malaysia and Morocco relative to the Index also benefited performance.

·Stock selection in South Africa, Russia, and Turkey were additive to performance.

·Relative gains also came from an overweight to the consumer discretionary sector.

·However, an overweight allocation to Poland and stock selection there detracted from performance.

·Underweight allocations to Brazil and Taiwan hurt performance.

·Additionally, relative performance was held back by stock selection in India.

·Underweight allocations to the energy and materials sectors also dampened relative performance.

Management Strategies

·Extremely high correlations are a symptom of a global boom-bust environment. Correlations between different economies and various financial asset classes that peaked at the height of the financial turmoil in the autumn of 2008 have fallen and we believe will continue to trend lower from here. We expect differentiation among markets based on local factors will matter once more. Within emerging markets, more capital will likely flow to countries that have shown greater resilience on a fundamental basis. Among sectors, materials and energy will likely remain tied to the global macro environment, but consumer stocks with exposure to emerging markets should show steady growth given the relatively low consumer leverage in many developing countries. There is a risk that rising inflation in emerging markets will result in central bank tightening in many countries. Therefore, we continue to position the Portfolio in names that we believe may perform well in stable and weaker market conditions. In particular, we are decreasing the overweight to financials and increasing our positions in sectors such as consumer staples and telecommunications.

2

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (cont’d)

Emerging Markets Equity Portfolio

Performance Compared to the Morgan Stanley Capital International (MSCI) Emerging Markets Net Index(1)

	Total Returns(2)
			Average Annual
	One Year		Five Years		Ten Years		Since Inception(5)
Portfolio — Class I(3)	69.84	%	13.69	%	6.13	%	7.61	%
MSCI Emerging Markets Net Index	78.51		15.51		9.82		8.01
Portfolio — Class II(4)	70.12		13.65		—		19.14
MSCI Emerging Markets Net Index	78.51		15.51		—		21.45

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. Performance assumes that all dividends and distributions, if any, were reinvested. For the 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 so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance shown does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total returns would be lower.

(1)	The Morgan Stanley Capital International (MSCI) Emerging Markets Net Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance of emerging markets. 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 MSCI Emerging Markets Index currently consists of 22 emerging market country indices. 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.
(2)	Total returns for the Portfolio reflect fees waived and expenses reimbursed, if applicable, by the Adviser. Without such waivers and reimbursements, total returns would have been lower. Fee waivers and/or expense reimbursements are voluntary and the Adviser reserves the right to commence or terminate any waiver and/or reimbursement at any time.
(3)	Commenced operations on October 1, 1996.
(4)	Commenced operations on January 10, 2003.
(5)	For comparative purposes, average annual since inception returns listed for the Index refers to the inception date or initial offering of the respective share class of the Portfolio, not the inception of the Index.

In accordance with SEC regulations, Portfolio performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested. The performance of Class II shares will vary from the Class I shares based upon its different inception date and will be negatively impacted by additional fees assessed to that class.

Portfolio Composition*

Classification	Percentage of Total Investments
Commercial Banks	21.3	%
Oil, Gas & Consumable Fuels	8.7
Metals & Mining	6.7
Wireless Telecommunication Services	5.1
Semiconductors & Semiconductor Equipment	5.0
Other**	48.8
Short-Term Investment	4.4
Total Investments	100.0	%

*	Percentages indicated are based upon total investments (excluding Securities held as collateral on Loaned Securities) as of December 31, 2009.
**	Industries representing less than 5% of total investments.

3

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments

Emerging Markets Equity Portfolio

	Shares	Value (000)
Common Stocks (95.4%)
Brazil (13.0%)
Banco Bradesco S.A. ADR (a)	316,200	$	6,915
Banco Bradesco S.A. (Preference)	121,500	2,630
BM&F Bovespa S.A.	510,700	3,549
BRF-Brasil Foods S.A.	395,097	10,340
Cia de Bebidas das Americas (Preference) ADR (a)	93,700	9,472
Companhia Brasileira de Meios de Pagamento	866,800	7,555
Itau Unibanco Holding S.A.	120,693	2,731
Itau Unibanco Holding S.A. (Preference) ADR (a)	788,070	18,000
MRV Engenharia e Participacoes S.A.	667,200	5,326
NET Servicos de Comunicacao S.A. (Preference) (b)	353,129	4,813
PDG Realty S.A. Empreendimentos e Participacoes	499,700	4,904
Petroleo Brasileiro S.A., Class A ADR	184,993	7,842
Petroleo Brasileiro S.A. ADR	111,000	5,293
Petroleo Brasileiro S.A. (Preference)	351,104	7,443
Ultrapar Participacoes S.A. (Preference)	88,430	4,119
Vale S.A. ADR (a)	24,600	714
Vale S.A. (Preference), Class A	31,755	786
Vale S.A. (Preference) ADR (a)	890,425	22,100
Vivo Participacoes S.A. ADR (a)	170,200	5,276
		129,808
China/Hong Kong (17.6%)
Bank of China Ltd., Class H	11,698,000	6,263
Beijing Enterprises Holdings Ltd. (a)	910,500	6,546
Belle International Holdings Ltd.	4,026,000	4,651
China Citic Bank, Class H	8,192,000	6,930
China Communications Services Corp., Ltd., Class H	506,000	247
China Construction Bank Corp., Class H (a)	24,079,000	20,496
China Dongxiang Group Co., Class H (a)	2,657,400	2,041
China Life Insurance Co., Ltd., Class H (a)	2,744,000	13,427
China Longyuan Power Group Corp., Class H (a)(b)	1,305,000	1,690
China Mobile Ltd. (a)	1,034,500	9,643
China Oilfield Services Ltd., Class H	2,950,000	3,500
China Pacific Insurance Group Co. Ltd., Class H (b)	1,277,000	5,089
China Petroleum & Chemical Corp., Class H	14,450,000	12,759
China Resources Land Ltd.	1,018,000	2,292
China Resources Power Holdings Co., Ltd.	2,787,300	5,515
China Zhongwang Holdings Ltd. (a)(b)	5,754,400	4,591
Dongfeng Motor Group Co., Ltd., Class H (a)	5,655,000	8,049
Fushan International Energy Group Ltd., Class H	4,956,000	4,775
GOME Electrical Appliances Holdings Ltd. (b)	33,606,059	12,049
Hengan International Group Co. Ltd.	289,000	2,139
Industrial & Commercial Bank of China, Class H	14,665,000	12,035
PetroChina Co., Ltd., Class H	6,288,000	7,491
Ping An Insurance Group Co. of China Ltd., Class H (a)	881,000	7,640
Sany Heavy Equipment International Holdings Co. Ltd. (b)	2,151,000	2,722
Shanghai Industrial Holdings Ltd. (a)	1,802,000	9,144
Tsingtao Brewery Co. Ltd., Class H	412,000	2,275
Want Want China Holdings Ltd. (a)(b)	2,943,000	2,053
		176,052
Czech Republic (1.4%)
CEZ A.S.	50,768	2,382
Komercni Banka A.S.	42,680	9,098
Telefonica O2 Czech Republic A.S.	122,979	2,796
		14,276
Egypt (1.4%)
Commercial International Bank	762,048	7,597
Orascom Construction Industries (b)	52,599	2,381
Orascom Construction Industries GDR	19,506	907
Telecom Egypt	1,001,460	3,302
		14,187
Hungary (1.5%)
MOL Hungarian Oil and Gas Nyrt (b)	62,205	5,549
OTP Bank plc (b)	129,121	3,662
Richter Gedeon Nyrt	25,816	5,844
		15,055
India (9.6%)
Asian Paints Ltd.	70,756	2,721
Bharat Heavy Electricals Ltd.	99,430	5,113
Colgate-Palmolive India Ltd.	143,672	2,033
Deccan Chronicle Holdings Ltd.	649,294	2,295
Dr. Reddy’s Laboratories Ltd.	132,126	3,242
Glenmark Pharmaceuticals Ltd.	630,385	3,730
Godrej Consumer Products Ltd.	377,158	2,112
GVK Power & Infrastructure Ltd. (b)	2,220,940	2,202
HDFC Bank Ltd.	318,505	11,588
Hero Honda Motors Ltd.	158,654	5,819
Hindalco Industries Ltd.	1,036,900	3,537
Hindustan Construction Co.	861,140	2,686
Hindustan Petroleum Corp. Ltd.	283,968	2,384
Hindustan Unilever Ltd.	402,621	2,277
IndusInd Bank Ltd.	982,400	3,021
Infosys Technologies Ltd.	293,064	16,310
ITC Ltd.	346,100	1,853
Jaiprakash Associates Ltd.	1,494,009	4,671
KSK Energy Ventures Ltd. (b)	750,256	3,228
Marico Ltd.	709,200	1,572
Nestle India Ltd.	33,496	1,836
Tata Motors Ltd.	261,742	4,425
Wipro Ltd.	260,757	3,797
Yes Bank Ltd. (b)	595,200	3,376
		95,828

4 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Equity Portfolio

	Shares	Value (000)
Indonesia (3.7%)
Astra International Tbk PT	1,632,900	$	5,998
Bank Central Asia Tbk PT	12,019,500	6,179
Bank Rakyat Indonesia Tbk PT	5,165,500	4,174
Bumi Resources Tbk PT	12,028,500	3,106
Golden Agri-Resources Ltd. (b)	8,334,000	3,001
Indocement Tunggal Prakarsa Tbk PT	2,529,500	3,690
Indofood Sukses Makmur Tbk PT	9,693,000	3,635
Perusahaan Gas Negara PT	8,161,000	3,371
Telekomunikasi Indonesia Tbk PT	4,239,500	4,242
		37,396
Israel (0.5%)
Check Point Software Technologies (a)(b)	132,739	4,497
Malaysia (1.0%)
CIMB Group Holdings Bhd	1,152,100	4,319
Sime Darby Bhd	1,650,900	4,323
Tenaga Nasional Bhd	407,000	996
		9,638
Mexico (4.6%)
America Movil S.A.B. de C.V., Class L ADR (a)	397,249	18,663
Fomento Economico Mexicano S.A.B. de C.V. ADR	235,700	11,285
Grupo Financiero Banorte S.A.B. de C.V., Class O	2,479,598	8,942
Grupo Televisa S.A. ADR (a)	362,700	7,530
		46,420
Philippines (0.2%)
Metro Pacific Investments Corp. (b)	30,531,000	1,718
Poland (3.2%)
Bank Handlowy w Warszawie S.A. (b)	105,870	2,587
Bank Pekao S.A. (b)	44,005	2,481
Bank Zachodni WBK S.A. (b)	46,563	3,056
Cyfrowy Polsat S.A.	271,382	1,287
Polski Koncern Naftowy Orlen S.A. (b)	492,529	5,783
Powszechna Kasa Oszczednosci Bank Polski S.A.	760,245	10,000
Telekomunikacja Polska S.A.	1,240,503	6,835
		32,029
Russia (5.1%)
LUKOIL OAO ADR (a)	228,063	12,775
Polyus Gold Co. ADR	132,015	3,577
Rosneft Oil Co. GDR	758,722	6,384
RusHydro (b)	23,160,569	872
RusHydro ADR (a)(b)	505,285	1,909
Sberbank of Russian Federation	2,725,807	7,624
Vimpel-Communications OJSC ADR	261,808	4,867
Wimm-Bill-Dann Foods OJSC ADR (a)(b)	231,136	5,508
X5 Retail Group N.V. GDR (b)	229,167	7,307
		50,823
South Africa (6.7%)
Anglo Platinum Ltd. (b)	68,027	7,250
AngloGold Ashanti Ltd.	46,180	1,871
AngloGold Ashanti Ltd. ADR (a)	19,270	774
Impala Platinum Holdings Ltd.	346,300	9,414
Imperial Holdings Ltd.	249,800	2,985
Kumba Iron Ore Ltd.	59,700	2,446
MTN Group Ltd.	874,566	13,914
Naspers Ltd., Class N	363,776	14,762
SABMiller plc	334,952	9,791
Tiger Brands Ltd.	174,599	4,042
		67,249
South Korea (11.9%)
Amorepacific Corp.	5,529	4,433
Cheil Industries, Inc.	75,251	3,657
Cheil Worldwide, Inc.	16,487	4,447
Hyundai Engineering & Construction Co., Ltd. (b)	73,314	4,438
Hyundai Mobis (b)	34,250	4,996
KB Financial Group, Inc. (b)	144,358	7,364
Kia Motors Corp. (b)	114,530	1,960
Korea Exchange Bank (b)	205,900	2,563
LG Chem Ltd.	50,874	9,925
LG Dacom Corp.	73,110	1,113
LG Display Co. Ltd. ADR (a)	76,800	1,300
LG Display Co., Ltd. (b)	144,760	4,888
NCSoft Corp. (b)	20,810	2,642
NHN Corp. (b)	35,246	5,820
OCI Co., Ltd. (b)	18,037	3,391
Samsung Electronics Co., Ltd.	38,149	26,055
Samsung Electronics Co., Ltd. (Preference)	11,807	5,336
Samsung Fire & Marine Insurance Co., Ltd.	23,428	4,001
Shinhan Financial Group Co., Ltd. (b)	252,496	9,376
Shinsegae Co., Ltd. (b)	8,744	4,036
SSCP Co., Ltd. (b)	143,105	986
Woongjin Coway Co., Ltd.	192,502	6,347
		119,074
Taiwan (9.3%)
Acer, Inc.	2,192,082	6,549
AU Optronics Corp.	5,809,990	7,011
Cathay Financial Holding Co., Ltd. (b)	4,462,250	8,268
China Steel Corp.	5,245,000	5,389
Fubon Financial Holding Co., Ltd. (b)	4,421,000	5,387
Hon Hai Precision Industry Co. Ltd.	4,055,600	19,078
HTC Corp.	171,375	1,950
Lite-On Technology Corp.	2,057,000	3,076
Siliconware Precision Industries Co.	2,515,000	3,379
Taishin Financial Holding Co., Ltd. (b)	6,378,000	2,489
Taiwan Fertilizer Co., Ltd.	1,383,000	4,892
Taiwan Semiconductor Manufacturing Co., Ltd.	7,630,242	15,306
Wistron Corp.	2,469,497	4,769
Yuanta Financial Holding Co., Ltd.	6,752,000	4,921
		92,464
Thailand (2.3%)
Bangkok Bank PCL	21,400	75
Bangkok Bank PCL NVDR (a)	1,639,100	5,706

The accompanying notes are an integral part of the financial statements. 5

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Equity Portfolio

	Shares		Value (000)
Thailand (cont’d)
Banpu PCL	162,500		$	2,812
Kasikornbank PCL (Foreign)	1,180,400		3,074
Kasikornbank PCL NVDR (a)	664,900		1,690
PTT Exploration & Production PCL (Foreign)	493,500		2,169
PTT PCL (Foreign)	237,700		1,748
Siam Cement PCL NVDR (a)	272,400		1,912
Siam Commercial Bank PCL (Foreign)	1,379,300		3,593
			22,779
Turkey (2.4%)
Akbank T.A.S.	547,467		3,463
Anadolu Efes Biracilik Ve Malt Sanayii A.S.	331,896		3,719
Coca-Cola Icecek Sanayi A.S.	181,955		1,827
Turk Telekomunikasyon A.S.	491,396		1,496
Turkcell Iletisim Hizmet A.S.	472,771		3,327
Turkiye Garanti Bankasi A.S.	1,309,734		5,563
Turkiye Halk Bankasi A.S.	283,916		2,260
Turkiye Is Bankasi, Class C	666,773		2,810
			24,465
Total Common Stocks (Cost $783,596)			953,758
Investment Company (0.5%)
India (0.5%)
Morgan Stanley Growth Fund (b)(d) (Cost $708)	3,926,900		4,839
Short-Term Investments (8.6%)
Securities held as Collateral on Loaned Securities (4.2%)
Investment Company (3.6%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (c)	36,360,030		36,360
	Face Amount (000)
Repurchase Agreement (0.6%)
Deutsche Bank Securities, Inc., 0.01%, dated 12/31/09, due 1/4/10, repurchase price $5,727; fully collateralized by U.S. government agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Corp., Adjustable Rate Mortgages, 2.63% to 6.56%, due 11/1/22 to 6/1/38; Federal Home Loan Mortgage Corp., Gold Pool, Fixed Rate Mortgages, 3.50% to 7.50%, due 8/1/13 to 2/1/48; Federal National Mortgage Association, Adjustable Rate Mortgages, 2.52% to 6.29%, due 3/1/18 to 9/1/47; Federal National Mortgage Association, Fixed Rate Mortgages, 4.31% to 4.92%, due 6/1/19 to 12/1/19; Government National Mortgage Association, Adjustable Rate Mortgages, 0.86% to 4.38%, due 8/20/27 to 12/20/58; Government National Mortgage Association, Fixed Rate Mortgages, 3.50% to 7.50%, due 10/15/18 to 5/15/44, valued at $5,842.	$	5,727	5,727
			42,087
	Shares
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (c)	43,853,976			43,854
Total Short-Term Investments (Cost $85,941)			85,941
Total Investments (104.5%) (Cost $870,245) — Including $40,140 of Securities Loaned (d)			1,044,538
Liabilities in Excess of Other Assets (-4.5%)			(44,838		)
Net Assets (100%)			$	999,700

