UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-03692
Morgan Stanley Variable Investment Series
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York					10036
(Address of principal executive offices)					(Zip code)
Randy Takian 522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code:				212-296-6990
Date of fiscal year end:	December 31, 2009
Date of reporting period:		December 31, 2009

Item 1 - Report to Shareholders

MORGAN STANLEY
VARIABLE INVESTMENT SERIES

Annual Report

DECEMBER 31, 2009

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

Morgan Stanley Variable Investment Series

Table of Contents

Letter to the Shareholders	1
Expense Example	25
Portfolios of Investments:
Money Market	31
Limited Duration	33
Income Plus	43
High Yield	56
Global Infrastructure	66
Income Builder	73
Dividend Growth	79
Global Dividend Growth	83
European Equity	88
Capital Opportunities	92
S&P 500 Index	94
Aggressive Equity	105
Strategist	107
Financial Statements:
Statements of Assets and Liabilities	124
Statements of Operations	127
Statements of Changes in Net Assets	130
Notes to Financial Statements	142
Financial Highlights	186
Report of Independent Registered Public Accounting Firm	198
Trustee and Officer Information	199
Federal Tax Notice	205

Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2009

Dear Shareholder,

As we entered 2009, the economy was still mired in recession and the financial markets continued to tumble as the credit crisis deepened and consumer confidence hit a new low. As the first quarter progressed, however, signs emerged that the unprecedented monetary and fiscal stimulus measures enacted by global governments and central banks had begun to take hold. Credit conditions became more favorable, thanks in part to the Federal Reserve's zero interest-rate policy and other initiatives to enhance liquidity, while at the same time, the contraction in economic growth appeared to be slowing, all of which served to boost investor confidence and a resurgence in risk appetite. Investors who had fled riskier asset classes in favor of the relatively safe haven of U.S. Treasury and cash-equivalent securities began to pour cash back into the credit and equity markets, sparking a brisk rebound in performance in early March.

Market sentiment continued to improve in the second quarter as encouraging news on the corporate and economic fronts — including better-than-expected corporate earnings and increased manufacturing activity — pointed to a potential economic recovery, propelling the markets higher. Although weak spots in the economy remained, most notably high unemployment and the still-languishing housing market, initial gross domestic product (GDP) estimates for the third quarter moved into positive territory, further stoking investor confidence. The rally continued to gain momentum through the third and fourth quarters and by year end, both the stock and bond markets had made a dramatic comeback, with many of the most beaten down sectors in 2008 posting the largest gains for the year.

While 2009 was certainly a remarkable year for the markets and the economy appears to be back on the path to expansion, concerns remain about the strength of the recovery going forward as the government begins winding down its various support programs and unemployment continues to hover near 10%.

Domestic Equity Overview

For the year overall, domestic equities were up 26.46% as measured by the S&P 500^® Index. Performance was led by the most beaten-down sectors of the previous year, including sectors with greater economic sensitivity (cyclicals) and/or reliance on commodity prices. Within those sectors, lower quality, higher beta (more volatile) stocks tended to outperform.

In particular, financials, materials, information technology, and consumer discretionary were all among the top performing groups in 2009. Within financials, banks and diversified financial companies saw strong comebacks as government interventions helped stabilize the financial system and credit markets. Furthermore, companies with capital markets exposure were bolstered by the markets' rally. The materials sector gained on the back of rising commodity prices, as increasing optimism for a global economic recovery

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Letter to the Shareholders nDecember 31, 2009 continued

drove expectations of rising demand for commodities. The information technology and consumer discretionary sectors performed well as investors began to anticipate a return to economic expansion and an eventual increase in spending by corporations and consumers.

Not surprisingly, the sectors left behind in 2009's rally were those that had outperformed in 2008: the defensive (or less economically sensitive) sectors such as health care, telecommunications services, and utilities. Although there were areas of strength within each sector, including several high-profile acquisitions in the pharmaceuticals industry, investors generally rotated out of these defensive sectors into riskier areas of the market as it became clearer that an economic depression had been averted and that the worst had passed. However, all sectors, including the laggards, posted positive returns for the 12-month period.

Fixed Income Overview

Within the fixed income market, spread (or non-government) sectors rebounded strongly in 2009, with the riskiest segments of the market staging the most impressive rallies. Although Treasury securities performed well early in the year, as investors assumed more risk and shifted to other sectors, performance lagged and yields moved markedly higher. As of year end, yields on 2-, 5-, 10-, and 30-year Treasuries were approximately 37, 113, 162, and 196 basis points higher, respectively, than at the end of 2008.

The agency sector performed relatively well, 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. Despite lower rates and the Home Affordable Modification Program, refinancing activity remained low and mortgage prepayment speed only modestly increased.

The corporate credit sector benefited from a significant tightening in yield spreads (an indication of investors' willingness to assume credit risk), particularly within the lower quality, higher yielding segment. The Barclays Capital Corporate Bond Index, which is generally representative of the investment grade corporate credit market, returned 18.68% for the year. The best performing sectors were those with the widest yield spreads at the start of 2009: real estate investment trusts (REITs), metals/mining, life insurance, financials and telecommunications. The high yield corporate credit market made an even more dramatic comeback, posting a record 58.76% return for the year, as measured by the Barclays Capital U.S. Corporate High Yield - 2% Issuer Cap Index. The lowest quality bonds delivered the best performance; CCC rated issues were up over 90%, easily outperforming better quality BB and B rated issues, which returned 46%

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Letter to the Shareholders nDecember 31, 2009 continued

and 45%, respectively. From an industry perspective, financials and insurance were the top performers while the utility and consumer non-cyclical industries trailed.

Money market liquidity improved significantly during the year and as a result, the 3-month London Interbank Offered Rate (LIBOR), a benchmark for short-term interest rates, fell roughly 1.17% to end the year at 0.25%. The decline is indicative of improving financial conditions as the various government-sponsored programs reinvigorated financing activity. As the financial markets moved closer to normalcy, usage of the government-sponsored liquidity programs materially declined. Nonetheless, the Federal Reserve Board of Governors approved the extension of and modifications to a number of these programs until February 1, 2010 in an effort to promote financial stability and support the flow of credit to households and businesses.

International Equity Overview

International equities also came back strongly starting in mid-March, supported by significant monetary and fiscal stimulus by governments and central banks around the world. As in the U.S., cyclical sectors (such as materials, financials and consumer discretionary) led the recovery globally while the more defensive health care, telecommunications and utilities sectors lagged.

On a regional basis, the emerging markets again outperformed developed markets in 2009, propelled by more stable banking systems and healthier corporate and government balance sheets in several emerging market countries, a low interest rate environment, and positive economic momentum from China. Within developed markets, Asia ex-Japan and Europe each posted double-digit gains, while Japan was the notable laggard, with a single-digit return for the year.

In Europe, the economic outlook continued to brighten but concerns about the pace of deleveraging remained. Although European bank stocks rebounded strongly during the year as governments and central banks across the region took extraordinary measures to stabilize the financial system, investors began to worry about what may happen once these measures are removed. Moreover, investors are questioning the effect that large government deficits might have on European economies going forward, particularly in Greece, Spain, and the U.K.

Japan benefited in the first half of the year from the return of investors' risk appetites. Investors rotated into Japan, attracted to its highly cyclical nature. But political noise in the second half of the year, combined with a stronger yen, mounting deflationary pressure and a stream of equity finance announcements slowed the market's advance. However, in December, Japanese equities reversed course as some of these concerns abated, the yen weakened, mid-year earnings announcements were solid, and the government and Bank of Japan took coordinated actions to fuel the economy.

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Letter to the Shareholders nDecember 31, 2009 continued

Aggressive Equity Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Aggressive Equity Portfolio Class X shares produced a total return of 69.46%, outperforming the Russell 3000^® Growth Index (the "Index"), which returned 37.01%. For the same period, the Portfolio's Class Y shares returned 69.06%. Past performance is no guarantee of future results.

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

Stock selection in technology was the largest positive contributor to relative performance, although it was partially offset by the negative effect of an underweight there. The computer services, software and systems industry led performance within the sector. Stock selection in consumer discretionary also had a positive effect on relative performance, driven by the diversified retail industry. Both stock selection and an overweight in financial services added to relative performance. Here, exposure to the financial data and systems industry was the primary contributor.

Although the Portfolio outperformed the Index, one area was detrimental to overall performance. Stock selection in materials and processing detracted from relative performance, despite the benefit of an overweight position in the sector. While none of our

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		69.46	%		6.61	%		0.63	%		4.23	%
Class Y		69.06	%		6.34	%		—			0.34	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

holdings had negative returns, they did not keep pace with the stronger performing industries within the sector. In particular, the paper and chemicals industries, in which the Portfolio had no exposure, saw large rebounds in 2009.

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

Capital Opportunities Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Capital Opportunities Portfolio Class X shares produced a total return of 71.32%, outperforming the Russell 3000^® Growth Index (the "Index"), which returned 37.01%. For the same period, the Portfolio's Class Y shares returned 70.85%. Past performance is no guarantee of future results.

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

Stock selection in technology was the largest positive contributor to relative performance, although it was partially offset by the negative effect of an underweight there. The computer services, software and systems industry led performance within the sector. Stock selection in consumer discretionary also had a positive effect on relative

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		71.32	%		5.72	%		–0.94	%		10.84	%
Class Y		70.85	%		5.45	%		—			–0.27	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

performance, driven by the diversified retail industry. Both stock selection and an overweight in financial services added to relative performance. Here, exposure to the financial data and systems industry was the primary contributor.

Although the Portfolio outperformed the Index, one area was detrimental to overall performance. Stock selection in materials and processing detracted from relative performance, despite the benefit of an overweight position in the sector. While none of our holdings had negative returns, they did not keep pace with the stronger performing industries within the sector. In particular, the paper and chemicals industries, in which the Portfolio had no exposure, saw large rebounds in 2009.

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

Dividend Growth Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Dividend Growth Portfolio Class X shares produced a total return of 24.30%, underperforming the S&P 500^® Index (the "Index"), which returned 26.46%. For the same period, the Portfolio's Class Y shares returned 23.94%. Past performance is no guarantee of future results.

The performance of the Portfolio's two share classes varies because each has different expenses. The Portfolio's total returns assume the reinvestment of all distributions but do not reflect the deduction of any

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		24.30	%		–0.66	%		0.94	%		6.77	%
Class Y		23.94	%		–0.91	%		—			0.98	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

charges by your insurance company. Such costs would lower performance.

The main detractors from relative performance were stocks in the capital goods and technology sectors.

However, other positions benefited relative returns. The main contributors to relative performance were stocks in the shelter, health care, and consumer services sectors. In addition, an overweight position in the finance sector further added value to the Portfolio's relative returns.

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

European Equity Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — European Equity Portfolio Class X shares produced a total return of 27.73%, underperforming the MSCI Europe Index (the "Index"), which returned 35.83%. For the same period, the Portfolio's Class Y shares returned 27.41%. Past performance is no guarantee of future results.

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

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		27.73	%		3.67	%		0.69	%		9.19	%
Class Y		27.41	%		3.40	%		—			0.22	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

From a country perspective, detractors from performance included the U.K. and Switzerland, where both stock selection and overweight allocations in both countries dampened performance. Stock selection in Sweden and Norway, and an overweight allocation to the Netherlands also hampered relative results. However, the Portfolio had positive contributions from both stock selection and an underweight allocation in France, stock selection in Finland, and stock selection and an overweight allocation in Belgium.

Sectors that lagged on a relative basis included both stock selection and an underweight allocation in banks. The Portfolio had no exposure to the banks which rallied the strongest during the year, as these companies did not meet our investment criteria. Also, although we initiated a position in a major global financial services company later in the year, a substantial portion of the stock's appreciation had occurred earlier in the year. Stock selection in materials was another area of relative weakness, as the Portfolio was underweight in metals and mining stocks which performed very well during the rally. Other detractors included stock selection in pharmaceuticals, underweight allocations in energy and diversified financials, and stock selection and an overweight allocation in food, beverage and tobacco stocks.

However, other sectors benefited the Portfolio's relative performance. Stock selection in technology contributed positively. Here, the Portfolio had no exposure to a mobile phone supplier (which is the largest technology stock in the Index) that underperformed during the year. An underweight allocation to automobiles and components was additive to relative returns. The Portfolio had no exposure to a German automaker that was acquired last year and has since underperformed. An overweight allocation to the telecommunications sector drove relative gains, primarily from overweight positions in German and French telecommunications stocks. Additionally, an overweight in health care equipment and both stock selection and an overweight allocation in capital goods were positive for overall performance.

In the last year, we increased the Portfolio's weight in financials, with positions in several banks, and in more cyclical sectors, buying positions in a global leading steel company, U.K. retailers, and automobiles and components companies. We also added to health care with a U.K. consumer-branded health care products manufacturer. We took some profits from selected global pharmaceutical and telecommunications companies, and eliminated positions in a French nuclear utility and a Finnish energy company.

The outlook for the European economy has improved and it looks like the worst is behind us, although companies will likely take a while to de-leverage. Current equity valuations are now pricing a low growth scenario, which we believe seems to be the most likely scenario for the next few years. Our investment approach remains the same. We continue to seek high quality companies with high earnings visibility and predictability, stable and strong cash flow and low levels of debt.

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Letter to the Shareholders nDecember 31, 2009 continued

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

Global Dividend Growth Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Global Dividend Growth Portfolio Class X shares produced a total return of 16.44%, underperforming the Morgan Stanley Capital International (MSCI) World Index (the "Index"), which returned 29.99%. For the same period, the Portfolio's Class Y shares returned 16.11%. Past performance is no guarantee of future results.

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

For the full-year period, the Index returned 29.99%, quite an exceptional recovery from its – 25% return from January through its March low. Those sectors which performed the worst during the 2008 slump were the top performers this year. Materials, financials and, within the consumer discretionary sector, the autos and retail industries all rebounded sharply in the recovery. The technology sector also performed strongly for the full-year period. Conversely, sectors such as utilities,

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		16.44	%		–0.93	%		1.48	%		5.70	%
Class Y		16.11	%		–1.17	%		—			1.59	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2)  The Morgan Stanley Capital International (MSCI) 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

*  Inception dates of February 23, 1994 for Class X and June 5, 2000 for Class Y.

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telecommunications, insurance and pharmaceuticals, while still delivering positive returns during the year, lagged the sectors mentioned above.

In this environment, where lower quality stocks outperformed, the Portfolio's 16.44% return was not sufficient to keep pace with the extraordinary return of the Index mentioned above. The majority of this relative underperformance came from allocation rather than stock selection decisions. The strategy of the Portfolio is to purchase high quality companies with attractive and sustainable dividend yields which are available at discounted valuations. Financial strength is an essential component of our stock assessment process and we look for companies with strong free cash flow which are not too highly leveraged. On this basis, the Portfolio has a natural overweight to the cash-generative telecommunications, consumer staples and pharmaceutical sectors, which lagged the strong performance o f the more cyclical sectors where the Portfolio is underweight.