(a)	All or a portion of security on loan at December 31, 2009.
(b)	Non-income producing security.
(c)	See Note I within the Notes to Financial Statements regarding investments in the Morgan Stanley Growth Fund and the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class.
(d)	The approximate market value and percentage of total investments, $809,975,000 and 77.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.
@	Value is less than $500.
ADR	American Depositary Receipt
GDR	Global Depositary Receipt
NVDR	Non-Voting Depositary Receipt

Foreign Currency Exchange Contracts Information:

The Portfolio had the following foreign currency exchange contract(s) open at period end:

Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Net Unrealized Appreciation (Depreciation) (000)
HKD	388	$	50	1/5/10	USD	50	$	50	$	—	@
HKD	187	24		1/4/10	USD	24	24		—		@
INR	1,006	22		1/4/10	USD	22	22		—		@
MYR	446	130		1/4/10	USD	130	130		—		@
PLN	99	34		1/4/10	USD	34	34		—		@
PLN	45	16		1/5/10	USD	16	16		—		@
TWD	1,449	46		1/4/10	USD	45	45		(1		)
USD	43	43		1/4/10	EGP	237	43		—		@
USD	440	440		1/4/10	EGP	2,410	439		(1		)
USD	61	61		1/4/10	EGP	336	61		—		@
USD	120	120		1/4/10	MYR	410	120		—		@
USD	14	14		1/6/10	PLN	39	14		—		@
		$	1,000				$	998	$	(2	)

EGP	— Egyptian Pound
HKD	— Hong Kong Dollar
INR	— Indian Rupee
MYR	— Malaysian Ringgit
PLN	— Polish Zloty
TWD	— Taiwan Dollar
USD	— United States Dollar

6 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Emerging Markets Equity Portfolio

Fair Value Measurement Information:

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009. (See Note A-6 to the financial statements for further information regarding fair value measurement.)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Auto Components	$	—	$	4,996	$	—	$	4,996
Automobiles	—		21,826		—		21,826
Beverages	20,757		17,612		—		38,369
Capital Markets	—		4,921		—		4,921
Chemicals	—		25,572		—		25,572
Commercial Banks	33,857		179,873		—		213,730
Computers & Peripherals	—		16,344		—		16,344
Construction & Engineering	—		10,412		—		10,412
Construction Materials	—		5,602		—		5,602
Distributors	—		2,985		—		2,985
Diversified Financial Services	—		10,654		—		10,654
Diversified Telecommunication Services	5,980		18,918		—		24,898
Electric Utilities	—		9,387		—		9,387
Electrical Equipment	—		5,113		—		5,113
Electronic Equipment, Instruments & Components	1,300		30,977		—		32,277
Energy Equipment & Services	—		3,500		—		3,500
Food & Staples Retailing	—		11,343		—		11,343
Food Products	5,508		24,907		—		30,415
Gas Utilities	—		3,371		—		3,371
Household Durables	—		16,577		—		16,577
Household Products	—		4,389		—		4,389
Independent Power Producers & Energy Traders	—		9,407		—		9,407
Industrial Conglomerates	—		24,684		—		24,684
Information Technology Services	—		27,662		—		27,662
Insurance	—		38,425		—		38,425
Internet Software & Services	—		5,820		—		5,820
Machinery	—		7,147		—		7,147
Media	7,530		27,604		—		35,134
Metals & Mining	23,588		43,636		—		67,224
Oil, Gas & Consumable Fuels	7,842		79,815		—		87,657
Personal Products	—		10,177		—		10,177
Pharmaceuticals	—		12,816		—		12,816
Real Estate Management & Development	—		2,292		—		2,292
Semiconductors & Semiconductor Equipment	—		50,076		—		50,076
Software	4,497		2,642		—		7,139
Specialty Retail	—		16,700		—		16,700
Textiles, Apparel & Luxury Goods	—		2,041		—		2,041
Tobacco	—		1,853		—		1,853
Wireless Telecommunication Services	23,939		26,884		—		50,823
Total Common Stocks	134,798		818,960		—		953,758
Investment Company	—		4,839		—		4,839
Short-Term Investments
Investment Company	80,214		—		—		80,214
Repurchase Agreement	—		5,727		—		5,727
Total Short-Term Investments	80,214		5,727		—		85,941
Total Assets	215,012		829,526		—		1,044,538
Liabilities:
Foreign Currency Exchange Contracts	—		2		—		2
Total Liabilities	—		2		—		2
Total	$	215,012	$	829,524	$	—	$	1,044,536

The accompanying notes are an integral part of the financial statements. 7

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Equity Portfolio

Statement of Assets and Liabilities

	December 31, 2009 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $789,323)	$	959,485
Investments in Securities of Affiliated Issuers, at Value (Cost $80,922)	85,053
Total Investments in Securities, at Value (Cost $870,245)	1,044,538
Receivable for Investments Sold	1,280
Receivable for Portfolio Shares Sold	795
Dividends Receivable	381
Foreign Currency, at Value (Cost $193)	199
Capital Gain Country Tax Refund Receivable	43
Foreign Withholding Tax Reclaim Receivable	17
Receivable from Affiliate	26
Other Assets	21
Total Assets	1,047,300
Liabilities:
Collateral on Securities Loaned, at Value	42,087
Investment Advisory Fees Payable	2,830
Payable for Investments Purchased	1,196
Deferred Capital Gain Country Tax	539
Payable for Portfolio Shares Redeemed	411
Administration Fees Payable	209
Custodian Fees Payable	160
Bank Overdraft	94
Distribution Fees — Class II Shares	17
Directors’ Fees and Expenses Payable	3
Unrealized Depreciation on Foreign Currency Exchange Contracts	2
Other Liabilities	52
Total Liabilities	47,600
NET ASSETS	$	999,700
Net Assets Consist of:
Paid-in Capital	$	1,060,258
Undistributed Net Investment Income	2,022
Accumulated Net Realized Loss	(236,330		)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $539 Deferred Capital Gain Country Tax)	173,754
Foreign Currency Exchange Contracts and Translations	(4		)
Net Assets	$	999,700
CLASS I:
Net Assets	$	591,835
Net Asset Value, Offering and Redemption Price Per Share Applicable to 45,487,617 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	13.01
CLASS II:
Net Assets	$	407,865
Net Asset Value, Offering and Redemption Price Per Share Applicable to 31,426,528 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	12.98
(1)    Including:
Securities on Loan, at Value	$	40,140

8 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Equity Portfolio

Statement of Operations

	Year Ended December 31, 2009 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,378 Foreign Taxes Withheld)	$	14,472
Dividends from Security of Affiliated Issuer	235
Interest from Securities of Unaffiliated Issuers	50
Total Investment Income	14,757
Expenses:
Investment Advisory Fees (Note B)	9,137
Administration Fees (Note C)	1,854
Distribution Fees — Class II Shares (Note D)	1,013
Custodian Fees (Note F)	764
Shareholder Reporting Fees	97
Professional Fees	93
Directors’ Fees and Expenses	17
Transfer Agency Fees (Note E)	6
Other	23
Total Expenses	13,004
Distribution Fees — Class II Shares Waived (Note D)	(868		)
Investment Advisory Fees Voluntarily Waived (Note B)	(127		)
Rebate from Morgan Stanley Affiliates (Note I)	(65		)
Expense Offset (Note F)	—		@
Net Expenses	11,944
Net Investment Income	2,813
Realized Gain (Loss) on:
Investments Sold	(119,648		)
Foreign Currency Exchange Contracts	1,303
Foreign Currency Transactions	(3		)
Net Realized Loss	(118,348		)
Change in Unrealized Appreciation (Depreciation) on:
Investments (Net of Decrease in Deferred Capital Gain Country Tax Accruals of $539)	505,169
Foreign Currency Exchange Contracts	(249		)
Foreign Currency Translations	5
Net Change in Unrealized Appreciation (Depreciation)	504,925
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)	386,577
Net Increase in Net Assets Resulting from Operations	$	389,390

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements. 9

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Emerging Markets Equity Portfolio

Statements of Changes in Net Assets

	Year Ended December 31, 2009 (000)			Year Ended December 31, 2008 (000)
Increase (Decrease) in Net Assets
Operations:
Net Investment Income	$	2,813		$	5,830
Net Realized Loss	(118,348		)	(114,652		)
Net Change in Unrealized Appreciation (Depreciation)	504,925			(735,516		)
Net Increase (Decrease) in Net Assets Resulting from Operations	389,390			(844,338		)
Distributions from and/or in Excess of:
Class I:
Net Realized Gain	—			(244,709		)
Class II:
Net Realized Gain	—			(109,281		)
Total Distributions	—			(353,990		)
Capital Share Transactions:(1)
Class I:
Subscriptions	121,323			110,790
Distributions Reinvested	—			244,709
Redemptions	(117,723		)	(408,799		)
Class II:
Subscriptions	94,409			111,752
Distributions Reinvested	—			109,281
Redemptions	(46,050		)	(84,554		)
Net Increase in Net Assets Resulting from Capital Share Transactions	51,959			83,179
Total Increase (Decrease) in Net Assets	441,349			(1,115,149		)
Net Assets:
Beginning of Period	558,351			1,673,500
End of Period (Including Undistributed (Distributions in Excess of) Net Investment Income of $2,022 and $(2,090))	$	999,700		$	558,351
(1)   Capital Share Transactions:
Class I:
Shares Subscribed	12,126			6,278
Shares Issued on Distributions Reinvested	—			17,089
Shares Redeemed	(12,418		)	(27,851		)
Net Decrease in Class I Shares Outstanding	(292		)	(4,484		)
Class II:
Shares Subscribed	9,018			6,920
Shares Issued on Distributions Reinvested	—			7,642
Shares Redeemed	(4,812		)	(6,043		)
Net Increase in Class II Shares Outstanding	4,206			8,519

10 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Emerging Markets Equity Portfolio

	Class I
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	7.66		$	24.27		$	19.53		$	14.73		$	11.05
Income (Loss) from Investment Operations
Net Investment Income#	0.04			0.08			0.01			0.05			0.10
Net Realized and Unrealized Gain (Loss)	5.31			(11.33		)	7.45			5.27			3.63
Total from Investment Operations	5.35			(11.25		)	7.46			5.32			3.73
Distributions from and/or in Excess of:
Net Investment Income	—			—			(0.10		)	(0.13		)	(0.05		)
Net Realized Gain	—			(5.36		)	(2.62		)	(0.39		)	—
Total Distributions	—			(5.36		)	(2.72		)	(0.52		)	(0.05		)
Net Asset Value, End of Period	$	13.01		$	7.66		$	24.27		$	19.53		$	14.73
Total Return +	69.84		%	(56.62		)%	40.45		%	37.14		%	33.85		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	591,835		$	350,649		$	1,220,017		$	868,701		$	647,447
Ratio of Expenses to Average Net Assets(1)	1.59		%+	1.60		%+	1.58		%+	1.62		%†	1.65		%
Ratio of Net Investment Income to Average Net Assets(1)	0.41		%+	0.52		%+	0.03		%+	0.31		%	0.81		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.01		%	0.00		%§	0.00		%§	N/A			N/A
Portfolio Turnover Rate	64		%	98		%	107		%	77		%	53		%
(1)    Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser:
Expenses to Average Net Assets	1.61		%+	1.62		%+	1.58		%+	1.63		%	1.66		%
Net Investment Income to Average Net Assets	0.39		%+	0.50		%+	0.03		%+	0.30		%	0.80		%

#	Per share amount is based on average shares outstanding.
+	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.
†	Effective June 1, 2006, the Adviser has agreed to voluntarily limit the ratio of expenses to average net assets to the maximum ratio of 1.60% for Class I shares. Prior to June 1, 2006, the maximum ratio was 1.65% for Class I shares.
§	Amount is less than 0.005%.

The accompanying notes are an integral part of the financial statements. 11

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Emerging Markets Equity Portfolio

	Class II
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	7.63		$	24.25		$	19.52		$	14.71		$	11.04
Income (Loss) from Investment Operations
Net Investment Income (Loss)#	0.03			0.07			(0.01		)	0.03			0.08
Net Realized and Unrealized Gain (Loss)	5.32			(11.33		)	7.46			5.30			3.64
Total from Investment Operations	5.35			(11.26		)	7.45			5.33			3.72
Distributions from and/or in Excess of:
Net Investment Income	—			—			(0.10		)	(0.13		)	(0.05		)
Net Realized Gain	—			(5.36		)	(2.62		)	(0.39		)	—
Total Distributions	—			(5.36		)	(2.72		)	(0.52		)	(0.05		)
Net Asset Value, End of Period	$	12.98		$	7.63		$	24.25		$	19.52		$	14.71
Total Return +	70.12		%	(56.74		)%	40.45		%	37.17		%	33.76		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	407,865		$	207,702		$	453,483		$	229,038		$	92,594
Ratio of Expenses to Average Net Assets(1)	1.64		%+	1.65		%+	1.63		%+	1.67		%†	1.70		%
Ratio of Net Investment Income (Loss) to Average Net Assets(1)	0.34		%+	0.47		%+	(0.04		)%+	0.19		%	0.66		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.01		%	0.00		%§	0.00		%§	N/A			N/A
Portfolio Turnover Rate	64		%	98		%	107		%	77		%	53		%
(1)Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser and/or Distributor:
Expenses to Average Net Assets	1.96		%+	1.97		%+	1.93		%+	1.98		%	2.01		%
Net Investment Income (Loss) to Average Net Assets	0.02		%+	0.15		%+	(0.34		)%+	(0.12		)%	0.35		%

#	Per share amount is based on average shares outstanding.
+	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.
†	Effective June 1, 2006, the Adviser has agreed to voluntarily limit the ratio of expenses to average net assets to the maximum ratio of 1.65% for Class II shares. Prior to June 1, 2006, the maximum ratio was 1.70% for Class II shares.
§	Amount is less than 0.005%.

12 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements

The Universal Institutional Funds, Inc., (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund is comprised of sixteen separate active, diversified and non-diversified portfolios (individually referred to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Emerging Markets Equity Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries. The Portfolio offers two classes of shares — Class I and Class II. Both classes of shares have identical voting rights (except that shareholders of a Class have exclusive voting rights regarding any matter relating solely to that Class of shares), dividend, liquidation and other rights.

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

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles. Such policies are consistently followed by the Fund in the preparation of the financial statements. U.S. generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.Security Valuation: Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NAS-DAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Securities listed on a foreign exchange are valued at their closing price. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the current bid and asked prices obtained from reputable brokers. Debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors (the “Directors”) determines such valuation does not reflect the securities’ market value, in which case these securities will be valued at their fair value as determined by the Directors.

All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Directors, although the actual calculations may be done by others. 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.

Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect 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 these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.

2.Foreign Currency Translation and Foreign Investments: The books and records of the Fund are main-tained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the mean of the bid and asked prices of such currencies against U.S. dollars last quoted by a major bank as follows:

·investments, other assets and liabilities at the prevailing rates 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 Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of the securities held at period end. Similarly, the Fund does 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

13

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

currency 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 Fund’s 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) on the Statement of Assets and Liabilities. The change in net unrealized currency gains (losses) for the period is reflected on the Statement of Operations.

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, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

At December 31, 2009, the net assets of the Portfolio were substantially comprised of foreign denominated securities and currency. Changes in currency exchange rates will affect the U.S. dollar value of and investment income from such securities.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violation of foreign investment limitations. As a result, an additional class of shares (identified as “Foreign” in the Portfolio of Investments) may be created and offered for investment. The “local” and “foreign” shares’ market values may differ. In the absence of trading of the foreign shares in such markets, the Fund values the foreign shares at the closing exchange price of the local shares. Such securities, if any, are identified as fair valued in the Portfolio of Investments.

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

Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Portfolio 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 SEC rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio’s investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio may use and their associated risks:

Foreign Currency Forward Contracts. In connection with its investments in foreign securities, the Portfolio also may enter into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date (“forward contracts”). A foreign currency forward contract is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Forward foreign currency exchange contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, the Portfolio may use cross currency hedging or proxy hedging with respect to currencies in which the Portfolio has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. A currency exchange contract is marked-to-market daily and the change in market value is recorded by the Portfolio as

14

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

unrealized gain (loss). The Portfolio records realized gains (losses) when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Hedging the Portfolio’s currency risks involves the risk of mismatching the Portfolio’s objectives under a forward or futures contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which the Portfolio’s securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts.

The Portfolio adopted the provisions of FASB ASC 815, “Derivatives and Hedging: Overall” (“ASC 815”) (formerly known as SFAS 161), effective December 31, 2008. ASC 815 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio’s financial position and results of operations.

The following table sets forth the fair value of the Portfolio’s derivative contracts by primary risk exposure as of December 31, 2009.

Primary Risk Exposure	Statement of Assets and Liabilities	Foreign Currency Exchange Contracts (000)
Liabilities:
Foreign Currency
Contracts Risk	Payables	$	2

The following tables set forth by primary risk exposure the Portfolio’s realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2009 in accordance with ASC 815.

Realized Gain (Loss)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency	Foreign Currency
Contracts Risk	Exchange Contracts	$	1,303

Change in Unrealized Appreciation (Depreciation)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency	Foreign Currency
Contracts Risk	Exchange Contracts	$	(249	)

All open derivative positions at period end are reflected on the Portfolio of Investments and the volume of these open positions relative to the net assets of the Portfolio is generally representative of open positions throughout the reporting period for the Portfolio.

4.Securities Lending: The Portfolio 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 Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked to market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements backed by U.S. Treasury and Agency securities. 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 included in the Portfolio’s Statement of Operations in affiliated dividend income and interest 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.

The value of the loaned securities was approximately $40,140,000 and related collateral outstanding at December 31, 2009 was approximately $42,087,000. For the year ended December 31, 2009, the Portfolio had income from securities lending (after rebates to borrowers and allocation to the securities lending agent) of approximately $216,000.

5.Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends excess 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 the adequacy of the collateral. In

15

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

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 and/or retention of the collateral or proceeds may be subject to legal proceedings. The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

6.Fair Value Measurement: In accordance with FASB ASC 820 “Fair Value Measurements and Disclosure” (“ASC 820”) (formerly known as SFAS 157), fair value is defined as the price that the Portfolio would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Portfolio’s investments. The inputs are summarized in the three broad levels listed below.

Level 1 — quoted prices in active markets for identical securities

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

Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

7.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains (losses) on the sale of investment securities are determined on the specific identified cost basis. Dividend income and distributions are recorded on the ex-dividend date (except for certain foreign dividends that may be recorded as soon as the Fund is informed of such dividends), net of applicable withholding taxes where recovery of such taxes is not reasonably assured. Interest income is recognized on the accrual basis except where collection is in doubt. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets. Income, expenses (other than class specific expenses) and realized and unrealized gains (losses) are allocated to each class of shares based upon their relative net assets or other appropriate measures.

Settlement and registration of foreign securities transactions may be subject to significant risks not normally associated with investments in the United States. In certain markets, ownership of shares is defined according to entries in the issuer’s share register. It is possible that a Portfolio holding these securities could lose its share registration through fraud, negligence or even mere oversight. In addition, shares being delivered for sales and cash being paid for purchases may be delivered before the exchange is complete. This may subject the Portfolio to further risk of loss in the event of a failure to complete the transaction by the counterparty.

B. Investment Advisory Fees: Morgan Stanley Investment Management Inc. (the “Adviser” or “MS Investment Management”), a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with investment advisory services for a fee, paid quarterly, at the annual rate based on average daily net assets as follows:

First $500 million		Next $500 million		Next $1.5 billion		Over $2.5 billion
1.25	%	1.20	%	1.15	%	1.00	%

MS Investment Management has voluntarily agreed to waive fees payable to it and/or reimburse the Portfolio for certain expenses, after giving effect to custody fee offsets, if necessary, to the extent that the total annual operating expenses, excluding bank overdraft, certain foreign taxes and extraordinary expenses, expressed as a percentage of average daily net assets, exceed the maximum ratio of 1.60% for Class I shares and 1.65% for Class II shares. Fee waivers and/or expense reimbursements are voluntary and may be terminated at any time. For the year ended December 31, 2009, this waiver amounted to approximately $127,000.

C. Administration Fees: MS Investment Management (the “Administrator”) also provides the Portfolio with administrative services pursuant to an administrative agreement for a monthly fee which on an annual basis equals 0.25% of the average daily net assets of the Portfolio, plus reimbursement of out-of-pocket expenses. Under an agreement between the Administrator and JPMorgan Investor Services Co. (“JPMIS”), a corporate affiliate of JPMorgan Chase Bank, N.A., JPMIS provides certain administrative services to the Fund. For such services, the Administrator pays JPMIS a portion of the fee the Administrator

16

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

receives from the Fund. In addition, the Fund incurs local administration fees in connection with doing business in certain emerging market countries.

D. Distribution Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund and provides the Portfolio’s Class II shareholders with distribution services pursuant to a Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio is authorized to pay the Distributor a distribution fee, which is accrued daily and paid monthly, at an annual rate of 0.35% of the Portfolio’s average daily net assets attributable to Class II shares. The Distributor has voluntarily agreed to waive 0.30% of the 0.35% distribution fee that it may receive. For the year ended December 31, 2009, this waiver amounted to approximately $868,000.

E. Dividend Disbursing and Transfer Agent: The Fund dividend disbursing and transfer agent is Morgan Stanley Services Company Inc. (“Morgan Stanley Services”). Pursuant to a Transfer Agency Agreement, the Fund pays Morgan Stanley Services a fee generally based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: JPMorgan Chase Bank, N.A. (the “Custodian”) serves as Custodian for the Fund in accordance with a custodian agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the 1940 Act.

The Fund has entered into an arrangement with its Custodian whereby credits realized on uninvested cash balances were used to offset a portion of the Portfolio’s expenses. These custodian credits are shown as “Expense Offset” on the Statement of Operations.

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

H. Federal Income Taxes: It is the Portfolio’s intention to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements. Dividend income and distributions to shareholders are recorded on the ex-dividend date.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation as these amounts 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.

FASB ASC 740-10 “Income Taxes — Overall” (formerly known as FIN 48) 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 Portfolio recognizes interest accrued related to unrecognized tax benefits in “Interest Expense” and penalties in “Other” expenses on the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four year period ended December 31, 2009, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown on 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 2009 and 2008 was as follows:

2009 Distributions Paid From:				2008 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	—	$	91,161	$	262,829

The amount and character of income and capital gain distributions to be paid by the Portfolio are determined in accordance with Federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable 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 wash sales adjustments and foreign currency transactions, resulted in the following reclassifications among the components of net assets at December 31, 2009:

Undistributed (Distributions in Excess of) Net Investment Income (Loss) (000)		Accumulated Net Realized Gain (Loss) (000)		Paid-in Capital (000)
$	1,299	$	192	$	(1,491	)

17

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

At December 31, 2009, the Portfolio had distributable earnings on a tax basis as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	6,213	$	—

At December 31, 2009, cost and unrealized appreciation (depreciation) for U.S. Federal income tax purposes of the investments of the Portfolio were:

Cost (000)		Appreciation (000)		Depreciation (000)			Net Appreciation (Depreciation) (000)
$	893,419	$	181,387	$	(30,268	)	$	151,119

Net capital, passive foreign investment company (“PFIC”) and currency losses incurred after October 31, and within the taxable year are deemed to arise on the first day of the Portfolio’s next taxable year. For the year ended December 31, 2009, the Portfolio deferred to January 4, 2010, for U.S. Federal income tax purposes, currency losses of approximately $50,000.

At December 31, 2009, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, of approximately $217,287,000, of which, $3,315,000 will expire on December 31, 2016 and $213,972,000 will expire on December 31, 2017.

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

I. Security Transactions and Transactions with Affiliates: The Portfolio invests in the Morgan Stanley Growth Fund, an open-end management investment company advised by an affiliate of the Adviser. Investment Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investment in the Morgan Stanley Growth Fund. For the year ended December 31, 2009, advisory fees paid were reduced by approximately $31,000 relating to the Portfolio’s investment in the Morgan Stanley Growth Fund. The Morgan Stanley Growth Fund has a cost basis of approximately $708,000.

A summary of the Portfolio’s transactions in shares of the Morgan Stanley Growth Fund issuer during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)	Sales Proceeds (000)	Dividend Income (000)	Market Value December 31, 2009 (000)
$	2,543	—	—	—	$	4,839

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the “Liquidity Funds”), an open-end management investment company managed by the Adviser, both directly, and/or as a portion of the securities held as collateral on loaned securities. Investment Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the year ended December 31, 2009, advisory fees paid were reduced by approximately $34,000 relating to the Portfolio’s investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the Liquidity Funds during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)		Sales Proceeds (000)		Dividend Income (000)		Market Value December 31, 2009 (000)
$	25,418	$	426,237	$	371,441	$	235	$	80,214

For the year ended December 31, 2009, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $491,752,000 and $456,908,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the year ended December 31, 2009.

During the year ended December 31, 2009, the Portfolio incurred approximately $46,000 of brokerage commissions with Morgan Stanley & Co. Incorporated, an affiliated broker/dealer. Additionally, during the year ended December 31, 2009, the Portfolio incurred no brokerage commissions with China International Capital Corporation (Hong Kong) Limited (CICC), an affiliated broker/dealer.

J. Other (unaudited): At December 31, 2009, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 63.9% and 78.2%, for Class I and Class II shares, respectively.

K. Subsequent Events: In accordance with the provisions set forth in FASB ASC 855 “Subsequent Events” (formerly known as SFAS 165), adopted by the Portfolio as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Portfolio’s financial statements through February 19, 2010.

On January 8, 2010, the Directors of the Portfolio approved the conversion for Fund Accounting, Custody, Fund Administration and Securities Lending services from JPMorgan Investor Services Co. to State Street Bank and Trust Company. The conversion is expected to be completed in or about the second quarter of 2010.

18

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

The Universal Institutional Funds, Inc. —

Emerging Markets Equity Portfolio

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Emerging Markets Equity Portfolio (one of the portfolios constituting The Universal Institutional Funds, Inc.) (the “Portfolio”) as of December 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Emerging Markets Equity Portfolio of The Universal Institutional Funds, Inc. at December 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
February 19, 2010

19

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Federal Income Tax Information (unaudited)

For Federal income tax purposes, the following information is furnished with respect to the Portfolio’s earnings for its taxable year ended December 31, 2009.

The Portfolio intends to pass through foreign tax credits of approximately $857,000, and has derived net income from sources within foreign countries amounting to approximately $15,874,000.

The Portfolio may designate up to a maximum of $53,000 as qualifying as interest-related dividends.

In January, the Portfolio provides tax information to shareholders for the preceding calendar year.

20

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (unaudited)

Independent Directors:

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time  Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Frank L. Bowman (65) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004); Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l’Orde National du Mérite by the French Government.	162	Director of Armed Services YMCA of the USA; member, BP America External Advisory Council (energy); member, National Academy of Engineers.
Michael Bozic (68) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since April  1994	Private Investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006), Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987- 1991) of the Sears Merchandise Group of Sears Roebuck & Co.	164	Director of various business organizations.
Kathleen A. Dennis (56) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).	162	Director of various non-profit organizations.
Dr. Manuel H. Johnson (60) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006	Director	Since July  1991	Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.	164	Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings.
Joseph J. Kearns (67) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265	Director	Since August 1994	President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); CFO of the J. Paul Getty Trust.	165	Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation.

21

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Independent Directors (cont’d):

Name, Age and Address of Independent Director	Position(s)  Held with  Registrant	Length of Time  Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund  Complex Overseen  by Independent Director**	Other Directorships Held by Independent  Directors***
Michael F. Klein (51) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chief Operating Officer and Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).	162	Director of certain investment funds managed or sponsored by Aetos Capital LLC; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).
Michael E. Nugent (73) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022	Chairperson of the Board and Director	Chairperson of the Boards since July 2006 and Director since July 1991	General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006).	164	None.
W. Allen Reed (62)† c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (July 1994-December 2005).	162	Director of Temple-Inland Industries (packaging and forest products), Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006).
Fergus Reid (77) c/o Joe Pietryka, Inc. 85 Charles Coleman Blvd. Pawling, NY 12564	Director	Since June  1992	Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992).	165	Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc.

Interested Director:

Name, Age and Address of Interested Director	Position(s)  Held with  Registrant	Term of Office and Length of Time  Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund  Complex Overseen by Interested Director**	Other Directorships Held by Interested  Director***
James F. Higgins (61) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311	Director	Since June  2000	Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000).	163	Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

*	This is the earliest date the Director began serving the Retail Funds or Institutional Funds. Each Director serves an indefinite term, until his or her successor is elected.
**	The Fund Complex includes all funds advised by MS Investment Management that have an investment advisor that is an affiliated entity of MSIM (including but not limited to, Morgan Stanley Investment Advisors Inc. (“MSIA”) and Morgan Stanley AIP GP LP). The Retail Funds are those funds advised by MSIA. The Institutional Funds are certain U.S. registered funds advised by MS Investment Management and Morgan Stanley AIP GP LP.
***	This includes any directorships at public companies and registered investment companies held by the Directors at any time during the past five years.
†	For the period September 26, 2008 through February 5, 2009 W. Allen Reed was an Interested Director. At all other times covered by this report, Mr. Reed was an Independent Director.

22

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Executive Officers:

Name, Age and Address of Executive Officer	Position(s) Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years
Randy Takian (35) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	President and Principal Executive Officer	Since September 2008	President and Principal Executive Officer (since September 2008) of funds in the Fund Complex; President and Chief Executive Officer of Morgan Stanley Services Company Inc. (since September 2008). President of Morgan Stanley Investment Advisors Inc. (since July 2008). Head of the Retail and Intermediary business within Morgan Stanley Investment Management (since July 2008). Head of Liquidity and Bank Trust business (since July 2008) and the Latin American franchise (since July 2008) at Morgan Stanley Investment Management. Managing Director, Director and/or Officer of the Adviser and various entities affiliated with the Adviser. Formerly, Head of Strategy and Product Development for the Alternatives Group and Senior Loan Investment Management. Formerly with Bank of America (July 1996-March 2006), most recently as Head of the Strategy, Mergers and Acquisitions team for Global Wealth and Investment Management.
Kevin Klingert (47) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since June  2008	Head, Chief Operating Officer and acting Chief Investment Officer of the Global Fixed Income Group of the Adviser and Morgan Stanley Investment Advisors Inc. (since April 2008). Head of Global Liquidity Portfolio Management and co-Head of Liquidity Credit Research of Morgan Stanley Investment Management (since December 2007). Managing Director of the Adviser and Morgan Stanley Investment Advisors Inc. (since December 2007). Previously, Managing Director on the Management Committee and head of Municipal Portfolio Management and Liquidity at BlackRock (October 1991 to January 2007).
Carsten Otto (46) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Chief Compliance Officer	Since October  2004	Managing Director and Global Head of Compliance for Morgan Stanley Investment Management (since April 2007) and Chief Compliance Officer of the Retail Funds and Institutional Funds (since October 2004). Formerly, U.S. Director of Compliance (October 2004-April 2007) and Assistant Secretary and Assistant General Counsel of the Retail Funds.
Stefanie V. Chang Yu (43) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since December 1997	Managing Director and Secretary of the Adviser and various entities affiliated with the Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997).
Mary E. Mullin (42) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Secretary	Since June  1999	Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999).
James W. Garrett (41) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Treasurer and Chief Financial Officer	Treasurer since February 2002 and Chief Financial Officer since July 2003	Head of Global Fund Administration for the Morgan Stanley Investment Management; Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer and Chief Financial Officer of the Institutional Funds.

* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds. Each Officer serves an indefinite term, until his or her successor is elected.

23

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Adviser and Administrator Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, New York 10036 Distributor Morgan Stanley Distribution, Inc. One Tower Bridge 100 Front Street, Suite 1100 West Conshohocken, PA 19428-2899 Dividend Disbursing and Transfer Agent Morgan Stanley Services Company Inc. P.O. Box 219804 Kansas City, MO 64121-9804 Custodian JPMorgan Chase Bank, N.A. 270 Park Avenue New York, New York 10017 Legal Counsel Dechert LLP 1095 Avenue of the Americas New York, New York 10036 Independent Registered Public Accounting Firm Ernst & Young LLP 200 Clarendon Street Boston, Massachusetts 02116-5072

The Investment Adviser, Morgan Stanley Investment Management Inc., does business in certain instances as Van Kampen or Morgan Stanley Asset Management.

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund’s second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.vankampen.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public website. 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 website, 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 toll free at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102.

The Fund’s Statement of Additional Information contains additional information about the Fund, including its Directors. It is available, without charge, by calling toll free 1-(800-281-2715.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free 1-800-281-2715 or by visiting our website at www.vankampen.com. It is also available on the Securities and Exchange Commission’s website at www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 by calling toll free 1-800-281-2715. This information is also available on the Securities and Exchange Commission’s website at www.sec.gov.

UIFEMEANN

IU10-00408I-Y12/09

24

	The Universal Institutional Funds, Inc.
	Annual Report — December 31, 2009

Equity and Income Portfolio

The Portfolio is 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.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Expense Example (unaudited)

Equity and Income Portfolio

Expense Example

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges, and (2) ongoing costs, including management fees, distribution (12b-1) fees (in the case of Class II shares) and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2009 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of Expense Offset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the table below is useful in comparing ongoing costs, but 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.