However, the Portfolio outperformed the Index in other areas. In the industrials sector, stock selection in the capital goods group was additive. The Portfolio also made relative gains in the consumer staples sector with strong picks in tobacco and food stocks. Stock selection in the utilities sector further bolstered relative performance.

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

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Letter to the Shareholders nDecember 31, 2009 continued

Global Infrastructure Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Global Infrastructure Portfolio Class X shares produced a total return of 19.26%, underperforming the S&P 500^® Utilities Index/S&P Global Infrastructure Index (the "Index"), which returned 25.28%, and the S&P Global BMI Index, which returned 37.76%. For the same period, the Portfolio's Class Y shares returned 18.83%. Past performance is no guarantee of future results.

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

Relative to the Index, the primary detractors from performance were the Portfolio's positions in transportation infrastructure, energy transportation, and gas utilities. An underweight in transportation infrastructure detracted from returns as this was the leading sector within the Index and our lower exposure there kept the Portfolio from more fully benefiting from its strong performance. An underweight in energy transportation also hindered relative performance, as did security selection within the sector. Lastly, the Portfolio's exposure to gas utilities, which are not represented in the Index, was disadvantageous as this segment underperformed for the period.

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		19.26	%		5.72	%		0.99	%		7.36	%
Class Y		18.83	%		5.44	%		—			0.68	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

(3)  The Standard & Poor's Global BMI Index (S&P Global BMI Index) is a broad market index designed to capture exposure to equities in all countries in the world that meet minimum size and liquidity requirements. As of the date of this Report, there are approximately 11,000 index members representing 25 developed and 21 emerging market countries. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

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

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Other positions, however, were additive to relative performance. Among the top contributors to relative returns was security selection within the utilities sector. In particular, security selection in independent power producers and energy traders boosted returns. Security selection in electric utilities also enhanced returns, as did an underweight allocation there, given that electric utilities stocks overall underperformed the broader utilities sector. Favorable security selection in multi-utilities was the third largest contributor to relative performance for the year.

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

High Yield Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — High Yield Portfolio Class X shares produced a total return of 44.56%, underperforming the Barclays Capital U.S. Corporate High Yield - 2% Issuer Cap Index (the "Index"), which returned 58.76%. For the same period, the Portfolio's Class Y shares returned 44.27%. Past performance is no guarantee of future results.

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

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		44.56	%		5.27	%		–2.75	%		3.92	%
Class Y		44.27	%		5.05	%		—			–2.76	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2)  The Barclays Capital U.S. Corporate High Yield - 2% Issuer Cap Index is the 2% Issuer Cap component of the Barclays Capital U.S. Corporate High Yield Index which covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below. The Index excludes Emerging Markets debt. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

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

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Letter to the Shareholders nDecember 31, 2009 continued

The Portfolio's underperformance of the Index was primarily attributable to its more conservative overall positioning. We continued to favor higher quality, more liquid bonds with an emphasis on issuers with solid asset coverage as we believe this positioning provided an appropriate risk/return profile for our investors. A significant underweight to the lowest quality, most risky segment of the high yield market was the primary detractor as these bonds provided the strongest returns for the period. An underweight in financials, particularly the banking and brokerage industry groups, also dampened performance as these industries performed well.

Other positions, however, were additive to relative performance. Large overweight allocations to the energy and utilities sectors were additive to performance. The energy sector benefited from heightened merger and acquisition (M&A) activity and rising commodity prices while the utility sector, and electric credits in particular, also performed well. An overweight allocation to the basic industry sector boosted returns. Here, overweights to the chemicals, mining and paper/packaging industries were advantageous as M&A activity drove the chemical industry's strong performance, mining benefited from the commodity rally, and the paper industr y rebounded strongly during the year.

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

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Letter to the Shareholders nDecember 31, 2009 continued

Income Builder Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Income Builder Portfolio Class X shares produced a total return of 25.16%, outperforming the Russell 1000^® Value Index (the "Index"), which returned 19.69%, and the Barclays Capital U.S. Government/Credit Index, which returned 4.52%. For the same period, the Portfolio 's Class Y shares returned 24.90%. Past performance is no guarantee of future results.

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

The 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.

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

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Year			10 Years			Since Inception*
Class X		25.16	%		3.07	%		3.97	%		5.49	%
Class Y		24.90	%		2.82	%		—			4.01	%

(1)Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2)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.

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

*  Inception dates of January 21, 1997 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders nDecember 31, 2009 continued

to acquire them. Toward the end of the period, we began adding attractive consumer staples companies that met our value-with-a-catalyst criteria.

Health care also contributed to outperformance during the period. The Portfolio has historically maintained an overweight in the sector; however, over the past 12 months the weight has declined. 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: Wyeth and Schering Plough. 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.

However, other positions modestly offset those relative gains. The financials sector was the largest relative detractor during the review period. The Portfolio has maintained a significant underweight in financials versus the Index for some time, which benefited the portfolio significantly in 2007 and 2008. However, over the past 12 months, and specifically from March through May, financial stocks rebounded from their earlier dramatic decline. 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. In particular, the Portfolio was underexposed to the banks and diversified financials that rebounded most strongly during the period. The Portfolio's underexposure was based on our concerns regarding quality of balances sheets, uncert ainty regarding additional capital requirements and incremental dividend cuts, and the unpredictability of government influence.

The materials sector also dampened relative gains. The Portfolio's underweight in the sector meant that it had less exposure to these economically sensitive stocks, which performed well as the market rebounded.

The Portfolio's convertible securities exposure was generally additive to performance during the year. The convertible securities market, along with the equity market, rebounded during the 12-month period. Speculative grade convertible securities outperformed investment grade for the year, primarily due to the strong performance of the underlying stocks and spread tightening in the high yield bond market.

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

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Letter to the Shareholders nDecember 31, 2009 continued

Income Plus Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Income Plus Portfolio Class X shares produced a total return of 22.57%, outperforming the Barclays Capital U.S. Corporate Index (the "Index"), which returned 18.68%. For the same period, the Portfolio's Class Y shares returned 22.29%. Past performance is no guarantee of future results.

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

The Portfolio's positioning in the corporate credit sector contributed to the outperformance of the Index for the reporting period. In particular, selected overweights in the banking, food and beverage, and insurance industries were additive to relative returns as significant spread tightening in these sectors led to their strong performance. However, this was somewhat offset by the negative impact of an overall underweight to the corporate sector.

The Portfolio's yield-curve positioning benefited performance. During the period we employed tactical strategies involving interest rate swaps that were designed to take advantage of short-term rate movements across the yield curve.

Conversely, a small position in U.S. Treasury securities, which are not included in the Index,

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		22.57	%		5.26	%		6.59	%		7.27	%
Class Y		22.29	%		5.00	%		—			6.37	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

detracted from relative performance as the sector underperformed for year.

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

Limited Duration Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — Limited Duration Portfolio Class X shares produced a total return of 5.76%, underperforming the Barclays Capital U.S. Credit Index (1-5 Year) (the "Index"), which returned 13.52%. For the same period, the Portfolio's Class Y shares returned 5.56%. Past performance is no guarantee of future results.

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

The Portfolio's underperformance of the Index was primarily attributable to its relative underweight in corporate credit, which kept the Portfolio from more fully benefiting from the sector's strong performance for the year. However, selected overweights in banking, food and beverage, insurance and media were additive to relative returns as significant spread tightening in these segments led to their strong performance.

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		5.76	%		–0.32	%		1.83	%		1.87	%
Class Y		5.56	%		–0.58	%		—			1.47	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

The underweight to corporate credit was largely the result of the Portfolio's allocation to the agency sector, which is not represented in the Index. Within the sector, the Portfolio's position in FDIC-backed bank notes contributed to performance as spreads on these securities tightened during the reporting period. However, the agency sector overall underperformed corporate credit for the year. The Portfolio also held a position in asset-backed securities (ABS), another sector not represented in the Index. This was beneficial to relative returns as spreads in the ABS sector narrowed considerably, resulting in particularly strong performance for the period.

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

Money Market Portfolio

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

As of December 31, 2009, Variable Investment Series — Money Market Portfolio had net assets of approximately $166 million with an average portfolio maturity of 32 days. For the seven-day period ended December 31, 2009, the Portfolio's Class X shares provided an effective annualized yield of 0.01% (subsidized) and – 0.28% (non-subsidized) and a current yield of 0.01% (subsidized) and – 0.28% (non-subsidized). Yield quotations more closely reflect the current earnings of the Portfolio. The non-subsidized yield reflects what the yield would have been had a fee and/or expense waiver not been in place during the period shown. For the 12-month period ended December 31, 2009, the Portfolio's Class X shares returned 0.03%. Past performance is no guarantee of future results.

For the seven-day period ended December 31, 2009, the Portfolio's Class Y shares provided an effective annualized yield of 0.01% (subsidized) and – 0.53% (non-subsidized) and a current yield of 0.01% (subsidized) and – 0.53% (non-subsidized). Yield quotations more closely reflect the current earnings of the Portfolio. The non-subsidized yield reflects wh at the yield would have been had a fee and/or expense waiver not been in place during the period shown. For the 12-month period ended December 31, 2009, the Portfolio's Class Y shares returned 0.01%. Past performance is no guarantee of future results.

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

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Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2009 continued

During the reporting period, we continued to place a strong emphasis on purchasing high quality corporate, financial, and banking obligations. We focused on maintaining high levels of liquidity and a short weighted average maturity to guard against the uncertainty caused by volatility in the financial markets. In addition, valuations have become very expensive with technical factors driving down absolute levels as well as tightening spreads dramatically versus historical levels. Our strategy in managing the Portfolio remained consistent with our long-term focus on capital preservation and very high liquidity, and as in the past, we adhered to a conservative approach. We continue to review all eligible securities on our purchase list to ensure that they continue to meet our high standards of minimal credit risk.

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

S&P 500 Index Portfolio

For the 12-month period ended December 31, 2009, Variable Investment Series — S&P 500 Index Portfolio Class X shares produced a total return of 26.34%, underperforming the S&P 500^® Index (the "Index"), which returned 26.46%. For the same period, the Portfolio's Class Y shares returned 26.06%. Past performance is no guarantee of future results.

The performance of the Portfolio's two share classes varies because each has different expenses. The

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		26.34	%		0.23	%		–1.25	%		1.51	%
Class Y		26.06	%		–0.02	%		—			–1.58	%

(1)  Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

*  Inception dates of May 18, 1998 for Class X and June 5, 2000 for Class Y.

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Morgan Stanley Variable Investment Series

Letter to the Shareholders nDecember 31, 2009 continued

Portfolio's total returns assume the reinvestment of all distributions but do not reflect the deduction of any charges by your insurance company. Such costs would lower performance.

The year began with a rough start, with woes in the financial system and significant declines in economic activity across all sectors and segments of the economy. Unemployment kept rising, while consumer confidence and spending collapsed. The recession, which spread beyond the U.S. into developed and emerging markets as well, has been the worst since the Great Depression. The U.S. equity market continued to tumble, reaching its lowest point of the year in March.

However, as a result of the truly unprecedented global policy response by governments and central banks in the first half of 2009, so-called "green shoots" — tentative signs of improvement in quite a few economic indicators — began to appear. Late summer saw a stabilization of housing prices, a decline in inventories and positive industrial production. Since early March markets have embarked on a sizeable rally following a slow stream of positive news through the end of the year. Although unemployment remains high (at 10 percent in December), the consensus at the end of the period seems to be that the global economy is in the early stage of an upturn and the recession is over.

Within the Index and therefore the Portfolio, all ten sectors had positive absolute performance during the 12-month period, posting double-digit returns. The best performing sectors were information technology, materials and consumer discretionary. Rising commodity prices in 2009 led to improvement in the performance of the materials and energy sectors. The financials sector rebounded as a result of government intervention.

Other performance trends within the Portfolio and the Index during the period included the outperformance of growth stocks within every capitalization segment, as well as the outperformance of small-cap stocks.

Because the Index is market capitalization weighted (and the Portfolio seeks to replicate the performance attributes of the Index before Portfolio fees), the overall contribution of each sector was influenced by its relative size within the Index and the Portfolio. As such, the sectors that contributed the most to the Portfolio's return were information technology, consumer discretionary and financials, while telecommunication services and utilities contributed the least.

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

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Letter to the Shareholders nDecember 31, 2009 continued

Strategist Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series — Strategist Portfolio Class X shares produced a total return of 19.74%, underperforming the S&P 500^® Index, which returned 26.46%, and outperforming the Barclays Capital U.S. Government/Credit Index, which returned 4.52%. For further comparison, the Lipper Variable Flexible Portfolio average total return was 18.44% and U.S. Treasury bills returned 0.17%. For the same period, the Portfolio's Class Y shares returned 19.44%. Past performance is no guarantee of future results.

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

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

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

  Average Annual Total Returns as of December 31, 2009

	1 Year			5 Years			10 Years			Since Inception*
Class X		19.74	%		4.26	%		3.51	%		8.22	%
Class Y		19.44	%		4.00	%		—			3.25	%

(1)Ending value on December 31, 2009 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

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

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

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

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Letter to the Shareholders nDecember 31, 2009 continued

view, given the macroeconomic climate. Individual holdings are then selected to provide desired exposure to asset classes and sectors.

The Portfolio's target allocation remained unchanged throughout the 12-month period under review, based on the process summarized above. Approximately 60% of assets were allocated to equities (a slightly higher weight than the average balanced fund), while 20% of assets were allocated to long-term credit markets (a significantly lower allocation than the average balanced fund). The balance of assets (20%) remained in short-term credits and cash equivalent investments.

The 12-month period ending December 31, 2009 can best be assessed by splitting the year into two parts: the first, from January 1 to early March, and the second, from early March to year-end. While no single event marks this split, global stock and bond markets shifted from extreme pessimism to cautious optimism in early March as selling pressure finally exhausted itself. Investors entered the year with trepidation, as many hoped that the residual impact of the collapse in property values and frozen credit markets had already manifested itself with the consolidations and failures of a number of banks and global financial services firms. Equity markets around the world disagreed and seemed to focus on the extreme recessionary conditions brought on by this cycle, as well as the cessation of business activity and spending by consumers and corporations alike. By early March, the S&P 500^® Index and the MSCI All-Country World Index^® had each fallen by approximately 27% year-to-date, adding to the bear market slide experienced in 2008. Meanwhile, "safe havens" such as U.S. Treasury bills and notes hit historically low yield levels, as cash poured into these dollar-denominated instruments from every corner of the world.

Global government officials and central bank governors prepared a number of policy responses in an attempt to provide liquidity and prevent a global depression from setting in. Perhaps the psychological impact of the U.S. stimulus bill (signed by the president in February) and global central banks' shifts to zero rate policies and quantitative easing programs provided the type of unprecedented response investors needed to see.

With little fanfare, and constant skepticism, global equities began to recover. Corporations discussed the "troughing" of the global economic downturn and maintained exceptional financial discipline. Emerging economies posted robust growth. Housing prices in the U.S., Europe and Australia stabilized. And global stock markets posted historic rallies. From March to year-end, the S&P 500^® Index and the MSCI All-Country World Index^® returned 67% and 73%, respectively. U.S. treasury notes saw their yields rise (and prices fall) as investors began to rotate from their extreme risk-aversion position. As 2009 drew to a close,

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Letter to the Shareholders nDecember 31, 2009 continued

questions surrounding the health of the U.S. consumer and the recovery of capital spending continued, but the global economic expansion appeared underway.

During the year, we increased cyclical sector exposures in both the equity and fixed income portions of the Portfolio. Within the equity portfolio, allocations to technology and industrials rose, while financials and telecommunication services exposures were reduced. A long-standing bias toward large capitalization, higher quality companies continued, as did the Portfolio's tilt toward U.S. and emerging market equities. On a sector basis, the Portfolio's largest exposures at year-end included: information technology (approximately 26% of total equity portfolio market value), industrials (14%), and health care (14%). Our smallest sector exposures at period end included materials (5%), utilities (3%) and telecommunications services (3%).

The fixed income component of the Portfolio shifted during the year as well, as mortgage and cash positions were reduced in order to fund purchases in other sectors of the fixed income market. By year-end, the Portfolio's mortgage exposure had been reduced from approximately 12% of fixed income assets to roughly 1%, while cash equivalents were reduced from 19% to 5%. Exposures to corporate-issued bonds, as well as U.S. government and foreign sovereign debt, increased throughout the year. At year-end, U.S. government-issued securities climbed to over 51% of the overall fixed income portfolio, while corporate credits represented approximately 41% of the total. The balance of the Portfolio was distributed among government-agency backed securities, cash, mortgages, and municipal securities, in descending order of exposure.

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

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

Very truly yours,

Randy Takian
President and Principal Executive Officer

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Letter to the Shareholders nDecember 31, 2009 continued

For More Information About Portfolio Holdings

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

Proxy Voting Policy and Procedures and Proxy Voting Record

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

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

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Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2009

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

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 07/01/09 – 12/31/09.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your accoun t during this period.

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any insurance company charges. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds. In addition, if these insurance company charges were included, your costs would have been higher.

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Morgan Stanley Variable Investment Series

Expense Example nDecember 31, 2009 continued

Money Market

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.36
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.84	$	1.38
Class Y
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.36
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.84	$	1.38

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.27% and 0.27% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.58% and 0.83% for Class X and Class Y shares, respectively. These figures reflect fees paid in connection with the U.S. Treasury Guarantee Program for Money Market Funds. This fee had an effect of 0.02%.

Limited Duration

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (2.35% return)	$	1,000.00	$	1,023.50	$	2.45
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.79	$	2.45
Class Y
Actual (2.23% return)	$	1,000.00	$	1,022.30	$	3.72
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.53	$	3.72

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.48% and 0.73% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Income Plus

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (11.23% return)	$	1,000.00	$	1,112.30	$	2.93
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.43	$	2.80
Class Y
Actual (11.05% return)	$	1,000.00	$	1,110.50	$	4.26
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.17	$	4.08

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.55% and 0.80% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

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Expense Example nDecember 31, 2009 continued

High Yield

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (18.95% return)	$	1,000.00	$	1,189.50	$	9.99
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,016.08	$	9.20
Class Y
Actual (18.95% return)	$	1,000.00	$	1,189.50	$	11.37
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,014.82	$	10.46

  @  Expenses are equal to the Portfolio's annualized expense ratios of 1.81% and 2.06% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 1.82% and 2.07% for Class X and Class Y shares, respectively.

Global Infrastructure

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (17.46% return)	$	1,000.00	$	1,174.60	$	5.26
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.37	$	4.89
Class Y
Actual (17.23% return)	$	1,000.00	$	1,172.30	$	6.63
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.11	$	6.16

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.96% and 1.21% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Income Builder

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (21.95% return)	$	1,000.00	$	1,219.50	$	5.82
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.96	$	5.30
Class Y
Actual (21.76% return)	$	1,000.00	$	1,217.60	$	7.21
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.70	$	6.56

  @  Expenses are equal to the Portfolio's annualized expense ratios of 1.04% and 1.29% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

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Expense Example nDecember 31, 2009 continued

Dividend Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (21.69% return)	$	1,000.00	$	1,216.90	$	3.69
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.88	$	3.36
Class Y
Actual (21.54% return)	$	1,000.00	$	1,215.40	$	5.08
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.62	$	4.63

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.66% and 0.91% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Global Dividend Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (17.49% return)	$	1,000.00	$	1,174.90	$	5.15
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.47	$	4.79
Class Y
Actual (17.36% return)	$	1,000.00	$	1,173.60	$	6.52
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.21	$	6.06

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.94% and 1.19% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

European Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (25.57% return)	$	1,000.00	$	1,255.70	$	5.69
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.16	$	5.09
Class Y
Actual (25.41% return)	$	1,000.00	$	1,254.10	$	7.10
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.90	$	6.36

  @  Expenses are equal to the Portfolio's annualized expense ratios of 1.00% and 1.25% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 1.08% and 1.33% for Class X and Class Y shares, respectively.

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Expense Example nDecember 31, 2009 continued

Capital Opportunities

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (29.83% return)	$	1,000.00	$	1,298.30	$	3.24
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.38	$	2.85
Class Y
Actual (29.66% return)	$	1,000.00	$	1,296.60	$	4.69
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.12	$	4.13

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.56% and 0.81% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

S&P 500 Index

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (22.46% return)	$	1,000.00	$	1,224.60	$	1.40
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.95	$	1.28
Class Y
Actual (22.33% return)	$	1,000.00	$	1,223.30	$	2.80
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.68	$	2.55

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.25% and 0.50% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Aggressive Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (29.38% return)	$	1,000.00	$	1,293.80	$	5.78
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.16	$	5.09
Class Y
Actual (29.22% return)	$	1,000.00	$	1,292.20	$	7.22
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.90	$	6.36

  @  Expenses are equal to the Portfolio's annualized expense ratios of 1.00% and 1.25% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

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Expense Example nDecember 31, 2009 continued

Strategist

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/09		12/31/09		07/01/09 – 12/31/09
Class X
Actual (13.24% return)	$	1,000.00	$	1,132.40	$	2.96
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.43	$	2.80
Class Y
Actual (13.10% return)	$	1,000.00	$	1,131.00	$	4.30
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.17	$	4.08

  @  Expenses are equal to the Portfolio's annualized expense ratios of 0.55% and 0.80% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.58% and 0.83% for Class X and Class Y shares, respectively.

30

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2009

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE	VALUE
		Repurchase Agreements (40.7%)
$	7,000	Banc of America Securities, (dated 12/31/09; proceeds $7,000,008; fully collateralized by Federal Home Loan Bank 0.80% due 06/30/11, valued at $7,143,805)		0.01	%	01/04/10	$	7,000,000
	20,000	Barclay's Capital LLC, (dated 12/31/09; proceeds $20,000,000; fully collateralized by Government National Mortgage Assoc. 5.00% due 10/15/39, valued at $20,600,000)		0.00		01/04/10		20,000,000
	40,465	BNP Paribas Securities, (dated 12/31/09; proceeds $40,465,000; fully collateralized by Federal National Mortgage Assoc. 3.79% - 4.50% due 01/01/23 - 03/01/38, valued at $41,678,950)		0.00		01/04/10		40,465,000
		Total Repurchase Agreements (Cost $67,465,000)						67,465,000
		Commercial Paper (25.1%)
		Domestic Bank (3.0%)
	5,000	J.P. Morgan Chase and Co.		0.06		01/04/10		4,999,975
		International Banks (22.1%)
	7,000	DNB NOR Bank ASA (a)		0.21		02/12/10		6,998,285
	8,000	Intesa Funding LLC		0.20 - 0.25		01/19/10 - 03/29/10		7,997,183
	6,500	Lloyds TSB Bank PLC		0.55		04/15/10		6,489,672
	8,000	National Australia Funding (a)		0.20		01/27/10		7,998,845
	5,000	Rabobank (U.S.) Finance Corp.		0.24		03/29/10		4,997,100
	2,000	Societe Generale N.A., Inc.		0.26		03/16/10		1,998,931
								36,480,016
		Total Commercial Paper (Cost $41,479,991)						41,479,991
		Certificates of Deposit (18.1%)
		International Banks
	5,000	Banco Bilbao Vizcaya Argentaria - NY		0.35		03/29/10		5,000,061
	8,000	Barclays Bank PLC - NY		0.75		02/11/10		8,000,000
	8,000	Calyon North America, Inc.		0.22		03/03/10		8,000,000
	5,000	Nordea Bank AB		0.19		01/15/10		5,000,000
	4,000	Royal Bank of Scotland PLC		0.28		02/09/10		4,000,000
		Total Certificates of Deposit (Cost $30,000,061)						30,000,061

See Notes to Financial Statements
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Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE			VALUE
		Floating Rate Notes (11.5%)
		International Banks (6.1%)
$	5,000	Societe Generale N.Y., Inc.		0.38	(b)%	02/05/10(c)			$	5,000,000
	5,000	Westpac Banking Corp. (a)		0.28	(b)	03/08/10(c)				5,000,000
										10,000,000
		U.S. Government Agency (5.4%)
	9,000	Federal Home Loan Banks		0.08	(b)	02/08/10(c)				8,996,715
		Total Floating Rate Notes (Cost $18,996,715)								18,996,715
		Short-Term Bank Note (4.8%)
		Domestic Bank
	8,000	Bank of America N.A. (Cost $8,000,000)		0.23		02/17/10				8,000,000
		Total Investments (Cost $165,941,767) (d)					100.2	%		165,941,767
		Liabilities in Excess of Other Assets					(0.2	)		(310,572	)
		Net Assets					100.0	%	$	165,631,195

  (a)  Resale is restricted to qualified institutional investors.

  (b)  Rate shown is the rate in effect at December 31, 2009.

  (c)  Date of next interest rate reset.

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

MATURITY SCHEDULE†

1 - 30 Days	54	%
31 - 60 Days	25
61 - 90 Days	17
91 - 120 Days	4
	100	%

†  As a percentage of total investments.

See Notes to Financial Statements
32

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (50.8%)
		Aerospace/Defense (0.5%)
$	400	BAE Systems Holdings, Inc. (144A) (a)		4.75	%	08/15/10	$	406,131
		Applications Software (0.3%)
	230	Microsoft Corp.		2.95		06/01/14		232,703
		Auto - Cars/Light Trucks (0.5%)
	360	Daimler Finance North America LLC		7.30		01/15/12		391,557
		Auto - Medium & Heavy Duty Trucks (0.1%)
	100	PACCAR, Inc.		6.375		02/15/12		108,423
		Beverages - Non-Alcoholic (0.9%)
	340	Bottling Group LLC		6.95		03/15/14		391,568
	300	Coca-Cola Enterprises, Inc.		3.75		03/01/12		311,963
								703,531
		Beverages - Wine/Spirits (0.3%)
	250	Diageo Finance BV (Netherlands)		3.875		04/01/11		258,114
		Brewery (0.3%)
	205	Anheuser-Busch InBev Worldwide, Inc. (144A) (a)		5.375		11/15/14		217,277
		Building Product - Cement/Aggregation (0.3%)
	230	Lafarge SA (France)		6.15		07/15/11		239,766
		Cable/Satellite TV (0.8%)
	335	Comcast Cable Holdings LLC		9.80		02/01/12		379,335
	200	Time Warner Cable, Inc.		8.25		02/14/14		233,957
								613,292
		Commercial Banks - Non-U.S. (8.8%)
	315	Barclays Bank PLC (United Kingdom)		2.50		01/23/13		314,867
	900	Commonwealth Bank of Australia (144A) (Australia) (a)		2.50		12/10/12		914,078
	250	National Australia Bank Ltd. (144A) (Australia) (a)		5.35		06/12/13		269,297
	2,300	Royal Bank of Scotland PLC (The) (144A) (United Kingdom) (a)		2.625		05/11/12		2,334,254
	310	Royal Bank of Scotland PLC (The) (144A) (United Kingdom) (a)		4.875		08/25/14		314,566
	320	Svenska Handelsbanken AB (144A) (Sweden) (a)		2.875		09/14/12		322,181
	1,545	Swedbank AB (144A) (Sweden) (a)		2.90		01/14/13		1,574,710
	810	Westpac Securities NZ Ltd. (144A) (New Zealand) (a)		2.50		05/25/12		821,750
								6,865,703
		Commercial Banks - Eastern U.S. (0.5%)
	340	Credit Suisse (Switzerland)		5.50		05/01/14		369,325

See Notes to Financial Statements
33

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Commercial Banks - Southern U.S. (0.5%)
$	385	BB&T Corp.		3.10	%	07/28/11	$	391,964
		Computer Services (0.5%)
	360	Computer Sciences Corp.		7.375		06/15/11		387,557
		Computers (0.9%)
	105	Dell, Inc.		3.375		06/15/12		108,647
	330	Hewlett-Packard Co.		0.366	(b)	03/01/12		330,149
	220	International Business Machines Corp.		4.75		11/29/12		236,516
								675,312
		Consumer Products - Miscellaneous (0.4%)
	310	Clorox Co.		4.20		01/15/10		310,284
		Data Processing Services (0.5%)
	370	Fiserv, Inc.		6.125		11/20/12		403,149
		Diversified Financial Services (4.2%)
	300	Bank of America Corp.		5.375		08/15/11		315,054
	325	Citigroup, Inc. (See Note 6)		4.625		08/03/10		331,657
	275	Citigroup, Inc. (See Note 6)		5.30		10/17/12		286,664
	700	General Electric Capital Corp. (Series A)		5.45		01/15/13		744,679
	265	General Electric Capital Corp.		5.90		05/13/14		286,760
	405	Goldman Sachs Group, Inc. (The)		5.25		10/15/13		430,484
	325	Goldman Sachs Group, Inc. (The)		6.875		01/15/11		344,725
	515	JPMorgan Chase & Co.		5.375		10/01/12		557,654
								3,297,677
		Diversified Minerals (0.6%)
	235	BHP Billiton Finance USA Ltd. (Australia)		8.50		12/01/12		274,882
	190	Rio Tinto Finance USA Ltd. (Australia)		5.875		07/15/13		205,181
								480,063
		Electric - Distribution (0.5%)
	355	Detroit Edison Co. (The)		6.125		10/01/10		368,954
		Electric - Integrated (2.0%)
	205	Columbus Southern Power Co. (Series E)		4.40		12/01/10		208,780
	380	Dominion Resources, Inc.		5.70		09/17/12		410,890
	215	Firstenergy Solutions Corp.		4.80		02/15/15		219,696
	405	Ohio Power Co.		0.431	(b)	04/05/10		405,025
	290	Southern Co.		4.15		05/15/14		298,518
	30	Southern Co. (Series A)		5.30		01/15/12		32,158
								1,575,067