	Beginning Account Value 7/1/09		Actual Ending Account Value 12/31/09		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Equity and Income Class II	$	1,000.00	$	1,199.30	$	1,021.48	$	4.10	$	3.77	0.74	%

*	Expenses are calculated using the Portfolio’s annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 184/365 (to reflect the most recent one-half year period).
**	Annualized

1

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (unaudited)

Equity and Income Portfolio

The Equity and Income Portfolio (the “Portfolio”) seeks both capital appreciation and current income by investing primarily in income-producing equity instruments and investment grade fixed income securities.

Performance

For the fiscal year ended December 31, 2009, the Portfolio had a total return based on net asset value and reinvestment of distributions per share of 22.49%, net of fees, for Class II shares. The Portfolio’s Class II shares outperformed against the Russell 1000® Value Index which returned 19.69% and the Barclays Capital U.S. Government/Credit Index which returned 4.52%.

Factors Affecting Performance

·Equities advanced from mid-March through year end as the financial system improved, policy actions helped stabilize the credit markets, and corporate earnings were able to beat lowered expectations. As the period progressed, the rate of decline in some economic indicators continued to slow, but the economy and market still faced many headwinds, most notably high unemployment rates and the weak real estate market. Within the fixed income markets, a more optimistic outlook on the economy led to increased investor appetite for riskier assets and spread tightening in most fixed income asset classes.

·Within the equity portfolio, relative to the Russell 1000® Value Index, the energy sector was additive to relative performance, especially exploration and production (E&P) companies. E&P companies benefited from rising energy prices and the improving economic environment, whereas integrated oil companies (which we deemphasized in the Portfolio) lagged the broad sector. Although we increased the Portfolio’s exposure to the energy sector overall, the sector remained a relative underweight.

·Health care also contributed to outperformance during the period. Most of the exposure in health care had been in the pharmaceutical industry and the Portfolio benefited from holding two companies that were targeted for acquisition. Given the relative strength in health care over the preceding fiscal year and the merger and acquisition tailwind in pharmaceuticals in this fiscal year, we reduced the Portfolio’s exposure in the sector and used the proceeds to invest in other areas we believed had better risk/reward opportunities.

·In the technology sector, exposure to software and services and to semiconductors added to relative gains. In software and services, we held an undervalued Internet stock that appreciated as new management drove revenue growth and sold a non-core asset.

·Although we decreased the Portfolio’s consumer staples exposure during the period, the sector contributed to relative performance. One of the Portfolio’s top holdings was a confectionary company that performed strongly following an announcement that a competitor had made an offer to acquire them. Toward the end of the period, we began adding attractive consumer staples companies that met our value-with-a-catalyst criteria.

·However, the financials sector was the largest relative detractor during the review period. Over the past 12 months, financial stocks, especially banks and diversified financials, rebounded from their earlier dramatic decline. The Portfolio’s underexposure to these groups was based on our concerns regarding quality of balances sheets, uncertainty regarding additional capital requirements and incremental dividend cuts, and the unpredictability of government influence. Rather, the Portfolio’s exposure has been focused on financial companies that we believe possess conservative balance sheets and appropriate risk/return characteristics, and these companies did not participate in the rally to the degree that others in the sector did.

·An underweight in the materials sector also dampened relative gains.

·Additionally, the Portfolio’s convertible securities and fixed income exposure were additive to absolute return during the period. Given its sensitivity to the equity market, the convertibles market rose as stocks rallied. Holdings in health care and materials were especially beneficial. Within the fixed income portfolio, relative to the Barclays Capital U.S. Government/Credit Index, overweight allocations to the banking, food and beverage, insurance and media sectors were additive to relative returns as significant spread tightening in these sectors led to their strong performance. During the year, we reduced exposure to fixed income and redeployed those assets into what we believed were attractive new opportunities in convertible securities.

Management Strategies

·Over the past 12 months, equity markets have had tremendous volatility. The market initially experienced a significant sell-off, followed by a strong rally as investor confidence improved when signs of an economic recovery — or at least stabilization — began to emerge. Although cautiously optimistic, we remain guarded as valuations are relatively less compelling than previously thought and other

2

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (cont’d)

Equity and Income Portfolio

challenges continue. We continue to be concerned about high unemployment, an earnings recovery driven by massive cost cutting versus top-line revenue growth, and the still weak real estate market. However, we believe that, going forward, managers will be more likely to be rewarded for uncovering value with improving or good fundamentals. We think the market will more markedly differentiate between those companies that have more sustainable fundamental momentum with value as a backdrop versus those that just appear to provide value. Given our philosophy and process, which focuses on uncovering value combined with a catalyst, we are excited about what we believe will be this next phase in the market.

·We seek to find out-of-favor and undervalued companies that are experiencing a change or catalyst that we believe should have a positive impact on the stock valuation. Such catalysts could be fundamental in nature (e.g., revenues reaccelerating, returns improving), may take the form of growth or consolidation within an industry/sector, or could be a management change — or some combination of these elements. This process is designed to tilt risk/reward scales in our favor. We believe that if we are purchasing stocks that are out of favor and undervalued, expectations (and generally downside) will be more limited. We also believe that if we combine these attributes with a catalyst, we go a long way working toward mitigating our investors’ downside, while offering our investors the potential opportunity to outperform the market.

Performance Compared to the Russell 1000® Value Index(1) and Barclays Capital U.S. Government/Credit Index(2)

	Total Returns(3)
			Average Annual
	One Year		Five Years		Since Inception(5)
Portfolio – Class II(4)	22.49	%	3.42	%	6.76	%
Russell 1000® Value Index	19.69		–0.25		5.68
Barclays Capital U.S. Government/Credit Index	4.52		4.71		4.44

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. Performance assumes that all dividends and distributions, if any, were reinvested. For the 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 so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance shown does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total returns would be lower.

(1)	The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000® Index is an index of approximately 1,000 of the largest U.S. securities based on a combination of market capitalization and current index membership. 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)	The Barclays Capital U.S. Government/Credit Index tracks the performance of government and corporate obligations, including U.S. government agency and Treasury securities and corporate and Yankee bonds. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.
(3)	Total returns for the Portfolio reflect fees waived and expenses reimbursed, if applicable, by the Adviser. Without such waivers and reimbursements, total returns would have been lower. Fee waivers and/or expense reimbursements are voluntary and the Adviser reserves the right to commence or terminate any waiver and/or reimbursement at any time.
(4)	Commenced operations on April 30, 2003.
(9)	For comparative purposes, average annual since inception returns listed for the Index refers to the inception date or initial offering of the respective share class of the Portfolio, not the inception of the Index.

* Commenced operations on April 30, 2003.

In accordance with SEC regulations, Portfolio performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested.

Portfolio Composition

Classification	Percentage of Total Investments
Common Stocks	64.1	%
Fixed Income Securities	29.3
Other**	2.0
Short-Term Investments	4.6
Total Investments	100.0	%

**  Investment types representing less than 5% of total investments.

3

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments

Equity and Income Portfolio

	Face Amount		Value
	(000)		(000)
Fixed Income Securities (29.3%)
Advertising (0.0%)
WPP Finance,
8.00%, 9/15/14	$	100	$	114
Aerospace & Defense (0.4%)
L-3 Communications Holdings, Inc. (Convertible),
3.00%, 8/1/35	2,496		2,634
Systems 2001 Asset Trust LLC,
6.66%, 9/15/13 (a)	102		104
			2,738
Agency Bonds — Banking (FDIC Guaranteed) (1.3%)
Citibank N.A.,
1.75%, 12/28/12	1,500		1,488
Citigroup Funding, Inc.,
2.25%, 12/10/12	3,090		3,117
General Electric Capital Corp.,
2.20%, 6/8/12	120		122
2.63%, 12/28/12	3,150		3,210
General Motors Acceptance Corp., Inc.,
2.20%, 12/19/12	500		503
KeyBank N.A.,
3.20%, 6/15/12	500		519
			8,959
Agency Fixed Rate Mortgages (0.0%)
Federal Home Loan Mortgage Corp., Gold Pools:
6.50%, 2/1/26	9		10
Federal National Mortgage Association, Conventional Pools:
9.50%, 4/1/30	18		21
			31
Agriculture (0.0%)
Bunge Ltd. Finance Corp.,
8.50%, 6/15/19	90		103
Air Freight & Logistics (0.0%)
FedEx Corp.,
7.25%, 2/15/11	10		11
Asset Backed Securities (0.0%)
Harley-Davidson Motorcycle Trust,
4.07%, 2/15/12	46		47
4.41%, 6/15/12	85		86
			133
Auto Parts & Equipment (0.3%)
BorgWarner, Inc. (Convertible),
3.50%, 4/15/12	1,772		2,244
Automobiles (0.6%)
Daimler Finance North America LLC,
7.30%, 1/15/12	170		185
8.50%, 1/18/31	35		43
Ford Motor Co. (Convertible),
4.25%, 11/15/16	2,876		3,620
			3,848
Beverages (0.0%)
Anheuser-Busch InBev Worldwide, Inc.,
7.20%, 1/15/14 (a)	215		244
Biotechnology (2.0%)
Amgen, Inc. (Convertible),
0.38%, 2/1/13	3,454		3,493
0.38%, 2/1/13 (a)	2,400		2,427
Amylin Pharmaceuticals, Inc. (Convertible),
3.00%, 6/15/14	1,628		1,278
Biogen Idec, Inc.,
6.88%, 3/1/18	180		194
Life Technologies Corp. (Convertible),
1.50%, 2/15/24	2,026		2,350
3.25%, 6/15/25	468		555
Millipore Corp. (Convertible),
3.75%, 6/1/26	2,689		2,786
			13,083
Chemicals (0.0%)
Potash Corp. of Saskatchewan, Inc.,
4.88%, 3/30/20	60		59
5.88%, 12/1/36	35		35
6.50%, 5/15/19	150		166
			260
Commercial Banks (0.3%)
HBOS plc,
6.75%, 5/21/18 (a)	325		302
PNC Funding Corp.,
6.70%, 6/10/19	165		185
Royal Bank of Scotland plc (The),
4.88%, 8/25/14 (a)	155		157
Wells Fargo & Co.,
5.63%, 12/11/17	940		979
Westpac Banking Corp.,
4.20%, 2/27/15	210		214
			1,837
Commercial Services & Supplies (0.1%)
Holcim U.S. Finance Sarl & Cie SCS,
6.00%, 12/30/19 (a)	85		89
Republic Services, Inc.,
5.50%, 9/15/19 (a)	155		158
Waste Management, Inc.,
6.13%, 11/30/39	200		199
			446
Communications & Media (1.8%)
Comcast Corp.,
5.70%, 5/15/18	400		421
COX Communications, Inc.,
8.38%, 3/1/39 (a)	350		437
DirecTV Holdings LLC/DirecTV Financing Co., Inc.,
5.88%, 10/1/19 (a)	250		255
Interpublic Group of Cos., Inc. (Convertible),
4.25%, 3/15/23	1,805		1,803
4.75%, 3/15/23	1,638		1,658
Liberty Global, Inc. (Convertible),
4.50%, 11/15/16 (a)	1,442		1,572

4 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

	Face Amount		Value
	(000)		(000)
Communications & Media (cont’d)
Liberty Media LLC (Convertible),
3.13%, 3/30/23	$	2,858	$	2,890
News America, Inc.,
7.85%, 3/1/39	270		317
SBA Communications Corp. (Convertible),
1.88%, 5/1/13	1,152		1,188
Time Warner Cable, Inc.,
6.75%, 6/15/39	80		84
8.25%, 4/1/19	90		107
8.75%, 2/14/19	225		275
Time Warner, Inc.,
5.88%, 11/15/16	120		130
7.70%, 5/1/32	170		200
Viacom, Inc.,
5.63%, 9/15/19	40		42
6.88%, 4/30/36	210		228
Vivendi S.A.,
6.63%, 4/4/18 (a)	130		141
			11,748
Communications Equipment (0.3%)
Cisco Systems, Inc.,
4.95%, 2/15/19	215		221
5.90%, 2/15/39	30		30
JDS Uniphase Corp. (Convertible),
1.00%, 5/15/26 (a)	1,100		946
Telecom Italia Capital S.A.,
4.88%, 10/1/10	40		41
7.00%, 6/4/18	290		320
7.18%, 6/18/19	140		156
Telefonica Europe B.V.,
8.25%, 9/15/30	395		493
			2,207
Computers & Peripherals (1.1%)
Cadence Design Systems, Inc. (Convertible),
1.38%, 12/15/11	1,416		1,325
1.50%, 12/15/13	860		700
International Business Machines Corp.,
5.60%, 11/30/39	220		222
NetApp, Inc. (Convertible),
1.75%, 6/1/13	995		1,239
SanDisk Corp. (Convertible),
1.00%, 5/15/13	4,225		3,544
			7,030
Containers & Packaging (0.0%)
Sealed Air Corp.,
7.88%, 6/15/17 (a)	95		101
Diversified Financial Services (2.8%)
Abbey National Treasury Services plc,
3.88%, 11/10/14 (a)	210		211
Affiliated Managers Group, Inc. (Convertible),
3.95%, 8/15/38	1,874		1,858
AIG SunAmerica Global Financing VI,
6.30%, 5/10/11 (a)	405		403
American Express Co.,
8.13%, 5/20/19	555		659
Bank of America Corp.,
5.65%, 5/1/18	280		285
5.75%, 12/1/17	865		887
7.63%, 6/1/19	240		278
Barclays Bank plc,
6.75%, 5/22/19	380		425
BB&T Corp.,
6.85%, 4/30/19	165		185
Bear Stearns Cos. LLC (The),
7.25%, 2/1/18	285		328
Boston Properties LP,
5.88%, 10/15/19	175		176
Capital One Bank (USA), N.A.,
8.80%, 7/15/19	400		473
Catlin Insurance Co., Ltd.,
7.25%, (a)(b)(c)	220		163
Citigroup, Inc.,
6.13%, 11/21/17 - 5/15/18	815		822
8.50%, 5/22/19	695		804
Commonwealth Bank of Australia,
5.00%, 10/15/19 (a)	285		283
Credit Suisse USA, Inc.,
5.13%, 8/15/15	140		149
Credit Suisse, New York,
5.30%, 8/13/19	420		432
6.00%, 2/15/18	140		147
Farmers Exchange Capital,
7.05%, 7/15/28 (a)	200		175
General Electric Capital Corp.,
5.63%, 5/1/18	645		662
5.88%, 1/14/38	120		111
6.00%, 8/7/19	595		619
Goldman Sachs Group, Inc. (The),
6.15%, 4/1/18	625		670
6.75%, 10/1/37	365		376
Harley-Davidson Funding Corp.,
6.80%, 6/15/18 (a)	290		290
HSBC Finance Corp.,
6.38%, 10/15/11	445		474
6.75%, 5/15/11	175		185
8.00%, 7/15/10	85		88
Iberdrola Finance Ireland Ltd.,
3.80%, 9/11/14 (a)	125		125
5.00%, 9/11/19 (a)	100		100
Janus Capital Group, Inc. (Convertible),
3.25%, 7/15/14	212		256
Jefferies Group, Inc. (Convertible),
3.88%, 11/1/29	997		989
JPMorgan Chase & Co.,
6.00%, 1/15/18	935		1,007
Merrill Lynch & Co., Inc.,
6.88%, 4/25/18	285		308
NASDAQ OMX Group, Inc. (Convertible),
2.50%, 8/15/13	1,601		1,509
Nationwide Building Society,
4.25%, 2/1/10 (a)	310		310