See Notes to Financial Statements
34

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Electronic Connectors (0.2%)
$	140	Amphenol Corp.		4.75	%	11/15/14	$	140,200
		Electronic Measuring Instrument (0.5%)
	385	Agilent Technologies, Inc.		4.45		09/14/12		398,594
		Enterprise Software/Service (0.5%)
	335	Oracle Corp.		5.00		01/15/11		348,456
		Fiduciary Banks (0.4%)
	305	Mellon Funding Corp.		6.40		05/14/11		323,799
		Finance - Auto Loans (0.5%)
	395	American Honda Finance Corp. (MTN) (144A) (a)		2.757	(b)	06/02/11		404,875
		Finance - Commercial (0.6%)
	390	Caterpillar Financial Services Corp. (MTN)		6.125		02/17/14		436,241
		Finance - Consumer Loans (1.3%)
	695	HSBC Finance Corp.		6.75		05/15/11		734,771
	215	John Deere Capital Corp.		7.00		03/15/12		238,630
								973,401
		Finance - Credit Card (1.7%)
	475	American Express Co.		7.25		05/20/14		536,484
	750	MBNA Corp.		6.125		03/01/13		796,243
								1,332,727
		Finance - Investment Banker/Broker (1.1%)
	200	Credit Suisse USA, Inc.		6.125		11/15/11		215,772
	260	Merrill Lynch & Co., Inc.		5.45		02/05/13		273,784
	365	TD Ameritrade Holding Corp.		2.95		12/01/12		361,083
								850,639
		Finance - Other Services (0.5%)
	390	BP Capital Markets PLC (United Kingdom)		3.625		05/08/14		399,371
		Food - Miscellaneous/Diversified (0.8%)
	215	ConAgra Foods, Inc.		5.875		04/15/14		234,519
	345	Kraft Foods, Inc.		6.75		02/19/14		381,858
								616,377
		Food - Retail (0.3%)
	225	Kroger Co. (The)		7.50		01/15/14		257,015
		Industrial Gases (0.3%)
	240	Praxair, Inc.		6.375		04/01/12		263,865

See Notes to Financial Statements
35

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Life/Health Insurance (0.9%)
$	325	Principal Life Income Funding Trusts (MTN)		5.15	%	06/17/11	$	338,634
	315	Prudential Financial, Inc. (MTN)		3.625		09/17/12		319,864
								658,498
		Medical Products (0.4%)
	275	Baxter International, Inc.		4.00		03/01/14		283,861
		Medical - Biomedical/Genetics (0.2%)
	180	Genentech, Inc.		4.40		07/15/10		183,729
		Medical - HMO (0.2%)
	185	UnitedHealth Group, Inc.		5.25		03/15/11		191,754
		Money Center Banks (0.7%)
	500	Lloyds TSB Bank PLC (144A) (United Kingdom) (a)		2.80		04/02/12		510,362
		Multi-line Insurance (0.7%)
	515	MetLife Global Funding I (See Note 6) (144A) (a)		5.75		07/25/11		541,475
		Multimedia (0.4%)
	250	Time Warner, Inc.		6.875		05/01/12		273,834
		Oil Companies - Exploration & Production (1.6%)
	450	Burlington Resources Finance Co. (Canada)		6.68		02/15/11		478,317
	335	Devon Financing Corp. ULC (Canada)		6.875		09/30/11		364,066
	350	EOG Co. of Canada (144A) (Canada) (a)		7.00		12/01/11		375,880
								1,218,263
		Oil Company - Integrated (0.3%)
	255	Chevron Corp.		3.95		03/03/14		266,479
		Pipelines (1.0%)
	180	Enterprise Products Operating LLC (Series B)		7.50		02/01/11		190,772
	225	Enterprise Products Operating LLC (Series O)		9.75		01/31/14		268,763
	320	Plains All American Pipeline LP/PAA Finance Corp.		4.25		09/01/12		330,442
								789,977
		Reinsurance (0.3%)
	210	Berkshire Hathaway Finance Corp.		4.00		04/15/12		220,194
		REITS - Regional Malls (0.2%)
	110	Simon Property Group LP		6.75		05/15/14		117,335
		Retail - Discount (0.4%)
	245	Wal-Mart Stores, Inc.		7.25		06/01/13		282,843
		Retail - Drug Store (0.2%)
	180	CVS Caremark Corp.		5.75		08/15/11		191,752

See Notes to Financial Statements
36

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Retail - Restaurants (0.3%)
$	185	Yum! Brands, Inc.		8.875	%	04/15/11	$	200,245
		Savings & Loan/Thrifts - Eastern U.S. (0.4%)
	320	Sovereign Bancorp, Inc.		0.479	(b)	03/23/10		319,896
		Special Purpose Banks (2.8%)
	1,530	Kreditanstalt fuer Wiederaufbau (Series G) (Germany)		2.25		04/16/12		1,553,793
	577	Societe Financement de l'Economie Francaise (144A) (France) (a)		3.375		05/05/14		588,818
								2,142,611
		Special Purpose Entity (0.7%)
	250	Harley-Davidson Funding Corp. (144A) (a)		5.25		12/15/12		255,727
	260	Xlliac Global Funding (144A) (a)		4.80		08/10/10		261,549
								517,276
		Super - Regional Banks - U.S. (2.3%)
	405	Bank One Corp.		5.25		01/30/13		429,791
	370	Capital One Financial Corp. (MTN)		5.70		09/15/11		388,795
	195	US Bancorp		4.20		05/15/14		202,619
	740	Wells Fargo & Co.		5.25		10/23/12		790,521
								1,811,726
		Telecommunication Services (0.9%)
	150	Verizon Global Funding Corp.		7.25		12/01/10		158,552
	500	Verizon Global Funding Corp.		7.375		09/01/12		563,952
								722,504
		Telephone - Integrated (3.2%)
	350	AT&T, Inc.		4.95		01/15/13		373,671
	395	BellSouth Corp.		6.00		10/15/11		427,302
	175	British Telecommunications PLC (United Kingdom)		9.125		12/15/10		187,525
	300	Deutsche Telekom International Finance BV (Netherlands)		8.50		06/15/10		310,062
	395	France Telecom SA (France)		4.375		07/08/14		413,181
	505	Telecom Italia Capital SA (Luxembourg)		4.875		10/01/10		516,960
	220	Telefonica Europe BV (Netherlands)		7.75		09/15/10		230,183
								2,458,884
		Transport - Rail (0.6%)
	460	Union Pacific Corp.		6.50		04/15/12		502,615
		Total Corporate Bonds (Cost $38,495,299)						39,447,522

See Notes to Financial Statements
37

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Foreign Government Obligations (2.4%)
$	1,508	Denmark Government International Bond (Series E) (Denmark)		2.75	%	11/15/11	$	1,551,883
	290	Export Development Canada (Canada)		3.125		04/24/14		294,044
		Total Foreign Government Obligations (Cost $1,831,154)						1,845,927
		U.S. Government Agencies and Obligations (21.7%)
		Commercial Banks - Central U.S. - FDIC Guaranteed (3.5%)
	2,600	KeyBank NA		3.20		06/15/12		2,700,349
		Diversified Financial Services - FDIC Guaranteed (6.1%)
	500	Bank of America Corp.		2.10		04/30/12		504,900
	1,960	Citigroup, Inc. (See Note 6)		2.125		04/30/12		1,982,105
	700	Goldman Sachs Group, Inc. (The)		3.25		06/15/12		727,681
	1,500	JPMorgan Chase & Co.		3.125		12/01/11		1,553,193
								4,767,879
		Super - Regional Banks - U.S. - FDIC Guaranteed (4.8%)
	3,710	PNC Funding Corp.		2.30		06/22/12		3,774,940
		U.S. Government Obligations (7.3%)
	3,210	U.S. Treasury Note		0.75		11/30/11		3,190,066
		U.S. Treasury Strips
	705			0.00		11/15/19		468,257
	1,190			0.00		11/15/20		743,832
	2,260			0.00		11/15/22		1,246,874
								5,649,029
		Total U.S. Government Agencies and Obligations (Cost $16,814,235)						16,892,197
		U.S. Government Agencies - Mortgage-Backed Securities (2.4%)
		Federal Home Loan Mortgage Corp. (ARM) (0.8%)
	188			5.581		01/01/38		198,455
	184			5.673		04/01/37		194,699
	214			6.025		02/01/37		226,773
								619,927
		Federal National Mortgage Assoc. (0.9%)
	485			6.50		01/01/32 - 11/01/33		523,576
	163			7.00		08/01/29 - 06/01/32		179,877
								703,453

See Notes to Financial Statements
38

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Federal National Mortgage Assoc. (ARM) (0.7%)
$	349			5.736	%	12/01/36	$	368,766
	144			5.783		03/01/38		152,302
								521,068
		Total U.S. Government Agencies - Mortgage-Backed Securities (Cost $1,818,373)						1,844,448
		Asset-Backed Securities (17.9%)
	675	American Express Credit Account Master Trust 2009-2 A		1.483	(b)	03/15/17		694,459
	1,100	Bank of America Auto Trust 2009-1A A2 (144A) (a)		1.70		12/15/11		1,105,783
	725	BMW Vehicle Lease Trust 2009-1 A2		2.04		04/15/11		728,994
	119	Capital Auto Receivables Asset Trust 2008-2 A2B		1.153	(b)	03/15/11		118,795
	141	Capital Auto Receivables Asset Trust 2007-3 A3A		5.02		09/15/11		142,640
	807	Capital One Multi-Asset Execution Trust 2005-A10 A		0.313	(b)	09/15/15		792,058
	325	Chrysler Financial Auto Securitization Trust 2009-A A2		1.85		06/15/11		327,160
	600	Citibank Credit Card Issuance Trust 2009-A5 A5 (See Note 6)		2.25		12/23/14		594,960
	775	Daimler Chrysler Auto Trust 2007-A A3A		5.00		02/08/12		787,518
	850	Discover Card Master Trust 2009-A1 A1		1.533	(b)	12/15/14		854,736
	700	Ford Credit Auto Owner Trust 2009-E A3		1.51		01/15/14		696,555
	775	Ford Credit Floorplan Master Owner Trust 2009-2 A		1.783	(b)	09/15/14		776,704
	1,150	GE Capital Credit Card Master Note Trust 2009-1 A		2.333	(b)	04/15/15		1,167,754
	440	Harley-Davidson Motorcycle Trust 2009-4 A3		1.87		02/15/14		438,556
	950	Harley-Davidson Motorcycle Trust 2009-2 A2		2.00		07/15/12		956,504
	350	Honda Auto Receivables Owner Trust 2009-3 A2		1.50		08/15/11		351,770
	750	Huntington Auto Trust 2009-1A A3 (144A) (a)		3.94		06/17/13		772,213
	99	John Deere Owner Trust 2009-A A1		1.132		07/02/10		99,045
	425	MMAF Equipment Finance LLC 2009-AA A3 (144A) (a)		2.37		11/15/13		425,000
	775	Nissan Auto Lease Trust 2009-A A2		2.01		04/15/11		779,750
	775	Nissan Auto Lease Trust 2009-B A3		2.07		01/15/15		779,868
	159	USAA Auto Owner Trust 2007-2 A3		4.90		02/15/12		160,691
	318	Volkswagen Auto Lease Trust 2009-A A2		2.87		07/15/11		320,676
		Total Asset-Backed Securities(Cost $13,791,236)						13,872,189

See Notes to Financial Statements
39

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Collateralized Mortgage Obligation (0.6%)
		U.S. Government Agency
$	420	Federal Home Loan Mortgage Corp. 2182 ZC (Cost $449,449)		7.50	%		09/15/29		$	454,883
		Commercial Mortgage-Backed Security (0.2%)
		Private Issue
	190	Wachovia Bank Commercial Mortgage Trust 2004-C12 A4 (Cost $193,399) (b)		5.237			07/15/41			188,760
		Short-Term Investments (3.7%)
		U.S. Government Obligation (c)(d) (1.2%)
	905	U.S. Treasury Bill (Cost $904,524)		0.152			05/06/10			904,535
NUMBER OF SHARES (000)
		Investment Company (2.5%)
	1,961	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,960,815)								1,960,815
		Total Short-Term Investments (Cost $2,865,339)								2,865,350
		Total Investments (Cost $76,258,484) (e)(f)					99.7	%		77,411,276
		Other Assets in Excess of Liabilities					0.3			230,437
		Net Assets					100.0	%	$	77,641,713

  ARM  Adjustable Rate Mortgage. Interest rate in effect as of December 31, 2009.

  FDIC  Federal Deposit Insurance Corporation.

  MTN  Medium Term Note.

  (a)  Resale is restricted to qualified institutional investors.

  (b)  Floating rate security. Rate shown is the rate in effect at December 31, 2009.

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

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

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

  (f)  The aggregate cost for federal income tax purposes is $76,664,789. The aggregate gross unrealized appreciation is $874,412 and the aggregate gross unrealized depreciation is $127,925 resulting in net unrealized appreciation of $746,487.

See Notes to Financial Statements
40

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	31	Long	U.S. Treasury Notes 10 Year, March 2010	$	3,579,047		$	(88,135	)
	19	Long	U.S. Treasury Notes 5 Year, March 2010		2,173,273			(25,823	)
	1	Short	U.S. Treasury Bonds 30 Year, March 2010		(115,375	)		5,998
	192	Short	U.S. Treasury Notes 2 Year, March 2010		(41,522,999	)		221,439
Net Unrealized Appreciation							$	113,479

INTEREST RATE SWAP CONTRACTS OPEN AT DECEMBER 31, 2009:

COUNTERPARTY	NOTIONAL AMOUNT (000's)		PAYMENTS RECEIVED BY FUND	PAYMENTS MADE BY FUND	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank^	$	1,590	Floating Rate 4.141#%	Fixed Rate 0.00%	November 15, 2019	$	(71,640	)
Barclays Bank^^		1,590	Fixed Rate 0.00	Floating Rate 0.816#	November 15, 2019		(95,339	)
Credit Suisse Group***		2,400	Fixed Rate 5.086	Floating Rate 0.00#	December 23, 2019		(11,520	)
Credit Suisse Group		577	Floating Rate 0.248#	Fixed Rate 4.386	December 23, 2039		13,306
Deutsche Bank AG***		7,913	Fixed Rate 4.40	Floating Rate 0.00#	October 1, 2016		(48,507	)
Deutsche Bank AG***		4,258	Floating Rate 0.00#	Fixed Rate 4.41	October 3, 2018		50,543
Deutsche Bank AG^^		1,100	Fixed Rate 0.00	Floating Rate 0.816#	November 15, 2021		(75,918	)
Deutsche Bank AG^		1,100	Floating Rate 4.117#	Fixed Rate 0.00	November 15, 2021		(22,916	)
JPMorgan Chase Bank N.A. New York^		705	Floating Rate 4.314#	Fixed Rate 0.00	November 15, 2019		(26,110	)
JPMorgan Chase Bank N.A. New York^		1,190	Floating Rate 4.026#	Fixed Rate 0.00	November 15, 2020		(54,130	)
JPMorgan Chase Bank N.A. New York^		2,260	Floating Rate 0.245#	Fixed Rate 0.00	November 15, 2022		80,177
Net Unrealized Depreciation						$	(262,054	)

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

  #  Floating rate based on USD-3 Months LIBOR.

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

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

See Notes to Financial Statements
41

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2009 continued

LONG-TERM CREDIT ANALYSIS (unaudited)
AAA	60.3	%
AA	10.4
A	18.3
BBB	11.0
	100.0	%++

++  Does not include open long/short futures contracts with an underlying face amount of $47,390,694 and net unrealized appreciation of $113,479. Also does not include open swap contracts with net unrealized depreciation of $262,054.