The accompanying notes are an integral part of the financial statements. 5

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

	Face Amount		Value
	(000)		(000)
Diversified Financial Services (cont’d)
Pearson Dollar Finance Two plc,
6.25%, 5/6/18 (a)	$	140	$	147
Platinum Underwriters Finance, Inc.,
7.50%, 6/1/17	145		148
Reinsurance Group of America, Inc.,
6.45%, 11/15/19	150		150
UBS AG,
5.88%, 12/20/17	225		232
WEA Finance LLC/WT Finance (Aust) Pty Ltd.,
6.75%, 9/2/19 (a)	225		242
Xlliac Global Funding,
4.80%, 8/10/10 (a)	315		317
			18,458
Diversified Telecommunication Services (0.6%)
Alcatel-Lucent USA, Inc. (Convertible),
2.88%, 6/15/25	2,803		2,404
Deutsche Telekom International Finance B.V.,
6.00%, 7/8/19	95		101
8.75%, 6/15/30	175		226
Verizon Communications, Inc.,
5.50%, 2/15/18	405		423
6.35%, 4/1/19	235		260
8.95%, 3/1/39	280		380
			3,794
Electric Utilities (0.0%)
Consumers Energy Co.,
4.00%, 5/15/10	20		20
Energy Transfer Partners LP,
8.50%, 4/15/14	200		231
			251
Electrical Equipment (0.0%)
Cooper U.S., Inc.,
5.25%, 11/15/12	165		177
Electronic Equipment, Instruments & Components (0.0%)
Amphenol Corp.,
4.75%, 11/15/14	115		115
Entertainment (0.4%)
International Game Technology (Convertible),
3.25%, 5/1/14 (a)	2,096		2,565
Food & Staples Retailing (0.1%)
CVS Caremark Corp.,
6.60%, 3/15/19	50		55
CVS Pass-Through Trust,
6.04%, 12/10/28	251		238
8.35%, 7/10/31 (a)	35		38
Kroger Co. (The),
3.90%, 10/1/15	160		161
6.40%, 8/15/17	75		82
			574
Food Products (0.2%)
ConAgra Foods, Inc.,
7.00%, 10/1/28	40		43
8.25%, 9/15/30	180		216
Delhaize America, Inc.,
9.00%, 4/15/31	135		173
Delhaize Group S.A.,
5.88%, 2/1/14	165		177
FBG Finance Ltd.,
5.13%, 6/15/15 (a)	295		306
Kraft Foods, Inc.,
6.88%, 1/26/39	180		190
7.00%, 8/11/37	275		294
			1,399
Health Care Equipment & Supplies (0.1%)
Wright Medical Group, Inc. (Convertible),
2.63%, 12/1/14	937		825
Health Care Providers & Services (0.8%)
LifePoint Hospitals, Inc. (Convertible),
3.50%, 5/15/14	1,868		1,749
Omnicare, Inc. (Convertible),
3.25%, 12/15/35	3,331		2,727
Quest Diagnostics, Inc.,
4.75%, 1/30/20	145		142
Roche Holdings, Inc.,
6.00%, 3/1/19 (a)	335		369
UnitedHealth Group, Inc.,
6.00%, 2/15/18	195		202
WellPoint, Inc.,
7.00%, 2/15/19	60		67
			5,256
Hotels, Restaurants & Leisure (0.0%)
Yum! Brands, Inc.,
5.30%, 9/15/19	155		156
6.25%, 3/15/18	100		109
			265
Industrial Conglomerates (0.8%)
3M Co. (Convertible),
Zero Coupon, 11/21/32 (c)	3,312		2,952
Agilent Technologies, Inc.,
5.50%, 9/14/15	135		142
General Electric Co.,
5.25%, 12/6/17	920		941
Koninklijke Philips Electronics N.V.,
5.75%, 3/11/18	215		229
Textron, Inc. (Convertible),
4.50%, 5/1/13	474		766
			5,030
Insurance (0.2%)
ACE INA Holdings, Inc.,
5.60%, 5/15/15	135		145
Allstate Corp. (The),
7.45%, 5/16/19	140		163
MetLife, Inc.,
6.75%, 6/1/16	75		84
6.82%, 8/15/18	220		245
7.72%, 2/15/19	40		47
Principal Financial Group, Inc.,
8.88%, 5/15/19	140		162

6 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

	Face Amount		Value
	(000)		(000)
Insurance (cont’d)
Prudential Financial, Inc.,
4.75%, 9/17/15	$	230	$	233
6.63%, 12/1/37	95		98
7.38%, 6/15/19	70		79
			1,256
Metals & Mining (0.1%)
Freeport-McMoRan Copper & Gold, Inc.,
8.38%, 4/1/17	60		66
Newmont Mining Corp.,
5.13%, 10/1/19	315		316
Rio Tinto Finance USA Ltd.,
9.00%, 5/1/19	130		165
Vale Overseas Ltd.,
5.63%, 9/15/19	160		162
			709
Office Electronics (0.0%)
Xerox Corp.,
5.63%, 12/15/19	45		45
6.35%, 5/15/18	120		125
			170
Oil, Gas & Consumable Fuels (0.4%)
Enterprise Products Operating LLC,
5.25%, 1/31/20	100		99
6.50%, 1/31/19	220		238
Helix Energy Solutions Group, Inc. (Convertible),
3.25%, 12/15/25	693		627
Hess Corp.,
6.00%, 1/15/40	175		174
Petrobras International Finance Co.,
5.75%, 1/20/20	410		419
Questar Market Resources, Inc.,
6.80%, 4/1/18	200		209
Transocean, Inc.,
6.00%, 3/15/18	175		187
Weatherford International Ltd.,
9.63%, 3/1/19	400		500
XTO Energy, Inc.,
5.50%, 6/15/18	295		315
			2,768
Pharmaceuticals (1.6%)
Allergan, Inc. (Convertible),
1.50%, 4/1/26	1,156		1,337
AmerisourceBergen Corp.,
4.88%, 11/15/19	115		114
Cephalon, Inc. (Convertible),
2.50%, 5/1/14	2,123		2,380
GlaxoSmithKline Capital, Inc.,
5.65%, 5/15/18	75		81
6.38%, 5/15/38	70		78
King Pharmaceuticals, Inc. (Convertible),
1.25%, 4/1/26	1,690		1,574
Medco Health Solutions, Inc.,
7.13%, 3/15/18	280		315
Merck & Co., Inc.,
5.00%, 6/30/19	280		292
Mylan, Inc. (Convertible),
1.25%, 3/15/12	3,362		3,505
Pfizer, Inc.,
6.20%, 3/15/19	650		724
Wyeth,
5.45%, 4/1/17	30		32
5.50%, 2/15/16	45		48
6.45%, 2/1/24	95		106
			10,586
Real Estate Investment Trusts (REIT) (0.1%)
AvalonBay Communities, Inc.,
6.10%, 3/15/20	160		164
Simon Property Group LP,
6.75%, 5/15/14	195		208
			372
Real Estate Management & Development (0.0%)
Brookfield Asset Management, Inc.,
5.80%, 4/25/17	210		192
7.13%, 6/15/12	10		10
			202
Road & Rail (0.1%)
CSX Corp.,
7.38%, 2/1/19	120		137
Norfolk Southern Corp.,
5.75%, 1/15/16	155		165
Union Pacific Corp.,
6.13%, 2/15/20	105		114
7.88%, 1/15/19	250		303
			719
Semiconductors & Semiconductor Equipment (0.7%)
KLA-Tencor Corp.,
6.90%, 5/1/18	135		142
Linear Technology Corp. (Convertible),
3.00%, 5/1/27	819		825
3.00%, 5/1/27 (a)	1,193		1,202
ON Semiconductor Corp. (Convertible),
2.63%, 12/15/26	723		807
Xilinx, Inc. (Convertible),
3.13%, 3/15/37	763		710
3.13%, 3/15/37 (a)	1,302		1,211
			4,897
Software (0.3%)
Symantec Corp. (Convertible),
0.75%, 6/15/11	1,071		1,170
1.00%, 6/15/13	984		1,108
			2,278
Sovereign (0.1%)
Republic of Italy,
6.88%, 9/27/23	290		329

The accompanying notes are an integral part of the financial statements. 7

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

	Face Amount		Value
	(000)		(000)
Specialty Retail (0.1%)
Home Depot, Inc.,
5.88%, 12/16/36	$	210	$	204
Kohl’s Corp.,
6.88%, 12/15/37	190		216
			420
Steel (0.4%)
Allegheny Technologies, Inc. (Convertible),
4.25%, 6/1/14	1,614		2,217
ArcelorMittal,
9.85%, 6/1/19	525		680
			2,897
Telecommunications (0.0%)
Corning, Inc.,
6.63%, 5/15/19	85		93
Tobacco (0.1%)
Altria Group, Inc.,
9.25%, 8/6/19	160		195
BAT International Finance plc,
9.50%, 11/15/18 (a)	150		191
Philip Morris International, Inc.,
5.65%, 5/16/18	210		221
			607
U.S. Agency Securities (1.1%)
Federal Home Loan Mortgage Corp.,
3.00%, 7/28/14	2,100		2,131
4.88%, 6/13/18	1,000		1,072
5.00%, 4/18/17	1,500		1,631
6.75%, 3/15/31	650		794
Federal National Mortgage Association,
4.38%, 10/15/15	1,520		1,619
			7,247
U.S. Treasury Securities (9.0%)
U.S. Treasury Bonds,
3.50%, 2/15/39	1,200		983
4.25%, 5/15/39	250		235
5.38%, 2/15/31	8,800		9,727
6.63%, 2/15/27	2,500		3,123
8.13%, 8/15/21	2,700		3,704
U.S. Treasury Notes,
0.75%, 11/30/11	12,315		12,239
1.50%, 12/31/13	4,500		4,383
1.75%, 3/31/14	3,500		3,418
2.13%, 11/30/14	6,300		6,153
2.38%, 10/31/14	12,300		12,170
2.63%, 7/31/14	1,000		1,005
2.75%, 2/15/19	500		460
4.00%, 8/15/18	3,055		3,121
			60,721
Utilities (0.8%)
CenterPoint Energy Resources Corp.,
6.25%, 2/1/37	75		73
7.88%, 4/1/13	70		79
EDF S.A.,
6.50%, 1/26/19 (a)	240		270
Enel Finance International S.A.,
5.13%, 10/7/19 (a)	325		328
Exelon Generation Co. LLC,
5.20%, 10/1/19	425		426
FirstEnergy Solutions Corp.,
6.05%, 8/15/21	350		354
Kinder Morgan Energy Partners LP,
5.95%, 2/15/18	405		430
NiSource Finance Corp.,
6.80%, 1/15/19	175		187
Ohio Power Co.,
5.38%, 10/1/21	100		101
6.00%, 6/1/16	185		196
PG&E Corp. (Convertible),
9.50%, 6/30/10	517		1,585
Plains All American Pipeline LP/PAA
Finance Corp.,
6.70%, 5/15/36	175		179
8.75%, 5/1/19	150		177
PPL Energy Supply LLC,
6.30%, 7/15/13	140		151
6.50%, 5/1/18	100		104
Progress Energy, Inc.,
7.05%, 3/15/19	270		303
Spectra Energy Capital LLC,
7.50%, 9/15/38	120		133
Texas Eastern Transmission LP,
7.00%, 7/15/32	165		186
Virginia Electric & Power Co.,
8.88%, 11/15/38	285		404
			5,666
Wireless Telecommunication Services (0.2%)
AT&T Corp.,
8.00%, 11/15/31	240		294
AT&T, Inc.,
6.15%, 9/15/34	125		124
6.30%, 1/15/38	610		621
			1,039
Total Fixed Income Securities (Cost $188,264)			196,822
	Shares
Common Stocks (64.0%)
Aerospace & Defense (0.3%)
General Dynamics Corp.	33,000		2,250
Air Freight & Logistics (0.3%)
FedEx Corp.	26,300		2,195
Automobiles (0.4%)
Ford Motor Co. (d)	56,400		564
Harley-Davidson, Inc.	93,120		2,347
			2,911
Beverages (0.6%)
Coca-Cola Co. (The)	76,560		4,364

8 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

		Value
	Shares	(000)
Capital Markets (1.4%)
Charles Schwab Corp. (The)	349,100	$	6,570
State Street Corp.	58,300	2,538
		9,108
Chemicals (1.8%)
Bayer AG ADR	91,510	7,302
Dow Chemical Co. (The)	179,900	4,971
		12,273
Commercial Banks (2.7%)
Fifth Third Bancorp.	243,100	2,370
First Horizon National Corp. (d)	99,393	1,332
PNC Financial Services Group, Inc.	157,280	8,303
U.S. Bancorp	87,100	1,960
Wells Fargo & Co.	156,500	4,224
		18,189
Commercial Services & Supplies (1.4%)
Avery Dennison Corp.	59,900	2,186
Cintas Corp.	85,700	2,232
Manpower, Inc.	52,839	2,884
Robert Half International, Inc.	81,900	2,189
		9,491
Communications & Media (4.5%)
Comcast Corp., Class A	376,565	6,349
Time Warner Cable, Inc.	99,521	4,119
Time Warner, Inc.	291,820	8,504
Viacom, Inc., Class B (d)	379,595	11,285
		30,257
Communications Equipment (1.0%)
Cisco Systems, Inc. (d)	284,620	6,814
Computers & Peripherals (1.7%)
Dell, Inc. (d)	165,600	2,378
Hewlett-Packard Co.	175,130	9,021
		11,399
Diversified Financial Services (5.4%)
Bank of America Corp.	550,300	8,288
BB&T Corp.	116,600	2,958
Citigroup, Inc.	958,900	3,174
JPMorgan Chase & Co.	524,336	21,849
		36,269
Diversified Telecommunication Services (0.7%)
Verizon Communications, Inc.	143,430	4,752
Electric Utilities (3.0%)
American Electric Power Co., Inc.	273,205	9,505
Edison International	63,900	2,222
Entergy Corp.	45,457	3,720
FirstEnergy Corp.	97,590	4,533
		19,980
Energy Equipment & Services (1.4%)
Schlumberger Ltd.	89,930	5,853
Smith International, Inc.	133,000	3,614
		9,467
Food & Staples Retailing (2.8%)
Sysco Corp.	180,700	5,049
Walgreen Co.	121,000	4,443
Wal-Mart Stores, Inc.	169,400	9,054
		18,546
Food Products (1.9%)
Kraft Foods, Inc., Class A	337,400	9,171
Unilever N.V. (NY Shares)	108,490	3,507
		12,678
Health Care Equipment & Supplies (1.4%)
Boston Scientific Corp. (d)	340,960	3,069
Covidien plc	132,617	6,351
		9,420
Health Care Providers & Services (1.0%)
Cardinal Health, Inc.	85,600	2,760
UnitedHealth Group, Inc.	132,900	4,051
		6,811
Hotels, Restaurants & Leisure (0.2%)
Starbucks Corp. (d)	50,270	1,159
Household Durables (0.9%)
Sony Corp. ADR	200,850	5,825
Industrial Conglomerates (4.2%)
Agilent Technologies, Inc. (d)	175,100	5,440
General Electric Co.	802,300	12,139
Siemens AG ADR	48,910	4,485
Tyco International Ltd. (d)	181,847	6,488
		28,552
Insurance (4.0%)
Chubb Corp.	115,702	5,690
Marsh & McLennan Cos., Inc.	589,250	13,011
Transatlantic Holdings, Inc.	27,000	1,407
Travelers Cos., Inc. (The)	134,277	6,695
		26,803
Internet Software & Services (2.0%)
eBay, Inc. (d)	405,250	9,539
Yahoo!, Inc. (d)	215,900	3,623
		13,162
Machinery (1.4%)
Dover Corp.	141,800	5,900
Ingersoll-Rand plc	96,643	3,454
		9,354
Metals & Mining (1.0%)
Freeport-McMoRan Copper & Gold, Inc. (d)	42,100	3,380
Newmont Mining Corp.	63,950	3,026
		6,406
Oil, Gas & Consumable Fuels (7.7%)
Anadarko Petroleum Corp.	153,870	9,604
BP plc ADR	82,080	4,758
ConocoPhillips	72,490	3,702
Devon Energy Corp.	66,900	4,917

The accompanying notes are an integral part of the financial statements. 9

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

			Value
	Shares		(000)
Oil, Gas & Consumable Fuels (cont’d)
Exxon Mobil Corp.	89,260		$	6,087
Hess Corp.	55,200		3,340
Occidental Petroleum Corp.	128,170		10,427
Royal Dutch Shell plc, Class A ADR	146,030		8,778
			51,613
Personal Products (0.6%)
Estee Lauder Cos., Inc. (The), Class A	89,870		4,346
Pharmaceuticals (4.3%)
Abbott Laboratories	67,350		3,636
Bristol-Myers Squibb Co.	314,420		7,939
Merck & Co., Inc.	148,388		5,422
Pfizer, Inc.	383,000		6,967
Roche Holding AG ADR	124,720		5,263
			29,227
Semiconductors & Semiconductor Equipment (1.3%)
Intel Corp.	247,940		5,058
Lam Research Corp. (d)	97,171		3,810
			8,868
Software (0.2%)
Symantec Corp. (d)	61,875		1,107
Specialty Retail (1.6%)
Gap, Inc. (The)	157,600		3,302
Home Depot, Inc.	266,610		7,713
			11,015
Wireless Telecommunication Services (0.9%)
Vodafone Group plc ADR	259,200		5,985
Total Common Stocks (Cost $396,683)			430,596
Preferred Stocks (2.0%)
Commercial Banks (0.2%)
KeyCorp., 7.75% (Convertible)	17,590		1,410
Commercial Services & Supplies (0.2%)
Avery Dennison Corp., 7.88% (Convertible)	39,210		1,517
Diversified Financial Services (0.3%)
Bank of America Corp., 10.0% (Convertible) (c)(d)	114,000		1,701
Electric Utilities (0.3%)
CenterPoint Energy, Inc., 0.25% (Convertible) (c)(d)	62,215		1,692
Food Products (0.2%)
Archer-Daniels-Midland Co., 6.25% (Convertible)	34,250		1,494
Health Care Providers & Services (0.3%)
Healthsouth Corp., 6.50% (Convertible) (a)	785		650
Omnicare Capital Trust II, 4.00% (Convertible)	44,400		1,639
			2,289
Oil, Gas & Consumable Fuels (0.5%)
El Paso Energy Capital Trust I, 4.75% (Convertible)	95,499		3,490
Total Preferred Stocks (Cost $14,000)			13,593
Short-Term Investments (4.6%)
Investment Company (4.5%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (e)	29,960,876		29,961
	Face Amount
	(000)
U.S. Treasury Security (0.1%)
U.S. Treasury Bill,
0.10%, 5/6/10 (f)(g)	$	870	870
Total Short-Term Investments (Cost $30,831)			30,831
Total Investments (99.9%) (Cost $629,778)			671,842
Other Assets in Excess of Liabilities (0.1%)			940
Net Assets (100%)			$	672,782

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

(b)Perpetual — Security does not have a predetermined maturity date. Rate for this security is fixed for a period of time then reverts to a floating rate. The interest rate shown is the rate in effect at December 31, 2009.