See Notes to Financial Statements
42

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (95.1%)
		Advertising Agencies (0.2%)
$	490	Omnicom Group, Inc.		6.25	%	07/15/19	$	529,592
		Advertising Services (0.5%)
	1,195	WPP Finance (United Kingdom)		8.00		09/15/14		1,360,376
		Agricultural Chemicals (1.2%)
	895	Agrium, Inc. (Canada)		6.75		01/15/19		969,234
	815	Mosaic Co. (The) (144A) (a)		7.625		12/01/16		891,221
	245	Potash Corp. of Saskatchewan, Inc. (Canada)		4.875		03/30/20		242,204
	555	Potash Corp. of Saskatchewan, Inc. (Canada)		5.875		12/01/36		548,238
	560	Potash Corp. of Saskatchewan, Inc. (Canada)		6.50		05/15/19		621,332
								3,272,229
		Agricultural Operations (0.3%)
	580	Bunge Ltd. Finance Corp.		8.50		06/15/19		662,247
		Airlines (0.3%)
	1,007	America West Airlines LLC (Series 011G) (AMBAC Insd)		7.10		04/02/21		795,613
		Appliances (0.2%)
	450	Whirlpool Corp.		8.60		05/01/14		509,982
		Auto - Cars/Light Trucks (0.2%)
	395	Daimler Finance North America LLC		8.50		01/18/31		486,706
		Beverages - Non-Alcoholic (0.4%)
	860	Dr Pepper Snapple Group, Inc.		6.82		05/01/18		966,319
		Beverages - Wine/Spirits (0.3%)
	610	Bacardi Ltd. (144A) (Bermuda) (a)		8.20		04/01/19		722,207
	165	Constellation Brands, Inc.		7.25		09/01/16		168,300
								890,507
		Brewery (0.7%)
	470	Anheuser-Busch Cos., Inc.		5.50		01/15/18		477,146
	510	Anheuser-Busch InBev Worldwide, Inc. (144A) (a)		5.375		11/15/14		540,543
	85	Anheuser-Busch InBev Worldwide, Inc. (144A) (a)		8.20		01/15/39		107,825
	700	FBG Finance Ltd. (144A) (Australia) (a)		5.125		06/15/15		725,400
								1,850,914
		Broadcast Service/Program (0.1%)
	280	Grupo Televisa SA (Mexico)		6.00		05/15/18		283,147
		Building Product - Cement/Aggregation (1.2%)
	820	CRH America, Inc.		6.00		09/30/16		857,641
	480	CRH America, Inc.		8.125		07/15/18		560,729

See Notes to Financial Statements
43

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	545	Holcim US Finance Sarl & Cie SCS (144A) (Luxembourg) (a)		6.00	%	12/30/19	$	568,351
	580	LAFARGE SA (France)		6.50		07/15/16		615,732
	525	LAFARGE SA (France)		7.125		07/15/36		551,413
								3,153,866
		Building-Residential/Commercial (0.6%)
	1,675	Toll Brothers Finance Corp.		6.75		11/01/19		1,643,386
		Cable/Satellite TV (3.4%)
	180	Comcast Corp.		5.70		05/15/18		189,540
	820	Comcast Corp.		6.40		05/15/38		846,597
	270	Comcast Corp.		6.45		03/15/37		279,293
	1,620	Comcast Corp.		6.50		01/15/15		1,816,939
	980	COX Communications, Inc. (144A) (a)		8.375		03/01/39		1,224,088
	320	CSC Holdings, Inc.		7.625		07/15/18		331,200
	465	DIRECTV Holdings LLC/Financing Co., Inc. (144A) (a)		5.875		10/01/19		473,821
	275	DIRECTV Holdings LLC/Financing Co., Inc.		6.375		06/15/15		287,031
	620	DIRECTV Holdings LLC/Financing Co., Inc.		7.625		05/15/16		678,215
	1,200	Time Warner Cable, Inc.		6.75		07/01/18		1,320,428
	375	Time Warner Cable, Inc.		6.75		06/15/39		394,025
	350	Time Warner Cable, Inc.		8.25		04/01/19		417,582
	485	Time Warner Cable, Inc.		8.75		02/14/19		592,075
								8,850,834
		Cellular Telephone (0.3%)
	810	Vodafone Group PLC (United Kingdom)		5.625		02/27/17		861,623
		Commercial Banks - Non-U.S. (2.9%)
	545	Barclays Bank PLC (144A) (United Kingdom) (a)		6.05		12/04/17		555,514
	1,495	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		1,670,516
	1,675	HBOS PLC (144A) (United Kingdom) (a)		6.75		05/21/18		1,556,656
	260	Rabobank Nederland (144A) (Netherlands) (a)		11.00	(b)	06/30/49(c)		317,886
	1,310	Royal Bank of Scotland PLC (The) (144A) (United Kingdom) (a)		4.875		08/25/14		1,329,295
	925	Royal Bank of Scotland Group PLC (United Kingdom)		6.40		10/21/19		923,690
	1,325	Westpac Banking Corp. (Australia)		4.20		02/27/15		1,348,374
								7,701,931
		Commercial Banks - Eastern U.S. (2.6%)
	3,250	Credit Suisse (Switzerland)		5.30		08/13/19		3,343,928
	580	Credit Suisse (Switzerland)		6.00		02/15/18		607,850
	715	Discover Bank/Greenwood		8.70		11/18/19		767,299
	760	PNC Bank NA		6.00		12/07/17		772,707
	1,300	UBS AG/Stamford Branch (Switzerland)		5.875		12/20/17		1,338,112
								6,829,896

See Notes to Financial Statements
44

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Commercial Banks - Southern U.S. (1.3%)
$	1,160	BB&T Corp. (MTN)		6.85	%	04/30/19	$	1,303,340
	805	Regions Financial Corp.		7.75		11/10/14		794,697
	1,370	Wachovia Bank NA		5.85		02/01/37		1,314,887
								3,412,924
		Consumer Products - Miscellaneous (0.2%)
	460	Fortune Brands, Inc.		6.375		06/15/14		493,116
		Containers - Paper/Plastic (0.2%)
	515	Sealed Air Corp. (144A) (a)		7.875		06/15/17		549,333
		Data Processing Services (0.2%)
	350	Fiserv, Inc.		6.80		11/20/17		386,801
		Diversified Financial Services (11.8%)
	1,115	Bank of America Corp. (Series L)		5.65		05/01/18		1,134,275
	1,865	Bank of America Corp.		5.75		12/01/17		1,912,811
	795	Bank of America Corp.		7.625		06/01/19		921,280
	1,735	Citigroup, Inc. (See Note 6)		5.875		05/29/37		1,533,709
	480	Citigroup, Inc. (See Note 6)		6.125		05/15/18		483,378
	265	Citigroup, Inc. (See Note 6)		8.125		07/15/39		299,994
	4,820	Citigroup, Inc. (See Note 6)		8.50		05/22/19		5,575,174
	795	Credit Agricole SA (144A) (France) (a)		8.375	(b)	10/13/49(c)		845,372
	1,980	General Electric Capital Corp.		5.625		05/01/18		2,032,343
	75	General Electric Capital Corp. (MTN)		5.875		01/14/38		69,670
	6,075	General Electric Capital Corp. (Series G)		6.00		08/07/19		6,317,459
	4,870	Goldman Sachs Group, Inc. (The)		6.15		04/01/18		5,221,794
	1,565	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		1,613,748
	2,430	JPMorgan Chase & Co.		6.00		01/15/18		2,616,418
	340	JPMorgan Chase & Co.		6.30		04/23/19		374,692
								30,952,117
		Diversified Manufactured Operation (1.5%)
	2,565	General Electric Co.		5.25		12/06/17		2,625,306
	1,150	Tyco Electronics Group SA (Luxembourg)		5.95		01/15/14		1,203,944
								3,829,250
		Diversified Minerals (1.2%)
	825	Rio Tinto Finance USA Ltd. (Australia)		9.00		05/01/19		1,045,853
	475	Teck Resources Ltd. (Canada)		10.25		05/15/16		555,750
	650	Vale Overseas Ltd. (Cayman Islands)		5.625		09/15/19		659,573
	595	Vale Overseas Ltd. (Cayman Islands)		6.875		11/21/36		595,988
	345	Vale Overseas Ltd. (Cayman Islands)		6.875		11/10/39		349,045
								3,206,209

See Notes to Financial Statements
45

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Electric - Generation (0.6%)
$	1,610	AES Corp. (The)		8.00	%	06/01/20	$	1,646,225
		Electric - Integrated (5.8%)
	65	CMS Energy Corp.		6.30		02/01/12		66,482
	775	Consumers Energy Co.		5.80		09/15/35		748,256
	435	Dominion Resources, Inc.		7.00		06/15/38		502,830
	645	DTE Energy Co.		7.625		05/15/14		720,723
	800	Entergy Gulf States Louisiana LLC		5.59		10/01/24		801,531
	2,650	Exelon Generation Co. LLC		6.25		10/01/39		2,709,092
	975	FirstEnergy Solutions Corp.		6.80		08/15/39		987,896
	975	FirstEnergy Solutions Corp.		6.05		08/15/21		985,624
	150	NiSource Finance Corp.		6.125		03/01/22		153,409
	965	NiSource Finance Corp.		6.80		01/15/19		1,033,767
	200	Ohio Power Co. (Series 1)		5.375		10/01/21		200,968
	1,670	Ohio Power Co. (Series K)		6.00		06/01/16		1,772,835
	1,510	PPL Energy Supply LLC		6.50		05/01/18		1,576,999
	230	Progress Energy, Inc.		7.05		03/15/19		257,755
	710	Southwestern Public Service Co. (Series G)		8.75		12/01/18		866,845
	1,230	Virginia Electric & Power Co.		8.875		11/15/38		1,741,824
								15,126,836
		Electronic Component (0.3%)
	746	Koninklijke Philips Electronics N.V. (Netherlands)		5.75		03/11/18		795,088
		Electronic Connectors (0.2%)
	560	Amphenol Corp.		4.75		11/15/14		560,799
		Electronic Measuring Instrument (0.3%)
	675	Agilent Technologies, Inc.		5.50		09/14/15		708,400
		Enterprise Software/Service (0.2%)
	540	CA, Inc.		5.375		12/01/19		544,065
		Finance - Consumer Loans (1.8%)
	785	American General Finance Corp. (Series H)		4.625		09/01/10		760,914
	1,140	HSBC Finance Corp.		6.375		10/15/11		1,212,929
	1,660	HSBC Finance Corp.		6.75		05/15/11		1,754,992
	1,060	SLM Corp. (MTN)		0.442	(b)	07/26/10		1,037,546
								4,766,381
		Finance - Credit Card (1.4%)
	525	American Express Co.		8.125		05/20/19		623,215
	1,995	American Express Credit Corp. (Series C)		7.30		08/20/13		2,243,946
	780	Capital One Bank USA NA		8.80		07/15/19		923,243
								3,790,404

See Notes to Financial Statements
46

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Finance - Investment Banker/Broker (4.5%)
$	610	Bear Stearns Cos. LLC (The)		5.55	%	01/22/17	$	611,060
	1,060	Bear Stearns Cos. LLC (The)		7.25		02/01/18		1,218,622
	2,610	JPMorgan Chase Capital XXVII (Series AA)		7.00		11/01/39		2,640,477
	1,210	Macquarie Group Ltd. (144A) (Australia) (a)		7.625		08/13/19		1,350,155
	3,625	Merrill Lynch & Co., Inc. (MTN)		6.875		04/25/18		3,911,933
	930	Merrill Lynch & Co., Inc.		7.75		05/14/38		1,024,924
	1,120	TD Ameritrade Holding Corp.		5.60		12/01/19		1,114,660
								11,871,831
		Food - Miscellaneous/Diversified (1.7%)
	860	ConAgra Foods, Inc.		7.00		10/01/28		924,068
	740	ConAgra Foods, Inc.		8.25		09/15/30		889,432
	1,070	Kraft Foods, Inc.		6.125		08/23/18		1,130,049
	700	Kraft Foods, Inc.		6.875		02/01/38		736,905
	610	Kraft Foods, Inc.		6.875		01/26/39		642,562
								4,323,016
		Food - Retail (0.4%)
	835	Delhaize America, Inc.		9.00		04/15/31		1,071,922
		Gas - Distribution (0.4%)
	780	Florida Gas Transmission Co. LLC (144A) (a)		7.90		05/15/19		914,497
		Gold Mining (0.3%)
	880	Newmont Mining Corp.		6.25		10/01/39		884,022
		Independent Power Producer (0.1%)
	295	NRG Energy, Inc.		8.50		06/15/19		303,850
		Instruments - Scientific (0.3%)
	820	Fisher Scientific International, Inc.		6.125		07/01/15		845,727
		Investment Management/Advisor Services (0.7%)
	870	Ameriprise Financial, Inc.		7.30		06/28/19		969,175
	855	Blackstone Holdings Finance Co. LLC (144A) (a)		6.625		08/15/19		838,312
								1,807,487
		Life/Health Insurance (2.3%)
	660	Aflac, Inc.		8.50		05/15/19		761,576
	745	Lincoln National Corp.		8.75		07/01/19		852,650
	1,025	Principal Financial Group, Inc.		8.875		05/15/19		1,184,294
	925	Protective Life Corp.		7.375		10/15/19		928,596
	950	Prudential Financial, Inc. (MTN)		4.75		09/17/15		964,508
	635	Prudential Financial, Inc. (MTN)		6.625		12/01/37		653,004
	660	Prudential Financial, Inc. (Series D)		7.375		06/15/19		741,252
								6,085,880

See Notes to Financial Statements
47

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Medical Instruments (0.2%)
$	600	Boston Scientific Corp.		6.00	%	01/15/20	$	614,216
		Medical Labs & Testing Services (0.2%)
	605	Quest Diagnostics, Inc.		4.75		01/30/20		592,313
		Medical - Biomedical/Genetics (0.3%)
	790	Biogen Idec, Inc.		6.875		03/01/18		851,648
		Medical - Drugs (0.3%)
	405	Pfizer, Inc.		7.20		03/15/39		496,572
	150	Wyeth		6.45		02/01/24		167,503
								664,075
		Medical - Generic Drugs (0.2%)
	565	Watson Pharmaceuticals, Inc.		6.125		08/15/19		584,020
		Medical - HMO (0.7%)
	215	Aetna, Inc.		6.50		09/15/18		229,059
	1,150	UnitedHealth Group, Inc.		6.00		02/15/18		1,189,790
	260	WellPoint, Inc.		7.00		02/15/19		291,289
								1,710,138
		Medical - Hospitals (0.3%)
	305	HCA, Inc. (144A) (a)		8.50		04/15/19		330,162
	380	Tenet Healthcare Corp.		7.375		02/01/13		382,850
								713,012
		Metal - Aluminum (0.4%)
	530	Alcoa, Inc.		5.87		02/23/22		493,188
	465	Alcoa, Inc.		6.75		07/15/18		475,096
								968,284
		Metal - Copper (0.2%)
	390	Freeport-McMoRan Copper & Gold, Inc.		8.375		04/01/17		427,635
		Multi-line Insurance (3.5%)
	800	Aegon (Netherlands)		4.625		12/01/15		781,926
	840	Allstate Corp. (The) (See Note 6)		7.45		05/16/19		977,622
	1,285	American Financial Group, Inc.		9.875		06/15/19		1,443,062
	1,335	CNA Financial Corp.		7.35		11/15/19		1,338,877
	1,750	Farmers Insurance Exchange (144A) (a)		8.625		05/01/24		1,695,192
	290	MetLife, Inc. (Series A) (See Note 6)		6.817		08/15/18		323,523
	965	MetLife, Inc. (See Note 6)		10.75		08/01/39		1,191,267
	590	MetLife, Inc. (See Note 6)		7.717		02/15/19		694,499
	850	XL Capital Ltd. (Cayman Islands)		5.25		09/15/14		833,276
								9,279,244

See Notes to Financial Statements
48

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Multimedia (1.9%)
$	170	News America, Inc.		6.40	%	12/15/35	$	175,120
	930	News America, Inc.		6.65		11/15/37		985,565
	370	News America, Inc.		7.85		03/01/39		434,161
	610	Time Warner, Inc.		6.50		11/15/36		638,988
	715	Time Warner, Inc.		7.70		05/01/32		842,063
	205	Viacom, Inc.		5.625		09/15/19		214,441
	850	Viacom, Inc.		6.875		04/30/36		922,014
	760	Vivendi (144A) (France) (a)		6.625		04/04/18		824,998
								5,037,350
		Networking Products (0.3%)
	650	Cisco Systems, Inc.		5.90		02/15/39		659,498
		Non-Hazardous Waste Disposal (0.7%)
	665	Republic Services, Inc. (144A) (a)		5.50		09/15/19		676,537
	1,105	Waste Management, Inc.		6.125		11/30/39		1,101,852
								1,778,389
		Office Automation & Equipment (0.4%)
	255	Xerox Corp.		5.625		12/15/19		255,124
	815	Xerox Corp.		6.35		05/15/18		851,527
								1,106,651
		Oil & Gas Drilling (0.4%)
	985	Transocean, Inc. (Cayman Islands)		6.00		03/15/18		1,052,644
		Oil Companies - Exploration & Production (2.9%)
	665	Chesapeake Energy Corp.		7.625		07/15/13		699,912
	155	EnCana Corp. (Canada)		5.90		12/01/17		166,962
	1,220	EnCana Corp. (Canada)		6.50		02/01/38		1,332,911
	400	Gaz Capital SA (144A) (Luxembourg) (a)		6.51		03/07/22		369,000
	445	Newfield Exploration Co.		7.125		05/15/18		451,675
	950	Nexen, Inc. (Canada)		7.50		07/30/39		1,092,630
	180	Pioneer Natural Resources Co.		6.65		03/15/17		178,428
	480	Plains Exploration & Production Co.		7.625		06/01/18		493,200
	1,370	Questar Market Resources, Inc.		6.80		04/01/18		1,429,931
	550	XTO Energy, Inc.		5.50		06/15/18		587,661
	685	XTO Energy, Inc.		6.50		12/15/18		784,104
								7,586,414
		Oil Company - Integrated (1.5%)
	1,010	Cenovus Energy, Inc. (144A) (Canada) (a)		5.70		10/15/19		1,055,472
	750	Hess Corp.		6.00		01/15/40		745,249
	835	Marathon Oil Corp.		5.90		03/15/18		880,964

See Notes to Financial Statements
49

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	950	Petro-Canada (Canada)		5.95	%	05/15/35	$	940,592
	410	Petrobras International Finance Co. (Cayman Islands)		5.75		01/20/20		419,138
								4,041,415
		Oil - Field Services (0.4%)
	1,035	Weatherford International, Inc.		6.35		06/15/17		1,084,186
		Paper & Related Products (1.2%)
	130	Georgia-Pacific LLC (144A) (a)		8.25		05/01/16		138,450
	860	International Paper Co.		7.50		08/15/21		965,519
	460	International Paper Co.		9.375		05/15/19		566,345
	1,325	MeadWestvaco Corp.		7.375		09/01/19		1,458,057
								3,128,371
		Pharmacy Services (0.5%)
	1,220	Medco Health Solutions, Inc.		7.125		03/15/18		1,373,613
		Pipelines (4.8%)
	670	CenterPoint Energy Resources Corp.		6.25		02/01/37		651,576
	375	CenterPoint Energy Resources Corp. (Series B)		7.875		04/01/13		422,695
	364	Colorado Interstate Gas Co.		6.80		11/15/15		403,700
	1,615	Energy Transfer Partners LP		9.00		04/15/19		1,928,197
	275	Enterprise Products Operating LLC		5.25		01/31/20		272,562
	1,265	Enterprise Products Operating LLC (Series G)		5.60		10/15/14		1,348,422
	955	Kinder Morgan Energy Partners LP		5.85		09/15/12		1,028,390
	1,480	Kinder Morgan Finance Co. ULC (Canada)		5.70		01/05/16		1,428,200
	775	Midcontinent Express Pipeline LLC (144A) (a)		6.70		09/15/19		796,291
	1,095	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		1,120,236
	705	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		832,634
	225	Spectra Energy Capital LLC		8.00		10/01/19		263,783
	960	Texas Eastern Transmission LP		7.00		07/15/32		1,082,227
	860	Transcontinental Gas Pipe Line Co. LLC (Series B)		8.875		07/15/12		986,271
								12,565,184
		Property Trust (0.5%)
	1,200	WEA Finance LLC/WT Finance Aust Pty Ltd. (144A) (a)		6.75		09/02/19		1,290,794
		Real Estate Operation/Development (0.4%)
	1,165	Brookfield Asset Management, Inc. (Canada)		5.80		04/25/17		1,063,093
		Reinsurance (0.8%)
	1,235	Platinum Underwriters Finance, Inc. (Series B)		7.50		06/01/17		1,264,834
	775	Reinsurance Group of America, Inc.		6.45		11/15/19		773,851
								2,038,685

See Notes to Financial Statements
50

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		REITS - Apartments (0.3%)
$	800	AvalonBay Communities, Inc. (MTN)		6.10	%	03/15/20	$	818,470
		REITS - Office Property (0.6%)
	975	Boston Properties LP		5.875		10/15/19		979,856
	650	Mack-Cali Realty Corp.		7.75		08/15/19		673,728
								1,653,584
		REITS - Regional Malls (0.3%)
	610	Simon Property Group LP		6.75		05/15/14		650,678
		Retail - Building Products (0.4%)
	955	Home Depot, Inc. (The)		5.875		12/16/36		924,873
		Retail - Discount (0.2%)
	505	Wal-Mart Stores, Inc.		5.25		09/01/35		498,307
		Retail - Drug Store (0.6%)
	1,555	CVS Pass-Through Trust		6.036		12/10/28		1,475,165
	119	CVS Pass-Through Trust (144A) (a)		8.353		07/10/31		131,474
								1,606,639
		Retail - Regional Department Store (0.3%)
	675	Kohl's Corp.		6.875		12/15/37		768,092
		Retail - Restaurants (0.5%)
	235	Yum! Brands, Inc.		6.25		03/15/18		256,754
	1,040	Yum! Brands, Inc.		6.875		11/15/37		1,127,341
								1,384,095
		Satellite Telecommunication (0.1%)
	310	Intelsat Subsidiary Holding Co. Ltd. (Bermuda)		8.50		01/15/13		317,750
		Semiconductor Equipment (0.4%)
	905	KLA-Tencor Corp.		6.90		05/01/18		953,696
		Special Purpose Entity (1.0%)
	925	AIG SunAmerica Global Financing (144A) (a)		6.30		05/10/11		920,378
	800	Capital One Capital		8.875		05/15/40		858,000
	820	Harley-Davidson Funding Corp. (144A) (a)		6.80		06/15/18		819,017
								2,597,395
		Steel - Producers (1.1%)
	2,170	ArcelorMittal (Luxembourg)		9.85		06/01/19		2,811,287
		Super - Regional Banks - U.S. (2.5%)
	455	PNC Funding Corp.		6.70		06/10/19		510,039
	5,875	Wells Fargo & Co.		5.625		12/11/17		6,120,675
								6,630,714

See Notes to Financial Statements
51

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Telecom Equipment Fiber Optics (0.3%)
$	545	Corning, Inc.		6.625	%	05/15/19	$	594,961
	290	Corning, Inc.		7.25		08/15/36		296,365
								891,326
		Telecommunication Services (0.4%)
	445	Qwest Corp.		6.50		06/01/17		439,437
	260	Qwest Corp.		6.875		09/15/33		230,100
	305	SBA Telecommunications, Inc. (144A) (a)		8.25		08/15/19		324,825
								994,362
		Telephone - Integrated (7.9%)
	4,070	AT&T Corp.		8.00		11/15/31		4,981,603
	1,855	AT&T, Inc.		6.15		09/15/34		1,839,442
	840	CenturyTel, Inc.		6.00		04/01/17		863,802
	415	CenturyTel, Inc. (Series Q)		6.15		09/15/19		425,055
	715	Citizens Communications Co.		7.125		03/15/19		679,250
	375	Deutsche Telekom International Finance BV (Netherlands)		6.00		07/08/19		401,106
	315	Deutsche Telekom International Finance BV (Netherlands)		6.75		08/20/18		353,253
	555	Deutsche Telekom International Finance BV (Netherlands)		8.75		06/15/30		715,706
	1,680	Telecom Italia Capital SA (Luxembourg)		6.999		06/04/18		1,851,461
	725	Telecom Italia Capital SA (Luxembourg)		7.175		06/18/19		809,686
	2,120	Telefonica Europe BV (Netherlands)		8.25		09/15/30		2,646,735
	2,470	Verizon Communications, Inc.		5.50		02/15/18		2,581,832
	225	Verizon Communications, Inc.		6.35		04/01/19		248,666
	790	Verizon Communications, Inc.		6.90		04/15/38		878,466
	1,015	Verizon Communications, Inc.		8.95		03/01/39		1,377,658
								20,653,721
		Television (0.2%)
	515	CBS Corp.		8.875		05/15/19		617,127
		Tobacco (1.5%)
	280	Altria Group, Inc.		9.25		08/06/19		341,785
	460	Altria Group, Inc.		9.70		11/10/18		569,525
	505	Altria Group, Inc.		10.20		02/06/39		675,603
	445	BAT International Finance PLC (144A) (United Kingdom) (a)		9.50		11/15/18		565,996
	835	Lorillard Tobacco Co.		8.125		06/23/19		919,525
	835	Philip Morris International, Inc.		5.65		05/16/18		879,533
	45	Philip Morris International, Inc.		6.375		05/16/38		48,808
								4,000,775

See Notes to Financial Statements
52

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Transport - Rail (0.4%)
$	505	CSX Corp.		6.15	%		05/01/37		$	513,354
	535	CSX Corp.		7.375			02/01/19			612,227
										1,125,581
		Total Corporate Bonds(Cost $234,713,344)								249,634,692
		Commercial Mortgage-Backed Securities (0.8%)
	475	Banc of America Commercial Mortgage Inc. 2007-4 A4		5.744	(b)		02/10/51			420,097
	850	Bear Stearns Commercial Mortgage Securities 2007-T26 A4		5.471	(b)		01/12/45			806,103
	930	LB-UBS Commercial Mortgage Trust 2006-C6 A4		5.372			09/15/39			888,251
		Total Commercial Mortgage-Backed Securities (Cost $1,882,709)								2,114,451
		Municipal Bonds (0.2%)
	600	State of California - Various Purpose General Obligation Bonds (Cost $602,790)		5.95			04/01/16			606,162
		U.S. Government Agency - Mortgage-Backed Security (0.0%)
	1	Federal Home Loan Mortgage Corp. Gold (Cost $1,522)		6.50			12/01/28			1,586
		Short-Term Investments (2.7%)
		U.S. Government Obligation (d)(e) (0.6%)
	1,420	U.S. Treasury Bill (Cost $1,419,253)		0.152			05/06/10			1,419,271
NUMBER OF SHARES (000)
		Investment Company (2.1%)
	5,618	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $5,618,450)								5,618,450
		Total Short-Term Investments (Cost $7,037,703)								7,037,721
		Total Investments (Cost $244,238,068) (f)(g)					98.8	%		259,394,612
		Other Assets in Excess of Liabilities					1.2			3,201,044
		Net Assets					100.0	%	$	262,595,656

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

  MTN  Medium Term Note.

  (a)  Resale is restricted to qualified institutional investors.

  (b)  Floating rate security. Rate shown is the rate in effect at December 31, 2009.

  (c)  Security issued with perpetual maturity.

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

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

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

  (g)  The aggregate cost for federal income tax purposes is $244,859,453. The aggregate gross unrealized appreciation is $15,504,589 and the aggregate gross unrealized depreciation is $969,430 resulting in net unrealized appreciation of $14,535,159.

Bond Insurance:

AMBAC  AMBAC Assurance Corporation.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	119	Long	U.S. Treasury Notes 2 Year, March 2010	$	25,735,609		$	(141,406	)
	211	Long	U.S. Treasury Notes 5 Year, March 2010		24,134,773			(449,451	)
	167	Short	U.S. Treasury Bonds 30 Year, March 2010		(19,267,625	)		807,577
	367	Short	U.S. Treasury Notes 10 Year, March 2010		(42,371,299	)		1,007,262
Net Unrealized Appreciation							$	1,223,982

See Notes to Financial Statements
54

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Portfolio of Investments n December 31, 2009 continued

CREDIT DEFAULT SWAPS CONTRACTS OPEN AT DECEMBER 31, 2009:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000's)		INTEREST RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)			UPFRONT PAYMENTS			VALUE			CREDIT RATING OF REFERENCE OBLIGATION+
																	(unaudited)
Bank of America, N.A.
Carnival Corp.	Buy	$	1,185		1.57	%	March 20, 2018	$	(56,603	)		—		$	(56,603	)	BBB+
Bank of America, N.A. Centurytel, Inc.	Buy		905		0.88		September 20, 2017		11,359			—			11,359		BBB-
Goldman Sachs International Sealed Air Corp.	Buy		505		1.08		March 20, 2018		3,310			—			3,310		BB+
Bank of America, N.A.  Tyco Electronics Ltd.	Buy		925		5.00		June 20, 2014		(133,411	)	$	(38,859	)		(172,270	)	BBB-
Bank of America, N.A. Toll Brothers Inc.	Buy		1,695		2.90		March 20, 2013		(91,539	)		—			(91,539	)	BBB-
Barclays Capital Whirlpool Corp.	Buy		450		1.00		June 20, 2014		(23,575	)		24,263			688		BBB-
Total Credit Default Swaps								$(290,459)			$(14,596)			$(305,055)

  +  Credit rating as issued by Standard & Poors.