(c)Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated rate. The rates shown are those in effect on December 31, 2009.

(d)Non-income producing security.

(e)See Note I within the Notes to Financial Statements regarding investment in Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class.

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

(g)Rate shown is the yield to maturity at December 31, 2009.

ADRAmerican Depositary Receipt

Futures Contracts:

The Portfolio had the following futures contract(s) open at period end:

	Number ofContracts	Value (000)		Expiration Date	Net Unrealized Appreciation (Depreciation) (000)
Long:
U.S. Treasury 5 yr. Note	72	$	8,236	Mar-10	$	(150	)
Short:
U.S. Treasury 2 yr. Note	42	9,083		Mar-10	56
U.S. Treasury 10 yr. Note	74	8,544		Mar-10	212
U.S. Treasury 30 yr. Bond	72	8,307		Mar-10	341
					$	459

10 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

Credit Default Swap Agreements

The Portfolio had the following credit default swap agreement(s) open at period end:

Swap Counterparty and Reference Obligation	Buy/Sell Protection	Notional Amount (000)		Pay/Receive Fixed Rate		Termination Date	Upfront Payments (000)		Unrealized Appreciation (Depreciation) (000)
Bank of America
Sealed Air Corp., 5.63%, 7/15/13	Buy	$	90	1.12	%	3/20/18	$	—	$	—	@

@  Amount is less than $500.

Fair Value Measurement Information:

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009. (See Note A-4 to the financial statements for further information regarding fair value measurement.)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	2,250	$	—		$	—	$	2,250
Air Freight & Logistics	2,195		—			—		2,195
Automobiles	2,911		—			—		2,911
Beverages	4,364		—			—		4,364
Capital Markets	9,108		—			—		9,108
Chemicals	12,273		—			—		12,273
Commercial Banks	18,189		—			—		18,189
Commercial Services & Supplies	9,491		—			—		9,491
Communications & Media	30,257		—			—		30,257
Communications Equipment	6,814		—			—		6,814
Computers & Peripherals	11,399		—			—		11,399
Diversified Financial Services	36,269		—			—		36,269
Diversified Telecommunication Services	4,752		—			—		4,752
Electric Utilities	19,980		—			—		19,980
Energy Equipment & Services	9,467		—			—		9,467
Food & Staples Retailing	18,546		—			—		18,546
Food Products	12,678		—			—		12,678
Health Care Equipment & Supplies	9,420		—			—		9,420
Health Care Providers & Services	6,811		—			—		6,811
Hotels, Restaurants & Leisure	1,159		—			—		1,159
Household Durables	5,825		—			—		5,825
Industrial Conglomerates	28,552		—			—		28,552
Insurance	26,803		—			—		26,803
Internet Software & Services	13,162		—			—		13,162
Machinery	9,354		—			—		9,354
Metals & Mining	6,406		—			—		6,406
Oil, Gas & Consumable Fuels	51,613		—			—		51,613
Personal Products	4,346		—			—		4,346
Pharmaceuticals	29,227		—			—		29,227
Semiconductors & Semiconductor Equipment	8,868		—			—		8,868
Software	1,107		—			—		1,107
Specialty Retail	11,015		—			—		11,015
Wireless Telecommunication Services	5,985		—			—		5,985
Total Common Stocks	430,596		—			—		430,596
Credit Default Swap Agreements	—		—		@	—		—		@
Fixed Income Securities
Advertising	—		114			—		114
Aerospace & Defense	—		2,738			—		2,738
Agency Bonds — Banking (FDIC Guaranteed)	—		8,959			—		8,959
Agency Fixed Rate Mortgages	—		31			—		31
Agriculture	—		103			—		103
Air Freight & Logistics	—		11			—		11
Asset Backed Securities	—		133			—		133
Auto Parts & Equipment	—		2,244			—		2,244
Automobiles	—		3,848			—		3,848
Beverages	—		244			—		244
Biotechnology	—		13,083			—		13,083
Chemicals	—		260			—		260
Commercial Banks	—		1,837			—		1,837
Commercial Services & Supplies	—		446			—		446
Communications & Media	—		11,748			—		11,748
Communications Equipment	—		2,207			—		2,207
Computers & Peripherals	—		7,030			—		7,030

The accompanying notes are an integral part of the financial statements. 11

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Equity and Income Portfolio

Fair Value Measurement Information: (cont’d)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets: (cont’d)
Fixed Income Securities (cont’d)
Containers & Packaging	$	—	$	101	$	—	$	101
Diversified Financial Services	—		18,458		—		18,458
Diversified Telecommunication Services	—		3,794		—		3,794
Electric Utilities	—		251		—		251
Electrical Equipment	—		177		—		177
Electronic Equipment, Instruments & Components	—		115		—		115
Entertainment	—		2,565		—		2,565
Food & Staples Retailing	—		574		—		574
Food Products	—		1,399		—		1,399
Health Care Equipment & Supplies	—		825		—		825
Health Care Providers & Services	—		5,256		—		5,256
Hotels, Restaurants & Leisure	—		265		—		265
Industrial Conglomerates	—		5,030		—		5,030
Insurance	—		1,256		—		1,256
Metals & Mining	—		709		—		709
Office Electronics	—		170		—		170
Oil, Gas & Consumable Fuels	—		2,768		—		2,768
Pharmaceuticals	—		10,586		—		10,586
Real Estate Investment Trusts (REIT)	—		372		—		372
Real Estate Management & Development	—		202		—		202
Road & Rail	—		719		—		719
Semiconductors & Semiconductor Equipment	—		4,897		—		4,897
Software	—		2,278		—		2,278
Sovereign	—		329		—		329
Specialty Retail	—		420		—		420
Steel	—		2,897		—		2,897
Telecommunications	—		93		—		93
Tobacco	—		607		—		607
U.S. Agency Securities	—		7,247		—		7,247
U.S. Treasury Securities	—		60,721		—		60,721
Utilities	—		5,666		—		5,666
Wireless Telecommunication Services	—		1,039		—		1,039
Total Fixed Income Securities	—		196,822		—		196,822
Futures Contracts	609		—		—		609
Preferred Stocks
Commercial Banks	1,410		—		—		1,410
Commercial Services & Supplies	1,517		—		—		1,517
Diversified Financial Services	1,701		—		—		1,701
Electric Utilities	—		1,692		—		1,692
Food Products	1,494		—		—		1,494
Health Care Providers & Services	—		2,289		—		2,289
Oil, Gas & Consumable Fuels	—		3,490		—		3,490
Total Preferred Stocks	6,122		7,471		—		13,593
Short-Term Investments
Investment Company	29,961		—		—		29,961
U.S. Treasury Security	—		870		—		870
Total Short-Term Investments	29,961		870		—		30,831
Total Assets	467,288		205,163		—		672,451
Liabilities:
Futures Contracts	150		—		—		150
Total Liabilities	150		—		—		150
Total	$	467,138	$	205,163	$	—	$	672,301

12 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Equity and Income Portfolio

Statement of Assets and Liabilities

	December 31, 2009 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $599,817)	$	641,881
Investments in Securities of Affiliated Issuers, at Value (Cost $29,961)	29,961
Total Investments in Securities, at Value (Cost $629,778)	671,842
Interest Receivable	1,559
Dividends Receivable	756
Receivable for Portfolio Shares Sold	366
Due from Broker	58
Receivable for Investments Sold	43
Receivable from Affiliate	12
Unrealized Appreciation on Swap Agreements	—		@
Other Assets	15
Total Assets	674,651
Liabilities:
Investment Advisory Fees Payable	674
Payable for Investments Purchased	505
Payable for Forward Commitments	370
Administration Fees Payable	142
Payable for Portfolio Shares Redeemed	111
Distribution Fees — Class II Shares	28
Custodian Fees Payable	7
Directors’ Fees and Expenses Payable	—		@
Other Liabilities	32
Total Liabilities	1,869
NET ASSETS	$	672,782
Net Assets Consist of:
Paid-in Capital	$	692,261
Undistributed Net Investment Income	11,481
Accumulated Net Realized Loss	(73,483		)
Unrealized Appreciation (Depreciation) on:
Investments	42,064
Futures Contracts	459
Swaps	—		@
Net Assets	$	672,782
CLASS II:
Net Asset Value, Offering and Redemption Price Per Share Applicable to 52,552,684 Outstanding $0.001 Par Value Shares (Authorized 500,000,000 Shares)	$	12.80

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements. 13

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Equity and Income Portfolio

Statement of Operations

	Year Ended December 31, 2009 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $—@ Foreign Taxes Withheld)	$	9,592
Interest from Securities of Unaffiliated Issuers	6,191
Dividends from Securities of Affiliated Issuers	94
Total Investment Income	15,877
Expenses:
Investment Advisory Fees (Note B)	2,336
Distribution Fees — Class II Shares (Note D)	1,961
Administration Fees (Note C)	1,402
Professional Fees	57
Custodian Fees (Note F)	38
Shareholder Reporting Fees	33
Directors’ Fees and Expenses	14
Transfer Agency Fees (Note E)	4
Other	25
Total Expenses	5,870
Distribution Fees — Class II Shares Waived (Note D)	(1,681		)
Rebate from Morgan Stanley Affiliates (Note I)	(45		)
Expense Offset (Note F)	—		@
Net Expenses	4,144
Net Investment Income	11,733
Realized Gain (Loss) on:
Investments Sold from Unaffiliated Issuers	(32,169		)
Investment Sold from Affiliated Issuer (Note I)	(308		)
Foreign Currency Exchange Contracts	(4		)
Foreign Currency Transactions	—		@
Futures Contracts	4,592
Options Written	(96		)
Swap Agreements	29
Net Realized Loss	(27,956		)
Change in Unrealized Appreciation (Depreciation) on:
Investments	132,909
Foreign Currency Translations	—		@
Futures Contracts	2,015
Options Written	108
Swap Agreements	(58		)
Net Change in Unrealized Appreciation (Depreciation)	134,974
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)	107,018
Net Increase in Net Assets Resulting from Operations	$	118,751

@  Amount is less than $500.

14 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Equity and Income Portfolio

Statements of Changes in Net Assets

	Year Ended December 31, 2009 (000)			Year Ended December 31, 2008 (000)
Increase (Decrease) in Net AssetsOperations:
Net Investment Income	$	11,733		$	15,786
Net Realized Loss	(27,956		)	(42,028		)
Net Change in Unrealized Appreciation (Depreciation)	134,974			(135,583		)
Increase from Payment by Affiliate (Note J)	—			26
Net Increase (Decrease) in Net Assets Resulting from Operations	118,751			(161,799		)
Distributions from and/or in Excess of:
Class II:
Net Investment Income	(15,771		)	(15,234		)
Net Realized Gain	—			(20,502		)
Total Distributions	(15,771		)	(35,736		)
Capital Share Transactions:(1)
Class II:
Subscriptions	116,829			125,673
Distributions Reinvested	15,771			35,736
Redemptions	(79,922		)	(158,647		)
Net Increase in Net Assets Resulting from Capital Share Transactions	52,678			2,762
Total Increase (Decrease) in Net Assets	155,658			(194,773		)
Net Assets:
Beginning of Period	517,124			711,897
End of Period (Including Undistributed Net Investment Income of $11,481 and $15,704)	$	672,782		$	517,124
(1)   Capital Share Transactions:
Class II:
Shares Subscribed	10,390			9,684
Shares Issued on Distributions Reinvested	1,505			2,827
Shares Redeemed	(7,373		)	(12,768		)
Net Increase (Decrease) in Class II Shares Outstanding	4,522			(257		)

The accompanying notes are an integral part of the financial statements. 15

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Financial Highlights

Equity and Income Portfolio

	Class II
	Year Ended December 31,
Selected Per Share Data and Ratios	2009			2008			2007			2006			2005
Net Asset Value, Beginning of Period	$	10.77		$	14.74		$	14.89		$	13.69		$	12.97
Income (Loss) from Investment Operations
Net Investment Income#	0.24			0.32			0.35			0.32			0.24
Net Realized and Unrealized Gain (Loss)	2.11			(3.56		)	0.17			1.35			0.71
Total from Investment Operations	2.35			(3.24		)	0.52			1.67			0.95
Distributions from and/or in Excess of:
Net Investment Income	(0.32		)	(0.31		)	(0.28		)	(0.16		)	(0.09		)
Net Realized Gain	—			(0.42		)	(0.39		)	(0.31		)	(0.14		)
Total Distributions	(0.32		)	(0.73		)	(0.67		)	(0.47		)	(0.23		)
Net Asset Value, End of Period	$	12.80		$	10.77		$	14.74		$	14.89		$	13.69
Total Return ±	22.49		%	(22.68		)%‡	3.36		%	12.58		%	7.38		%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	672,782		$	517,124		$	711,897		$	570,626		$	406,725
Ratio of Expenses to Average Net Assets(1)	0.74		%+	0.75		%+	0.74		%+	0.78		%	0.83		%
Ratio of Net Investment Income to Average Net Assets(1)	2.09		%+	2.50		%+	2.31		%+	2.25		%	1.79		%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.01		%	0.01		%	0.00		%§	N/A			N/A
Portfolio Turnover Rate	81		%	95		%	70		%	56		%	46		%
(1)    Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived and/or Reimbursed by Adviser and/or Distributor:
Expenses to Average Net Assets	1.04		%+	1.05		%+	1.04		%+	1.08		%	1.13		%
Net Investment Income to Average Net Assets	1.79		%+	2.20		%+	2.01		%+	1.95		%	1.49		%

#	Per share amount is based on average shares outstanding.
±	Calculated based on the net asset value as of the last business day of the period. Performance does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total return would be lower.
‡	The Adviser reimbursed the Portfolio for losses incurred on derivative transactions which breached an investment guideline of the Portfolio during the period. The impact of this reimbursement is reflected in the total return shown above. Without this reimbursement, the total return for Class II would have been (22.68)%. (See Note J within the Notes to Financial Statements)
+	The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as “Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets”.
§	Amount is less than 0.005%.

16 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements

The Universal Institutional Funds, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Fund is comprised of sixteen separate active, diversified and non-diversified portfolios (individually referred to as a “Portfolio”, collectively as the “Portfolios”).

The accompanying financial statements relate to the Equity and Income Portfolio. The Portfolio seeks both capital appreciation and current income by investing primarily in income-producing equity instruments and investment grade fixed income securities. The Portfolio currently offers Class II shares only; although Class I shares may be offered in the future.

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

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles. Such policies are consistently followed by the Fund in the preparation of the financial statements. U.S. generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.Security Valuation: Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NASDAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Securities listed on a foreign exchange are valued at their closing price. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the current bid and asked prices obtained from reputable brokers. Bonds and other fixed income securities may be valued according to the broadest and most representative market. In addition, bonds and other fixed income securities may be valued on the basis of prices provided by a pricing service. The prices provided by a pricing service take into account broker dealer market price quotations for institutional size trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities. Debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, unless the Board of Directors (the “Directors”) determines such valuation does not reflect the securities’ market value, in which case these securities will be valued at their fair value as determined by the Directors.

All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Directors, although the actual calculations may be done by others. 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.

Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect 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 these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.

2.When-Issued/Delayed Delivery Securities: The Portfolio 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 yield, and no income accrues to the Portfolio on such securities prior to delivery. Payment and delivery for when-issued and delayed delivery securities can take place up to 120 days after the date of the transaction. When the Portfolio enters into a purchase transaction on a when-issued or delayed delivery basis, it establishes either a segregated account in which it maintains liquid assets in an amount at least equal in value to the Portfolio’s commitments to purchase such securities or designates such assets as segregated on the Portfolio’s records. 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 the Portfolio.

3.Derivatives: The Portfolio may use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income.

17

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

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

Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Portfolio 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 SEC rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio’s investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio may use and their associated risks:

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

Futures. In respect to futures, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Futures contracts are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). The risk of loss associated with a futures contract is in excess of the variation margin reflected as part of “Due from (to) Broker” on the Statement of Assets and Liabilities. A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed

18

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed the Portfolio’s initial investment in such contracts.