LONG-TERM CREDIT ANALYSIS (unaudited)
AAA	3.3	%
AA	13.4
A	32.4
BBB	47.0
BB	3.6
B or BELOW	0.3
	100.0	%++

++  Does not include open long/short futures contracts with an underlying face amount of $111,509,306 and net unrealized appreciation of $1,223,982. Also does not include open swap contracts with net unrealized depreciation of $290,459.

See Notes to Financial Statements
55

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Portfolio of Investments n December 31, 2009

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (92.8%)
		Advanced Materials/Products (0.4%)
$	145	Hexcel Corp. (a)		6.75	%	02/01/15	$	139,925
		Aerospace/Defense (0.4%)
	145	Transdigm, Inc. (144A) (b)		7.75		07/15/14		147,900
		Agricultural Chemicals (0.8%)
	255	Terra Capital, Inc. (144A) (a)(b)		7.75		11/01/19		274,125
		Apparel Manufacturers (0.5%)
	150	Oxford Industries, Inc.		11.375		07/15/15		165,750
		Auto - Medium&Heavy Duty Trucks (0.3%)
	95	Navistar International Corp. (a)		8.25		11/01/21		97,850
		Beverages - Wine/Spirits (0.5%)
	175	Constellation Brands, Inc.		7.25		05/15/17		178,281
		Broadcast Service/Program (0.4%)
	135	XM Satellite Radio, Inc. (144A) (b)		13.00		08/01/13		147,319
		Building Product - Cement/Aggregation (0.3%)
	100	Hanson Ltd. (United Kingdom)		7.875		09/27/10		103,642
		Building - Residential/Commercial (0.9%)
	295	K Hovnanian Enterprises, Inc. (144A) (b)		10.625		10/15/16		309,750
		Cable/Satellite TV (4.2%)
	295	Charter Communications Operating LLC/Charter Communications Operating Capital (144A) (b)		10.875		09/15/14		331,875
	120	CSC Holdings, Inc. (144A) (b)		8.50		06/15/15		128,400
	445	CSC Holdings, Inc. (144A) (b)		8.625		02/15/19		481,156
	330	DISH DBS Corp.		6.625		10/01/14		333,712
	130	DISH DBS Corp.		7.00		10/01/13		134,388
								1,409,531
		Casino Gaming (5.0%)
	4,485	Aladdin Gaming Holdings LLC (Series B) (c)(d)(e)		13.50		03/01/10		0
	165	Ameristar Casinos, Inc. (144A) (a)(b)		9.25		06/01/14		172,013
	250	Harrahs Operating Escrow LLC/Harrahs Escrow Corp. (144A) (a)(b)		11.25		06/01/17		262,812
	100	Las Vegas Sands Corp. (a)		6.375		02/15/15		89,000
	605	MGM Mirage (a)		13.00		11/15/13		697,262
	125	Scientific Games International, Inc.		9.25		06/15/19		131,875
	335	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp. (a)		6.625		12/01/14		325,369
								1,678,331

See Notes to Financial Statements
56

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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Cellular Telephone (1.6%)
$	165	MetroPCS Wireless, Inc.		9.25	%	11/01/14	$	167,887
	370	Nextel Communications, Inc. (Series E)		6.875		10/31/13		360,750
								528,637
		Chemicals - Other (0.5%)
	175	Innophos, Inc.		8.875		08/15/14		178,500
		Chemicals: Major Diversified (0.9%)
	180	Innophos Holdings, Inc. (144A) (b)		9.50		04/15/12		183,600
	130	Westlake Chemical Corp.		6.625		01/15/16		124,962
								308,562
		Chemicals: Specialty (0.6%)
	175	Ashland, Inc. (144A) (b)		9.125		06/01/17		192,500
		Coal (1.2%)
	140	Foundation PA Coal Co. LLC		7.25		08/01/14		142,450
	255	Massey Energy Co.		6.875		12/15/13		255,956
								398,406
		Commercial Services (0.8%)
	260	Ticketmaster Entertainment, Inc.		10.75		08/01/16		281,450
		Computer Services (1.3%)
	280	SunGard Data Systems, Inc.		9.125		08/15/13		288,400
	60	SunGard Data Systems, Inc. (a)		10.25		08/15/15		64,200
	65	SunGard Data Systems, Inc.		10.625		05/15/15		71,906
								424,506
		Containers - Metal & Glass (0.8%)
	12	Crown Americas LLC/Crown Americas Capital Corp.		7.625		11/15/13		12,450
	115	Owens-Brockway Glass Container, Inc.		7.375		05/15/16		119,313
	150	Owens-Brockway Glass Container, Inc.		8.25		05/15/13		154,875
								286,638
		Containers - Paper/Plastic (3.3%)
	360	Berry Plastics Corp. (a)		8.875		09/15/14		351,900
	110	Berry Plastics Escrow LLC/Berry Plastics Escrow Corp. (144A) (b)		8.25		11/15/15		111,100
	210	Graham Packaging Co. LP/GPC Capital Corp. I (a)		9.875		10/15/14		215,250
	200	Graphic Packaging International, Inc.		9.50		08/15/13		207,500
	210	Solo Cup Co. (a)		8.50		02/15/14		206,325
								1,092,075
		Data Processing Services (1.1%)
	310	First Data Corp. (a)		9.875		09/24/15		290,625
	105	First Data Corp. (a)		11.25		03/31/16		90,300
								380,925

See Notes to Financial Statements
57

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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Decision Support Software (1.3%)
$	460	Vangent, Inc.		9.625	%	02/15/15	$	435,275
		Diversified Financial Services (2.3%)
	190	Bank of America Corp. (a)		8.00	(f)	12/29/49(g)		183,186
	370	CIT Group, Inc.		7.00		05/01/17		322,825
	71	GMAC, Inc. (144A) (b)		6.75		12/01/14		68,160
	190	GMAC, Inc. (144A) (b)		6.875		09/15/11		189,050
								763,221
		Diversified Manufactured Operation (2.1%)
	460	Bombardier, Inc. (144A) (Canada) (b)		6.30		05/01/14		457,700
	235	RBS Global, Inc./Rexnord LLC		9.50		08/01/14		236,762
								694,462
		Diversified Minerals (1.3%)
	360	Teck Resources Ltd. (Canada) (a)		10.25		05/15/16		421,200
		E-Commerce/Services (0.9%)
	270	Expedia, Inc.		8.50		07/01/16		293,288
		Electric - Generation (3.4%)
	270	AES Corp. (The)		7.75		03/01/14		275,400
	100	AES Corp. (The) (144A) (b)		8.75		05/15/13		103,000
	200	Edison Mission Energy (a)		7.00		05/15/17		159,000
	175	Edison Mission Energy		7.75		06/15/16		149,625
	285	Intergen (144A) (Netherlands) (b)		9.00		06/30/17		298,537
	146	Midwest Generation LLC (Series B)		8.56		01/02/16		147,551
								1,133,113
		Electric - Integrated (2.2%)
	115	Ipalco Enterprises, Inc.		8.625		11/14/11		120,750
	495	Mirant Americas Generation LLC (a)		8.50		10/01/21		472,725
	170	Texas Competitive Electric Holdings Co. LLC (Series A) (a)		10.25		11/01/15		138,550
								732,025
		Electronic Component (0.3%)
	99	Flextronics International Ltd. (Singapore) (a)		6.50		05/15/13		99,743
		Electronics - Military (0.6%)
	200	L-3 Communications Corp. (a)		5.875		01/15/15		200,750
		Finance - Auto Loans (1.4%)
	450	Ford Motor Credit Co. LLC		7.25		10/25/11		454,641
		Food - Meat Products (0.5%)
	140	JBS USA LLC/JBS USA Finance, Inc. (144A) (b)		11.625		05/01/14		159,250

See Notes to Financial Statements
58

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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Food - Miscellaneous/Diversified (0.3%)
$	110	M-Foods Holdings, Inc. (144A) (b)		9.75	%	10/01/13	$	114,813
		Food - Retail (1.1%)
	110	SUPERVALU, Inc. (a)		7.50		05/15/12		113,850
	120	SUPERVALU, Inc.		7.50		11/15/14		122,100
	120	SUPERVALU, Inc.		8.00		05/01/16		122,400
								358,350
		Funeral Service & Related Items (0.5%)
	170	Service Corp. International/US		6.75		04/01/16		165,325
		Independent Power Producer (1.8%)
	330	NRG Energy, Inc.		8.50		06/15/19		339,900
	265	RRI Energy, Inc. (a)		7.875		06/15/17		261,687
								601,587
		Industrial Gases (0.1%)
	45	Airgas, Inc. (144A) (b)		7.125		10/01/18		47,025
		Machinery - Electric Utility (0.7%)
	276	Ormat Funding Corp.		8.25		12/30/20		250,744
		Machinery - Electrical (0.4%)
	120	Baldor Electric Co.		8.625		02/15/17		123,300
		Machinery - Farm (0.4%)
	135	Case New Holland, Inc. (144A) (b)		7.75		09/01/13		138,713
		Media (0.6%)
	185	Nielsen Finance LLC/Nielsen Finance Co. (a)		10.00		08/01/14		193,788
		Medical Products (1.9%)
	280	Biomet, Inc.		10.00		10/15/17		305,550
	255	Fresenius Medical Care Capital Trust IV		7.875		06/15/11		265,519
	65	Invacare Corp.		9.75		02/15/15		68,087
								639,156
		Medical - Drugs (0.4%)
	110	Axcan Intermediate Holdings, Inc.		12.75		03/01/16		123,475
		Medical - Hospitals (2.9%)
	255	HCA, Inc.		5.75		03/15/14		240,975
	200	HCA, Inc.		6.25		02/15/13		195,500
	70	HCA, Inc. (a)		9.125		11/15/14		74,025
	115	HCA, Inc. (144A) (b)		9.875		02/15/17		127,650
	180	Tenet Healthcare Corp. (a)		7.375		02/01/13		181,350
	135	Tenet Healthcare Corp. (144A) (b)		10.00		05/01/18		151,875
								971,375

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Medical - Nursing Homes (0.6%)
$	210	Sun Healthcare Group, Inc.		9.125	%	04/15/15	$	216,825
		Medical - Outpatient/Home Medical (2.3%)
	210	Apria Healthcare Group, Inc. (144A) (b)		11.25		11/01/14		231,525
	95	Apria Healthcare Group, Inc. (144A) (a)(b)		12.375		11/01/14		104,975
	160	Select Medical Corp.		6.428	(f)	09/15/15		148,800
	290	Select Medical Corp. (a)		7.625		02/01/15		282,750
								768,050
		Metal - Aluminum (1.2%)
	430	Novelis, Inc. (Canada)		7.25		02/15/15		411,725
		Office Furnishings - Original (0.2%)
	75	Interface, Inc.		9.50		02/01/14		74,156
		Oil Companies - Exploration & Production (9.9%)
	235	Atlas Energy Operating Co. LLC/Atlas Energy Finance Corp.		10.75		02/01/18		260,850
	290	Chaparral Energy, Inc. (a)		8.50		12/01/15		257,375
	150	Chesapeake Energy Corp.		6.375		06/15/15		147,750
	130	Chesapeake Energy Corp.		6.50		08/15/17		128,050
	120	Chesapeake Energy Corp.		7.50		09/15/13		122,700
	90	Cimarex Energy Co.		7.125		05/01/17		91,350
	115	Forest Oil Corp.		7.25		06/15/19		114,138
	185	Forest Oil Corp. (a)		7.75		05/01/14		188,237
	305	Hilcorp Energy I LP/Hilcorp Finance Co. (144A) (b)		7.75		11/01/15		300,425
	255	Newfield Exploration Co.		6.625		09/01/14		258,825
	60	Newfield Exploration Co.		7.125		05/15/18		60,900
	365	OPTI Canada, Inc. (Canada)		8.25		12/15/14		302,494
	215	Pioneer Natural Resources Co.		6.65		03/15/17		213,122
	295	Plains Exploration & Production Co.		7.625		06/01/18		303,112
	105	Plains Exploration & Production Co.		7.75		06/15/15		107,363
	125	Plains Exploration & Production Co. (a)		10.00		03/01/16		137,500
	80	SandRidge Energy, Inc. (144A) (b)		8.00		06/01/18		79,000
	265	SandRidge Energy, Inc. (a)(h)		8.625		04/01/15		266,325
								3,339,516
		Oil - Field Services (0.4%)
	140	Key Energy Services, Inc. (a)		8.375		12/01/14		141,050
		Paper & Related Products (3.0%)
	145	Cascades, Inc. (144A) (Canada) (b)		7.875		01/15/20		147,900
	265	Georgia-Pacific LLC (144A) (b)		7.125		01/15/17		269,637
	65	Georgia-Pacific LLC (144A) (b)		8.25		05/01/16		69,225
	110	Glatfelter		7.125		05/01/16		109,863

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	220	NewPage Corp. (144A) (b)		11.375	%	12/31/14	$	223,300
	165	Verso Paper Holdings LLC/Verso Paper, Inc. (144A) (a)(b)		11.50		07/01/14		182,325
								1,002,250
		Pharmacy Services (1.2%)
	345	Omnicare, Inc.		6.75		12/15/13		339,825
	70	Omnicare, Inc.		6.875		12/15/15		68,425
								408,250
		Physical Therapy/Rehabilitation Centers (0.7%)
	230	Healthsouth Corp. (a)		10.75		06/15/16		251,275
		Pipelines (1.0%)
	115	El Paso Corp.		6.875		06/15/14		115,490
	25	El Paso Corp. (a)		12.00		12/12/13		29,438
	170	Sonat, Inc.		7.625		07/15/11		176,069
								320,997
		Radio (0.6%)
	200	Sirius XM Radio, Inc.		9.625		08/01/13		200,000
		Rental Auto/Equipment (0.6%)
	190	United Rentals North America, Inc.		6.50		02/15/12		190,475
		Resorts/Theme Parks (0.0%)
	7,210	Resort at Summerlin LP (Series B) (c)(d)(e)		13.00		12/15/07		0
		Retail - Apparel/Shoe (1.5%)
	330	Brown Shoe Co., Inc.		8.75		05/01/12		337,837
	155	Phillips-Van Heusen Corp.		7.25		02/15/11		156,163
								494,000
		Retail - Drug Store (0.9%)
	340	RITE AID Corp. (a)		8.625		03/01/15		297,500
		Retail - Regional Department Store (0.6%)
	200	Macy's Retail Holdings, Inc.		5.90		12/01/16		196,000
		Satellite Telecommunication (2.4%)
	125	Hughes Network Systems LLC/HNS Finance Corp.		9.50		04/15/14		129,688
	525	Intelsat Bermuda Ltd. (144A) (Bermuda) (b)(h)		11.50		02/04/17		518,437
	140	Intelsat Corp. (a)		9.25		06/15/16		145,250
								793,375
		Seismic Data Collection (0.6%)
	205	Cie Generale de Geophysique-Veritas (France)		7.50		05/15/15		204,488
		Special Purpose Entity (2.6%)
	125	FireKeepers Development Authority (144A) (b)		13.875		05/01/15		142,500
	80	Fresenius US Finance II, Inc. (144A) (b)		9.00		07/15/15		88,400