Options. In respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If a Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument such as a security, currency or index, at an agreed upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase put and call options. Purchasing call options tends to increase the Portfolio’s exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio’s exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio 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” on the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If a Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed upon price typically in exchange for a premium received by the Portfolio. The Portfolio may write call and put options on stock indexes, futures, securities or currencies it owns or in which it may invest. Writing put options tend to increase the Portfolio’s exposure to the underlying instrument. Writing a call options tend to decrease the Portfolio’s exposure to the underlying instruments. When the Portfolio writes a call or put option, an amount equal to the premium received is recorded as a liability. Any liability recorded is subsequently adjusted to reflect the current value of the options written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the net realized gain (loss). The Portfolio as a writer of an option has no control over whether the underlying future, security or currency may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future, security or currency underlying the written option. There is the risk the Portfolio may not be able to enter into a closing transaction because of an illiquid market. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

Options written for the year ended December 31, 2009 were as follows:

	Total Number of Contracts		Total Premiums Received (000)
Options Outstanding - January 1, 2009	114		$	57
Options Written	307		58
Options Terminated in Closing Purchase Transactions	(421	)	(115		)
Options Outstanding - December 31, 2009	—		$	—

Swaps. In respect to swaps, the Portfolio is subject to equity risk, interest rate risk and credit risk in the normal course of pursuing its investment objectives. A swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Portfolio’s obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. In a zero-coupon interest rate swap, payment only occurs at maturity, at which time one counterparty pays the total compounded fixed rate over the life of the swap and the other pays the total compounded floating rate that would have been earned had a series of floating rate investments been rolled over through the life of the swap. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to credit risk or the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate or foreign currency exchange rates or credit quality

19

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

changes are not correctly anticipated by the Portfolio or if the reference index, security or investments do not perform as expected. When the Portfolio has an unrealized loss on a swap agreement, the Portfolio has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Cash collateral is included with “Due from (to) Broker” on the Statement of Assets and Liabilities. Cash collateral has been offset against open swap agreements under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification(TM) (“ASC”) “Balance Sheet” (ASC 210) (formerly known as FIN 39). Offsetting of Amounts Related to Certain Contracts an interpretation of ASC 210-20 (formerly known as APB No. 10 and SFAS 105) and are included within “Swap Agreements, at Value” on the Statement of Assets and Liabilities. For cash collateral received, the Portfolio pays a monthly fee to the counterparty based on the effective rate for Federal Funds. This fee, when paid, is included within realized gain (loss) on swap agreements on the Statement of Operations.

The Portfolio adopted the provisions of the FASB ASC 815-10, “Derivatives and Hedging” (“ASC 815-10”) (formerly known as SFAS 133-1) and ASC 460-10, “Guarantees” (“ASC 460-10”) (formerly known as FIN 45-4): An Amendment of FASB ASC 815 (formerly known as SFAS 133) and ASC 460 (formerly known as FIN 45), effective November 30, 2008. ASC 815-10 and ASC 460-10 require the seller of credit derivatives to provide additional disclosure about its credit derivatives. The Portfolio’s use of swaps may include those based on the credit of an underlying security and commonly referred to as credit default swaps. Where the Portfolio is the buyer of a credit default swap agreement, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the agreement only in the event of a default by a third party on the debt obligation. If no default occurs, the Portfolio would have paid to the counterparty a periodic stream of payments over the term of the agreement and received no benefit from the agreement. When the Portfolio is the seller of a credit default swap agreement, it receives the stream of payments but is obligated to pay upon default of the referenced debt obligation. The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as an indicator of the current status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.

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

Structured Investments. The Portfolio also may invest a portion of its assets in structured notes and other types of structured investments. A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more “factors.” These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Changes in interest rates and movement of the factor may cause significant price fluctuations and changes in the reference factor may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference factor may then reduce the principal amount payable on maturity. Other types of structured investments include interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. These investment entities may be structured as trusts or other types of pooled investment vehicles. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio’s illiquidity to the extent that the Portfolio, at a particular point in time, may be unable to find qualified buyers for these securities.

The Portfolio adopted the provisions of FASB ASC 815, “Derivatives and Hedging: Overall” (“ASC 815”) (formerly known as SFAS 161), effective December 31, 2008. ASC 815 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio’s financial position and results of operations.

20

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

The following table sets forth the fair value of the Portfolio’s derivative contracts by primary risk exposure as of December 31, 2009.

Primary Risk Exposure	Statement of Assets and Liabilities	Futures Contracts (000)(a)		Swap Agreements (000)
Assets:
Credit Risk	Receivables	$	—	$	—	@
Interest Rate Risk	Receivables	609		—
Total		$	609	$	—	@
Liabilities:
Interest Rate Risk	Payables	$	150	$	—

@Amount is less than $500.

(a)This amount represents the cumulative appreciation (depreciation) of futures contracts as reported in the Portfolio of Investments. The Statement of Assets and Liabilities only reflect the current day variation margin, receivable/payable to brokers.

The following tables set forth by primary risk exposure the Portfolio’s realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2009 in accordance with ASC 815.

Realized Gain (Loss)

Primary Risk Exposure	Derivative Type	Value (000)
Foreign Currency Contracts Risk	Foreign Currency Exchange Contracts	$	(4	)
Equity Risk	Futures Contracts	2,156
Interest Rate Risk	Futures Contracts Purchased and Written	2,436
Interest Rate Risk	Options(b)	(52		)
Credit Risk	Swap Agreements	35
Interest Rate Risk	Swap Agreements	(6		)
Total		$	4,565

Change in Unrealized Appreciation (Depreciation)

Primary Risk Exposure	Derivative Type	Value (000)
Interest Rate Risk	Futures Contracts Purchased and Written	$	2,015
Interest Rate Risk	Options(b)	(54		)
Credit Risk	Swap Agreements	(58		)
Total		$	1,903

(b)The realized gain (loss) for purchased options is reported within realized gains (losses) on investments sold, at value on the Statement of Operations. The unrealized gain (loss) for purchased options is reported within unrealized gains (losses) on investments, at value on the Statements of Operations.

All open derivative positions at period end are reflected on the Portfolio’s Portfolio of Investments and the volume of these open positions relative to the net assets of the Portfolio is generally representative of open positions throughout the reporting period.

4.Fair Value Measurement: In accordance with Financial In accordance with FASB ASC 820 “Fair Value Measurements and Disclosure” (“ASC 820”) (formerly known as SFAS 157), fair value is defined as the price that the Portfolio would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Portfolio’s investments. The inputs are summarized in the three broad levels listed below.

Level 1 — quoted prices in active markets for identical securities

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

Level 3 — significant unobservable inputs (including the Portfolio’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

5.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains (losses) on the sale of investment securities are determined on the specific identified cost basis. Dividend income and distributions are recorded on the ex-dividend date (except for certain foreign dividends that may be recorded as soon as the Fund is informed of such dividends), net of applicable withholding taxes where recovery of such taxes is not reasonably assured. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts and premiums on securities purchased are amortized according to the effective yield method over their respective lives. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate measures.

21

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

B. Investment Advisory Fees: Morgan Stanley Investment Management Inc. (the “Adviser” or “MS Investment Management”), a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with investment advisory services for a fee, paid quarterly, at the annual rate based on average daily net assets as follows:

First $150 million		Next $100 million		Next $100 million		Over $350 million
0.50	%	0.45	%	0.40	%	0.35	%

MS Investment Management has voluntarily agreed to waive fees payable to it and/or reimburse the Portfolio for certain expenses, after giving effect to custody fee offsets, if necessary, to the extent that the total annual operating expenses, excluding bank overdraft, certain foreign taxes and extraordinary expenses, expressed as a percentage of average daily net assets, exceed the maximum ratio of 1.00%. Fee waivers and/or expense reimbursements are voluntary and may be terminated at any time.

C. Administration Fees: MS Investment Management (the “Administrator”) also provides the Portfolio with administrative services pursuant to an administration agreement for a monthly fee, which on an annual basis equals 0.25% of the average daily net assets of the Portfolio, plus reimbursement of out-of-pocket expenses. Under an agreement between the Administrator and JPMorgan Investor Services Co. (“JPMIS”), a corporate affiliate of JPMorgan Chase Bank, N.A., JPMIS provides certain administrative services to the Fund. For such services, the Administrator pays JPMIS a portion of the fee the Administrator receives from the Fund.

D. Distribution Fees: Morgan Stanley Distribution, Inc. (“MSDI” or the “Distributor”), a wholly-owned subsidiary of the Adviser, serves as the Distributor of the Fund and provides the Portfolio’s Class II shareholders with distribution services pursuant to a Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the 1940 Act. Under the Plan, the Portfolio is authorized to pay the Distributor a distribution fee, which is accrued daily and paid monthly, at an annual rate of 0.35% of the Portfolio’s average daily net assets attributable to Class II shares. The Distributor has voluntarily agreed to waive 0.30% of the 0.35% distribution fee that it may receive. For the year ended December 31, 2009, this waiver amounted to approximately $1,681,000.

E. Dividend Disbursing and Transfer Agent: The Fund dividend disbursing and transfer agent is Morgan Stanley Services Company Inc. (“Morgan Stanley Services”). Pursuant to a Transfer Agency Agreement, the Fund pays Morgan Stanley Services a fee generally based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: JPMorgan Chase Bank, N.A. (the “Custodian”) serves as Custodian for the Fund in accordance with a custodian agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the 1940 Act.

The Fund has entered into an arrangement with its Custodian whereby credits realized on uninvested cash balances were used to offset a portion of the Portfolio’s expenses. These custodian credits are shown as “Expense Offset” on the Statement of Operations.

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

H. Federal Income Taxes: It is the Portfolio’s intention to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements. Dividend income and distributions to shareholders are recorded on the ex-dividend date.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation as these amounts 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.

FASB ASC 740-10 “Income Taxes — Overall” (formerly known as FIN 48) 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 Portfolio recognizes interest accrued related to unrecognized tax benefits in “Interest Expense” and penalties in “Other” expenses on the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four year period ended December 31, 2009, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown on 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 2009 and 2008 was as follows:

2009 Distributions Paid From:				2008 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	15,771	$	—	$	19,915	$	15,821

22

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

The amount and character of income and capital gain distributions to be paid by the Portfolio are determined in accordance with Federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable 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, paydown adjustments, basis adjustments for return of capital sold and basis adjustments for credit default swap sold, resulted in the following reclassifications among the components of net assets at December 31, 2009:

Undistributed (Distributions in Excess of) Net Investment Income (Loss) (000)			Accumulated Net Realized Gain (Loss) (000)		Paid-in Capital (000)
$	(185	)	$	185	$	—

At December 31, 2009, the Portfolio had distributable earnings on a tax basis as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	11,487	$	—

At December 31, 2009, cost and unrealized appreciation (depreciation) for U.S. Federal income tax purposes of the investments of the Portfolio were:

Cost (000)		Appreciation (000)		Depreciation (000)			Net Appreciation (Depreciation) (000)
$	630,804	$	59,251	$	(18,213	)	$	41,038

Net capital, passive foreign investment company (“PFIC”) and currency losses incurred after October 31, and within the taxable year are deemed to arise on the first day of the Portfolio’s next taxable year. For the year ended December 31, 2009, the Portfolio deferred to January 4, 2010, for U.S. Federal income tax purposes, capital losses of approximately $824,000.

At December 31, 2009, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, of approximately $70,824,000, of which $23,179,000 will expire on December 31, 2016 and $47,645,000 will expire on December 31, 2017.

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

I. Security Transactions and Transactions with Affiliates: The Portfolio invested in Mitsubishi UFJ Financial Group, Inc., a bank holding company advised by an affiliate of the Adviser. During the year ended December 31, 2009, the Portfolio sold 100,380 shares of Mitsubishi UFJ Financial Group, Inc. for a realized loss of $308,020.

A summary of the Portfolio’s transactions in shares of the Mitsubishi UFJ Financial Group, Inc. during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)		Sales Proceeds (000)		Dividend Income (000)		Market Value December 31, 2009 (000)
$	623	$	—	$	630	$	5	$	—

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the “Liquidity Funds”), an open-end management investment company managed by the Adviser. Investment Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the year ended December 31, 2009, advisory fees paid were reduced by approximately $45,000 relating to the Portfolio’s investment in the Liquidity Funds.

A summary of the Portfolio’s transactions in shares of the Liquidity Funds during the year ended December 31, 2009 is as follows:

Market Value December 31, 2008 (000)		Purchases at Cost (000)		Sales Proceeds (000)		Dividend Income (000)		Market Value December 31, 2009 (000)
$	30,330	$	184,374	$	184,743	$	89	$	29,961

For the year ended December 31, 2009, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $348,335,000 and $304,821,000, respectively. For the year ended December 31, 2009, purchases and sales of long-term U.S. Government securities were approximately $123,273,000 and $122,641,000, respectively.

During the year ended December 31, 2009, the Portfolio incurred approximately $22,000 of brokerage commissions with Morgan Stanley & Co. Incorporated, an affiliated broker/dealer.

J. Reimbursement by Affiliate: The Adviser reimbursed the Portfolio for a $26,087 loss incurred on derivative transactions that breached an investment guideline of the Portfolio

23

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Notes to Financial Statements (cont’d)

during the year ended December 31, 2008. The amount is reflected in the Statements of Changes in Net Assets.

K. Other (unaudited): At December 31, 2009, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 74.4% for Class II shares.

L. Subsequent Events: In accordance with the provisions set forth in FASB ASC 855 “Subsequent Events” (formerly known as SFAS 165), adopted by the Portfolio as of June 30, 2009, management has evaluated the possibility of subsequent events existing in the Portfolio’s financial statements through February 19, 2010.

On January 8, 2010, the Directors of the Portfolio approved the conversion for Fund Accounting, Custody, Fund Administration and Securities Lending services from JPMorgan Investor Services Co. to State Street Bank and Trust Company. The conversion is expected to be completed in or about the second quarter of 2010.

Morgan Stanley announced on October 19, 2009, that it has entered into a definitive agreement to sell substantially all of its retail asset management business to Invesco Ltd. (“Invesco”), a leading global investment management company. Subsequently, in December 2009 the Directors approved an Agreement and Plan of Reorganization with respect to the Portfolio (the “Plan”). Pursuant to the Plan, substantially all of the assets of the Portfolio would be combined with those of a newly organized mutual fund advised by an affiliate of Invesco (the “New Portfolio”). Pursuant to the Plan, stockholders of the Portfolio would become shareholders of the New Portfolio, receiving shares of such New Portfolio equal to the value of their holdings in the Portfolio. The Plan is subject to the approval of the Portfolio’s stockholders at a special meeting of stockholders anticipated to be held during the second quarter of 2010. A proxy statement formally detailing the proposal and information concerning the New Portfolio is anticipated to be distributed to stockholders of the Portfolio during the first quarter of 2010.

24

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of
The Universal Institutional Funds, Inc. —
Equity and Income Portfolio

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Equity and Income Portfolio (one of the portfolios constituting The Universal Institutional Funds, Inc.) (the “Portfolio”) as of December 31, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolio’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Equity and Income Portfolio of The Universal Institutional Funds, Inc. at December 31, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
February 19, 2010

25

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Federal Income Tax Information (unaudited)

For Federal income tax purposes, the following information is furnished with respect to the distributions paid by the Portfolio during its taxable year ended December 31, 2009.

For corporate shareholders, 64.5% of the dividends qualified for the dividends received deduction.

20.3% of the Portfolio’s dividends was attributable to qualifying U.S. Government obligations. (Please consult your tax advisor to determine if any portion of the dividends you received is exempt from state income tax.)

For Federal income tax purposes, the following information is furnished with respect to the Portfolio’s earnings for its taxable year ended December 31, 2009.

The Portfolio may designate up to a maximum of $76,000 as qualifying as interest-related dividends.

In January, the Portfolio provides tax information to shareholders for the preceding calendar year.

26

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (unaudited)

Independent Directors:

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Frank L. Bowman (65) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004); Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l’Orde National du Mérite by the French Government.	162	Director of Armed Services YMCA of the USA; member, BP America External Advisory Council (energy); member, National Academy of Engineers.
Michael Bozic (68) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since April 1994	Private Investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006), Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears Roebuck & Co.	164	Director of various business organizations.
Kathleen A. Dennis (56) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).	162	Director of various non-profit organizations.
Dr. Manuel H. Johnson (60) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006	Director	Since July 1991	Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.	164	Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings.
Joseph J. Kearns (67) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265	Director	Since August 1994	President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); CFO of the J. Paul Getty Trust.	165	Director of Electro Rent Corporation (equipment leasing) and The Ford Family Foundation.

27

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Independent Directors (cont’d):

Name, Age and Address of Independent Director	Position(s) Held with Registrant	Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Independent Director**	Other Directorships Held by Independent Directors***
Michael F. Klein (51) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chief Operating Officer and Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co., Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).	162	Director of certain investment funds managed or sponsored by Aetos Capital LLC; Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).
Michael E. Nugent (73) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022	Chairperson of the Board and Director	Chairperson of the Boards since July 2006 and Director since July 1991	General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006).	164	None.
W. Allen Reed (62) † c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Directors 1177 Avenue of the Americas New York, NY 10036	Director	Since August 2006	Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (July 1994-December 2005).	162	Director of Temple-Inland Industries (packaging and forest products), Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006).
Fergus Reid (77) c/o Joe Pietryka, Inc. 85 Charles Coleman Blvd. Pawling, NY 12564	Director	Since June 1992	Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992).	165	Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc.

Interested Directors:

Name, Age and Address of Interested Director	Position(s)  Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Interested Director**	Other Directorships Held by Interested Director***
James F. Higgins (61) c/o Morgan Stanley Trust Harborside Financial Center Plaza Two Jersey City, NJ 07311	Director	Since June 2000	Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000).	163	Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

*	This is the earliest date the Director began serving the Retail Funds or Institutional Funds. Each Director serves an indefinite term, until his or her successor is elected.
**	The Fund Complex includes all funds advised by MS Investment Management that have an investment advisor that is an affiliated entity of MSIM (including but not limited to, Morgan Stanley Investment Advisors Inc. (“MSIA”) and Morgan Stanley AIP GP LP). The Retail Funds are those funds advised by MSIA. The Institutional Funds are certain U.S. registered funds advised by MS Investment Management and Morgan Stanley AIP GP LP.
***	This includes any directorships at public companies and registered investment companies held by the Directors at any time during the past five years.
†	For the period September 26, 2008 through February 5, 2009 W. Allen Reed was an Interested Director. At all other times covered by this report, Mr. Reed was an Independent Director.

28

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Director and Officer Information (cont’d)

Executive Officers:

Name, Age and Address of Executive Officer	Position(s) Held with Registrant	Term of Office and Length of Time Served*	Principal Occupation(s) During Past 5 Years
Randy Takian (35) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	President and Principal Executive Officer	Since September 2008	President and Principal Executive Officer (since September 2008) of funds in the Fund Complex; President and Chief Executive Officer of Morgan Stanley Services Company Inc. (since September 2008). President of Morgan Stanley Investment Advisors Inc. (since July 2008). Head of the Retail and Intermediary business within Morgan Stanley Investment Management (since July 2008). Head of Liquidity and Bank Trust business (since July 2008) and the Latin American franchise (since July 2008) at Morgan Stanley Investment Management. Managing Director, Director and/or Officer of the Adviser and various entities affiliated with the Adviser. Formerly, Head of Strategy and Product Development for the Alternatives Group and Senior Loan Investment Management. Formerly with Bank of America (July 1996-March 2006), most recently as Head of the Strategy, Mergers and Acquisitions team for Global Wealth and Investment Management.
Kevin Klingert (47) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since June 2008	Head, Chief Operating Officer and acting Chief Investment Officer of the Global Fixed Income Group of the Adviser and Morgan Stanley Investment Advisors Inc. (since April 2008). Head of Global Liquidity Portfolio Management and co-Head of Liquidity Credit Research of Morgan Stanley Investment Management (since December 2007). Managing Director of the Adviser and Morgan Stanley Investment Advisors Inc. (since December 2007). Previously, Managing Director on the Management Committee and head of Municipal Portfolio Management and Liquidity at BlackRock (October 1991 to January 2007).
Carsten Otto (46) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Chief Compliance Officer	Since October 2004	Managing Director and Global Head of Compliance for Morgan Stanley Investment Management (since April 2007) and Chief Compliance Officer of the Retail Funds and Institutional Funds (since October 2004). Formerly, U.S. Director of Compliance (October 2004-April 2007) and Assistant Secretary and Assistant General Counsel of the Retail Funds.
Stefanie V. Chang Yu (43) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Vice President	Since December 1997	Managing Director and Secretary of the Adviser and various entities affiliated with the Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997).
Mary E. Mullin (42) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Secretary	Since June 1999	Executive Director of the Adviser and various entities affiliated with the Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999).
James W. Garrett (41) Morgan Stanley Investment Management Inc. 522 Fifth Avenue New York, NY 10036	Treasurer and Chief Financial Officer	Treasurer since February 2002 and Chief Financial Officer since July 2003	Head of Global Fund Administration for the Morgan Stanley Investment Management; Managing Director of the Adviser and various entities affiliated with the Adviser; Treasurer and Chief Financial Officer of the Institutional Funds.

* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds. Each Officer serves an indefinite term, until his or her successor is elected.

29

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Adviser and Administrator	Custodian
Morgan Stanley Investment Management Inc.	JPMorgan Chase Bank, N.A.
522 Fifth Avenue	270 Park Avenue
New York, New York 10036	New York, New York 10017
Distributor	Legal Counsel
Morgan Stanley Distribution, Inc.	Dechert LLP
One Tower Bridge	1095 Avenue of the Americas
100 Front Street, Suite 1100	New York, New York 10036
West Conshohocken, PA 19428-2899
	Independent Registered Public Accounting Firm
Dividend Disbursing and Transfer Agent	Ernst & Young LLP
Morgan Stanley Services Company Inc.	200 Clarendon Street
P.O. Box 219804	Boston, Massachusetts 02116-5072
Kansas City, MO 64121-9804

The Investment Adviser, Morgan Stanley Investment Management Inc., does business in certain instances as Van Kampen or Morgan Stanley Asset Management.

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund’s second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semi-annual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.vankampen.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public website. 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 website, 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 toll free at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s email address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102.

The Fund’s Statement of Additional Information contains additional information about the Fund, including its Directors. It is available, without charge, by calling toll free 1-800-281-2715.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free 1-800-281-2715 or by visiting our website at www.vankampen.com. It is also available on the SEC’s website at www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 by calling toll free 1-800-281-2715. This information is also available on the SEC’s website at www.sec.gov.

UIFEIPANN

IU10-00692P-Y12/09

30

	The Universal Institutional Funds, Inc.
	Annual Report — December 31, 2009

Global Franchise Portfolio

The Portfolio is 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.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Expense Example (unaudited)

Global Franchise Portfolio

Expense Example

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges, and (2) ongoing costs, including management fees, distribution (12b-1) fees (in the case of Class II shares) and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the six-month period ended December 31, 2009 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Please note that “Actual Expenses Paid During Period” are grossed up to reflect Portfolio expenses prior to the effect of Expense Offset (See Note F in the Notes to Financial Statements). Therefore, the annualized net expense ratios may differ from the ratio of expenses to average net assets shown in the Financial Highlights.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the table below is useful in comparing ongoing costs, but 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.

	Beginning Account Value 7/1/09		Actual Ending Account Value 12/31/09		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Global Franchise Class II	$	1,000.00	$	1,237.90	$	1,019.21	$	6.71	$	6.06	1.19	%

*	Expenses are calculated using the Portfolio’s annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 184/365 (to reflect the most recent one-half year period).
**	Annualized

1

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (unaudited)

Global Franchise Portfolio

The Global Franchise Portfolio (the “Portfolio”) seeks long-term capital appreciation by investing primarily in equity securities of issuers located throughout the world that Morgan Stanley Investment Management Inc. (the “Adviser”) believes have, among other things, resilient business franchises and growth potential. Foreign investing involves certain risks, including currency fluctuations and controls, restrictions on foreign investments, less liquidity and the potential for market volatility and political instability. The risks of investing in emerging-markets countries are greater than risks generally associated with foreign investments.

Performance

For the fiscal year ended December 31, 2009, the Portfolio had a total return based on net asset value and reinvestment of distributions per share of 29.56%, net of fees, for Class II shares. The Portfolio’s Class II shares underperformed against its benchmark, the Morgan Stanley Capital International (MSCI) World Index (the “Index”) which returned 29.99%.

Factors Affecting Performance

·Equity investors experienced a bit of a roller coaster ride as most global markets hit new lows in March and then rebounded substantially, with the MSCI World Index returning 30% for the year. Since March, the preference of the market has been for leveraged balance sheets, leveraged profit structures and cyclical (that is, economically sensitive) sectors. The market’s preference suggests that the worst of the recession is past and economic activity is returning to normal.

·The Portfolio outperformed the Index in the first quarter as cyclicals, particularly financials and materials, continued to be downgraded for most of the quarter, and the Portfolio benefited from underweight allocations to these sectors. However, market conditions shifted dramatically in mid-March as massive government stimulus packages, incentive programs and monetary easing rekindled the market’s appetite for risk. The Portfolio underperformed the next two quarters as cyclical sectors — particularly banks, industrials and materials — soared with confidence that financial meltdown had been avoided. The fourth quarter saw a bit of a pullback in financials as investors started questioning the adequacy of banks’ tier 1 capital ratios and the possibility of a more stringent regulatory environment. The Portfolio outperformed as financials sold off to the benefit of defensive sectors such as consumer staples, the Portfolio’s largest sector weighting.

·For the period overall, the Portfolio’s underweights in the market’s weakest sectors (utilities and telecommunications), along with good stock selection decisions in consumer staples and industrials, were beneficial to relative returns. This positioning allowed the Portfolio to perform largely in line with the Index for the period.

·The Portfolio’s overweight allocation to consumer staples and the underweight to the strong performing technology sector detracted from performance on a relative basis for the 12-month period.

·      Positive contributors to performance during the period were Swedish Match AB, Harley-Davidson and British American Tobacco plc.*

·      The largest detractors were Kao Corp., Pernod Ricard and Brown-Forman Corp.*

Management Strategies

·During the year, we sold out of Harley-Davidson and C&C Group. We reduced positions in Starbucks and eBay on the back of concerns of franchise erosion. We initiated a position in Dr. Pepper Snapple Group, Inc. and added to positions in Reckitt Benckiser Group plc and Procter & Gamble Co.*

·We do not attempt to predict from a macro perspective the direction of the markets. Our focus remains on the Portfolio’s philosophy of seeking exceptional quality at compelling value.

·We continue to seek investment opportunities in companies with strong business franchises protected by a dominant intangible asset. Additionally, we demand sound management, substantial free cash flow and growth potential. We invest in these high quality companies only when we can identify compelling value as measured by a current free cash flow yield in excess of the risk-free bond yield. We seek to deliver attractive returns while minimizing business and valuation risk. Our goal is for the Portfolio to outperform broadly-based benchmarks over the long term with less than average volatility.

*The information contained in this overview regarding specific securities is for informational purposes only and should not be construed as a recommendation to purchase or sell the securities mentioned.

2

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Investment Overview (cont’d)

Global Franchise Portfolio

Performance Compared to the Morgan Stanley Capital International (MSCI) World Index(1)

	Total Returns(2)
			Average Annual
	One Year		Five Years		Since Inception(4)
Portfolio — Class II(3)	29.56	%	6.58	%	10.24	%
MSCI World Index	29.99		2.01		7.62

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. Performance assumes that all dividends and distributions, if any, were reinvested. For the 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 so that Portfolio shares, when redeemed, may be worth more or less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance shown does not reflect fees and expenses imposed by your insurance company’s separate account. If performance information included the effect of these additional charges, the total returns would be lower.

(1)	Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the global equity market performance of developed markets. 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 MSCI World Index currently consists of 23 developed market country indices. 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.
(2)	Total returns for the Portfolio reflect fees waived and expenses reimbursed, if applicable, by the Adviser. Without such waivers and reimbursements, total returns would have been lower. Fee waivers and/or expense reimbursements are voluntary and the Adviser reserves the right to commence or terminate any waiver and/or reimbursement at any time.
(3)	Commenced operations on April 30, 2003.
(4)	For comparative purposes, average annual since inception returns listed for the Index refers to the inception date or initial offering of the respective share class of the Portfolio, not the inception of the Index.

*  Commenced operations on April 30, 2003.

In accordance with SEC regulations, Portfolio performance shown assumes that all recurring fees (including management fees) were deducted and all dividends and distributions were reinvested.

Portfolio Composition

Classification	Percentage of Total Investments
Tobacco	24.9	%
Food Products	19.9
Household Products	10.1
Media	9.6
Beverages	7.5
Other*	24.8
Short-Term Investment	3.2
Total Investments	100.0	%

*  Industries representing less than 5% of total investments.

3

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments

Global Franchise Portfolio

	Shares	Value (000)
Common Stocks (96.5%)
Finland (3.2%)
Kone Oyj, Class B	83,697	$	3,577
France (2.8%)
Danone S.A.	51,336	3,126
Ireland (4.5%)
Experian plc	495,942	4,903
Japan (2.4%)
Kao Corp.	111,000	2,591
Netherlands (6.7%)
Reed Elsevier N.V.	273,820	3,360
Wolters Kluwer N.V.	181,913	3,987
		7,347
Sweden (5.3%)
Swedish Match AB	267,447	5,847
Switzerland (9.0%)
Nestle S.A. (Registered)	120,818	5,869
Novartis AG (Registered)	73,229	3,990
		9,859
United Kingdom (29.5%)
British American Tobacco plc	286,963	9,309
Cadbury plc	352,492	4,536
Diageo plc	154,646	2,697
Imperial Tobacco Group plc	214,918	6,773
Reckitt Benckiser Group plc	77,320	4,189
Unilever plc	155,701	4,984
		32,488
United States (33.1%)
Brown-Forman Corp., Class B	46,210	2,475
Career Education Corp. (a)	65,741	1,532
Dr. Pepper Snapple Group, Inc.	106,082	3,002
eBay, Inc. (a)	148,009	3,484
Fortune Brands, Inc.	49,299	2,130
Kellogg Co.	62,951	3,349
McGraw-Hill Cos., Inc. (The)	94,363	3,162
Moody’s Corp.	100,652	2,698
Philip Morris International, Inc.	111,115	5,355
Procter & Gamble Co. (The)	70,778	4,291
Scotts Miracle-Gro Co. (The), Class A	44,749	1,759
Starbucks Corp. (a)	50,648	1,168
Weight Watchers International, Inc.	66,564	1,941
		36,346
Total Common Stocks (Cost $94,062)		106,084
Short-Term Investment (3.2%)
Investment Company (3.2%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (Cost $3,541) (b)	3,540,668	3,541
Total Investments (99.7%) (Cost $97,603) (c)		109,625
Other Assets in Excess of Liabilities (0.3%)		308
Net Assets (100%)		$	109,933

(a)	Non-income producing security.
(b)	See Note I within the Notes to Financial Statements regarding investment in Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class.
(c)	The approximate market value and percentage of total investments, $69,738,000 and 63.6%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to Financial Statements.

Foreign Currency Exchange Contracts Information:

The Portfolio had the following foreign currency exchange contract(s) open at period end:

Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Net Unrealized Appreciation (Depreciation) (000)
GBP	2,394	$	3,867	1/7/10	USD	3,964	$	3,964	$	97
GBP	2,394	3,866		1/7/10	USD	3,961	3,961		95
GBP	2,394	3,867		1/7/10	USD	3,964	3,964		97
GBP	2,394	3,866		1/7/10	USD	3,963	3,963		97
		$	15,466				$	15,852	$	386

GBP	— British Pound
USD	— United States Dollar

Fair Value Measurement Information:

The following is a summary of the inputs used to value the Portfolio’s net assets as of December 31, 2009. (See Note A-4 to the financial statements for further information regarding fair value measurement.)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	5,477	$	2,697	$	—	$	8,174
Chemicals	1,759		—		—		1,759
Diversified Consumer Services	3,473		—		—		3,473
Diversified Financial Services	2,698		—		—		2,698
Food Products	3,349		18,515		—		21,864
Hotels, Restaurants & Leisure	1,168		—		—		1,168
Household Durables	2,130		—		—		2,130
Household Products	4,291		6,780		—		11,071
Internet Software & Services	3,484		—		—		3,484
Machinery	—		3,577		—		3,577
Media	3,162		7,347		—		10,509
Pharmaceuticals	—		3,990		—		3,990

4 The accompanying notes are an integral part of the financial statements.

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Portfolio of Investments (cont’d)

Global Franchise Portfolio

Fair Value Measurement Information: (cont’d)

Investment Type	Level 1 Quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets: (cont’d)
Common Stocks (cont’d)
Professional Services	$	—	$	4,903	$	—	$	4,903
Tobacco	5,355		21,929		—		27,284
Total Common Stocks	36,346		69,738		—		106,084
Foreign Currency Exchange Contracts	—		386		—		386
Short-Term Investment
Investment Company	3,541		—		—		3,541
Total Assets	39,887		70,124		—		110,011
Total	$	39,887	$	70,124	$	—	$	110,011

The accompanying notes are an integral part of the financial statements. 5

The Universal Institutional Funds, Inc.

Annual Report — December 31, 2009

Global Franchise Portfolio

Statement of Assets and Liabilities

	December 31, 2009 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $94,062)