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	355	LPL Holdings, Inc. (144A) (b)		10.75	%	12/15/15	$	367,869
	315	NSG Holdings LLC/NSG Holdings, Inc. (144A) (b)		7.75		12/15/25		283,500
								882,269
		Steel - Producers (0.6%)
	160	ArcelorMittal (Luxembourg)		9.85		06/01/19		207,284
		Telecommunication Services (3.3%)
	415	PAETEC Holding Corp. (a)		8.875		06/30/17		422,262
	165	West Corp. (a)		9.50		10/15/14		168,300
	200	Wind Acquisition Finance SA (144A) (Luxembourg) (b)		11.75		07/15/17		219,500
	275	Wind Acquisition Finance SA (144A) (Luxembourg) (b)		12.00		12/01/15		295,625
								1,105,687
		Telephone - Integrated (4.7%)
	400	Citizens Communications Co.		9.00		08/15/31		395,000
	350	Qwest Capital Funding, Inc. (a)		7.25		02/15/11		357,000
	315	Sprint Capital Corp. (a)		6.90		05/01/19		291,375
	14	Virgin Media Finance PLC (United Kingdom) (a)		8.75		04/15/14		14,525
	205	Virgin Media Finance PLC (United Kingdom)		9.125		08/15/16		217,044
	165	Windstream Corp. (144A) (b)		7.875		11/01/17		163,762
	125	Windstream Corp. (a)		8.125		08/01/13		130,313
								1,569,019
		Theaters (0.7%)
	220	AMC Entertainment, Inc. (a)		8.75		06/01/19		225,500
		Total Corporate Bonds(Cost $39,972,522)						31,138,913
		Senior Loan Notes (1.7%)
		Casino Services (0.9%)
	321	CCM Merger Corp.		8.50	(f)	07/13/12		313,740
		Utilities (0.8%)
	273	Calpine Corp.		3.135	(f)	03/29/14		258,909
		Total Senior Loan Notes(Cost $502,164)						572,649

NUMBER OF SHARES
		Preferred Stock (0.3%)
		Diversified Financial Services
	172	GMAC, Inc. $70.00 (144A) (b) (Cost $72,132)	113,380

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Common Stocks (0.2%)
		Casino Gaming (0.0%)
	2,000	Fitzgeralds Gaming Corp. (d)(i)(j)	$	0
		Communications Equipment (0.1%)
	12,688	Birch Telecom, Inc. (d)(j)(k)(l)		127
	6,198	Orbcomm, Inc. (j)		16,735
				16,862
		Food Products (0.0%)
	2,375	SFAC New Holdings, Inc. (d)(j)(k)(m)		0
	436	SSFB Holdings, Inc. (d)(j)(k)		0
				0
		Restaurants (0.1%)
	3,374	American Restaurant Group, Inc. (Class A) (d)(j)(k)		26,992
		Textile - Apparel (0.0%)
	298,461	U.S. Leather, Inc. (d)(j)(k)		0
		Wireless Telecommunication Services (0.0%)
	521	USA Mobility, Inc. (a)(k)(n)		5,736
		Total Common Stocks(Cost $41,765,946)		49,590

NUMBER OF WARRANTS			EXPIRATION DATE
		Warrants (0.0%)
		Casino Gaming
	83,500	Aladdin Gaming Enterprises, Inc. (144A) (b)(d)(j) (Cost $835)	03/01/10	0

PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investments (30.3%)
		Securities Held as Collateral on Loaned Securities (26.0%)
		Repurchase Agreements (5.5%)
$	153	Bank of America Securities LLC (0.01% dated 12/31/09, due 01/04/10; proceeds $153,398; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Government National Mortgage Association 5.00% due 11/20/39; valued at $156,466)	153,398

See Notes to Financial Statements
63

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PRINCIPAL AMOUNT IN THOUSANDS			VALUE
$	1,168	Deutsche Bank (0.01% dated 12/31/09, due 01/04/10; proceeds $1,167,830; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal National Mortgage Association 5.50% - 7.00% due 11/01/30 - 05/01/39; valued at $1,191,185)	$	1,167,829
	515	ING (0.01% dated 12/31/09, due 01/04/10; proceeds $515,219; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Association 0.60% - 2.23% due 09/15/14 - 08/15/30; valued at $525,525)		515,218
		Total Repurchase Agreements (Cost $1,836,445)		1,836,445
NUMBER OF SHARES (000)
		Investment Company (20.5%)
	6,870	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $6,870,131)		6,870,131
		Total Securities Held as Collateral on Loaned Securities (Cost $8,706,576)		8,706,576
		Investment Company (4.3%)
	1,440	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,439,614)		1,439,614
		Total Short-Term Investments(Cost $10,146,190)		10,146,190

Total Investments (Cost $92,459,789) (o)	125.3	%		42,020,722
Liabilities in Excess of Other Assets	(25.3	)		(8,474,118	)
Net Assets	100.0	%	$	33,546,604

  (a)  All or a portion of this security was on loan at December 31, 2009.

  (b)  Resale is restricted to qualified institutional investors.

  (c)  Non-income producing security; bond in default.

  (d)  Securities with a total market value equal to $27,119 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available.

  (e)  Issuer in bankruptcy.

  (f)  Floating rate security. Rate shown is the rate in effect at December 31, 2009.

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

  (g)  Security issued with perpetual maturity.

  (h)  Payment-in-kind security.

  (i)  Resale is restricted, acquired (12/22/98) at a cost basis of $9,020.

  (j)  Non-income producing security.

  (k)  Acquired through exchange offer.

  (l)  Resale is restricted, acquired (06/18/98 and 08/25/98) at a cost basis of $6,473,685.

  (m)  Resale is restricted, acquired (06/10/99) at a cost basis of $24.

  (n)  Illiquid security.

  (o)  The aggregate cost for federal income tax purposes is $92,604,225. The aggregate gross unrealized appreciation is $3,080,556 and the aggregate gross unrealized depreciation is $53,664,059 resulting in net unrealized depreciation of $50,583,503.

LONG-TERM CREDIT ANALYSIS
A	3.5	%
BBB	0.6
BB	28.8
B	41.4
CCC	22.8
NR	2.9
	100.0	%

See Notes to Financial Statements
65

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Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (99.2%) Australia (a)(5.8%)
		Electric Utilities
	156,940	Spark Infrastructure Group (144A) (b)	$	194,039
		Transportation Infrastructure
	355,763	Australian Infrastructure Fund (Stapled Securities) (c)(d)(e)		564,598
	675,800	ConnectEast Group (Stapled Securities) (d)		261,915
	585,329	Macquarie Airports (Stapled Securities) (d)		1,580,475
	479,734	Transurban Group (Stapled Securities) (c)(d)(e)		2,376,482
				4,783,470
		Total Australia		4,977,509
		Austria (a)(0.8%)
		Construction & Engineering
	23,938	Strabag SE		705,714
		Belgium (a)(0.1%)
		Construction & Engineering
	2,200	Compagnie d'Entreprises CFE		111,266
		Oil, Gas & Consumable Fuels
	42	Euronav NV		914
		Total Belgium		112,180
		Bermuda (0.4%)
		Oil, Gas & Consumable Fuels
	10,500	Frontline Ltd. (a)(e)(f)		292,175
	100	Ship Finance International Ltd. (e)		1,363
		Total Bermuda		293,538
		Brazil (0.4%)
		Electric Utilities
	125	Cia Energetica de Minas Gerais (ADR)		2,257

NUMBER OF SHARES			VALUE
		Transportation Infrastructure
	19,100	Obrascon Huarte Lain Brasil SA (a)	$	367,369
		Total Brazil		369,626
		Canada (7.5%)
		Diversified Telecommunication Services
	8,500	BCE, Inc.		235,693
		Multi-Utilities
	5,100	Atco Ltd.		225,144
	6,100	Canadian Utilities Ltd.		255,175
	17,700	Just Energy Income Fund (Units) (c)		244,045
				724,364
		Oil, Gas & Consumable Fuels
	73,300	Enbridge, Inc. (e)		3,408,308
	61,600	TransCanada Corp. (e)		2,131,572
				5,539,880
		Total Canada		6,499,937
		Chile (0.9%)
		Electric Utilities
	14,800	Enersis SA (ADR)		338,328
		Independent Power Producers & Energy Traders
	266,379	Empresa Nacional de Electricidad SA (a)		445,160
		Total Chile		783,488
		China (a)(4.3%)
		Independent Power Producers & Energy Traders
	2,000	Datang International Power Generation Co., Ltd. (H Shares) (g)		854
		Machinery
	560,100	China National Materials Co., Ltd. (H Shares) (g)		413,424

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Transportation Infrastructure
	314,000	Beijing Capital International Airport Co., Ltd. (g)(h)	$	206,406
	464,000	Jiangsu Expressway Co., Ltd. (g)		411,012
	2,952,000	Zhejiang Expressway Co., Ltd. (H Shares) (g)		2,713,379
				3,330,797
		Total China		3,745,075
		Czech Republic (a)(0.4%)
		Electric Utilities
	6,953	CEZ		326,169
		France (a)(7.7%)
		Construction & Engineering
	4,537	Bouygues SA		236,611
		Electric Utilities
	16,362	EDF SA		973,626
		Multi-Utilities
	85,655	GDF Suez (e)		3,716,031
		Transportation Infrastructure
	19,700	Aeroports de Paris (ADP)		1,584,607
	2,073	Societe Des Autoroutes Paris-Rhin-Rhone (h)		158,791
				1,743,398
		Total France		6,669,666
		Germany (a)(7.8%)
		Electric Utilities
	66,607	E.ON AG		2,780,683
		Multi-Utilities
	33,284	RWE AG		3,234,453
		Transportation Infrastructure
	14,620	Fraport AG Frankfurt Airport Services Worldwide (e)		760,445
		Total Germany		6,775,581
		Greece (0.0%)
		Oil, Gas & Consumable Fuels
	100	Tsakos Energy Navigation Ltd. (e)		1,466

NUMBER OF SHARES			VALUE
		Italy (a)(8.3%)
		Transportation Infrastructure
	99,800	Ansaldo STS SpA	$	1,893,677
	184,597	Atlantia SpA (e)		4,798,434
	578,600	Gemina SpA (h)		469,098
		Total Italy		7,161,209
		Japan (a)(7.0%)
		Diversified Telecommunication Services
	12,899	Nippon Telegraph & Telephone Corp.		507,382
		Gas Utilities
	98,000	Osaka Gas Co., Ltd.		330,176
	180,000	Toho Gas Co., Ltd.		954,631
				1,284,807
		Metals & Mining
	671,000	Kobe Steel Ltd. (h)		1,215,315
		Transportation Infrastructure
	268,000	Kamigumi Co., Ltd.		1,947,381
		Wireless Telecommunication Services
	122	KDDI Corp.		643,353
	298	NTT DoCoMo, Inc.		415,120
				1,058,473
		Total Japan		6,013,358
		Malaysia (a)(0.9%)
		Electric Utilities
	92,500	Tenaga Nasional Berhad		226,425
		Transportation Infrastructure
	604,900	PLUS Expressways Berhad		575,780
		Total Malaysia		802,205
		Mexico (0.3%)
		Transportation Infrastructure
	88,000	Grupo Aeroportuario del Pacifico SAB de CV (Class B)		274,521

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Netherlands (a)(4.0%)
		Transportation Infrastructure
	33,816	Koninklijke Vopak NV (h)	$	2,671,654
	9,300	Smit Internationale NV		800,589
		Total Netherlands		3,472,243
		Portugal (a)(0.9%)
		Electric Utilities
	83,939	EDP - Energias de Portugal SA		371,513
		Transportation Infrastructure
	41,906	Brisa Auto-Estradas de Portugal SA		428,193
		Total Portugal		799,706
		Singapore (a)(0.9%)
		Transportation Infrastructure
	405,000	Singapore Airport Terminal Services Ltd.		786,166
		South Africa (a)(1.6%)
		Diversified Telecommunication Services
	177,606	Telkom South Africa Ltd.		895,432
		Wireless Telecommunication Services
	31,116	MTN Group Ltd.		495,036
		Total South Africa		1,390,468
		Spain (a)(7.9%)
		Electric Utilities
	12,174	Acciona SA		1,581,175
	35,024	Iberdrola SA (e)		333,659
				1,914,834
		Transportation Infrastructure
	163,809	Abertis Infraestructuras SA (e)		3,696,377
	100,864	Cintra Concesiones de Infraestructuras de Transporte SA		1,177,928
				4,874,305
		Total Spain		6,789,139

NUMBER OF SHARES			VALUE
		Turkey (a)(1.7%)
		Gas Utilities
	389,999	Aygaz	$	1,465,993
		United Kingdom (a)(7.3%)
		Diversified Telecommunication Services
	548,086	BT Group PLC		1,186,724
		Independent Power Producers & Energy Traders
	110,425	Drax Group PLC		739,201
		Multi-Utilities
	614,429	Centrica PLC		2,774,961
	88,278	National Grid PLC		964,972
				3,739,933
		Transportation Infrastructure
	236,913	BBA Aviation PLC		624,047
		Total United Kingdom		6,289,905
		United States (22.3%)
		Communications Equipment
	22,100	Comverse Technology, Inc. (h)		208,845
		Construction & Engineering
	18,400	EMCOR Group, Inc. (e)(h)		494,960
	33,300	KBR, Inc.		632,700
				1,127,660
		Electric Utilities
	8,400	Entergy Corp.		687,456
	4,900	FirstEnergy Corp.		227,605
	7,700	FPL Group, Inc.		406,714
				1,321,775
		Gas Utilities
	8,800	Atmos Energy Corp.		258,720
	27,300	Nicor, Inc.		1,149,330
	3,200	Oneok, Inc.		142,624
	13,900	Southwest Gas Corp.		396,567
	45,700	UGI Corp.		1,105,483
				3,052,724

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Independent Power Producers & Energy Traders
	25,200	Constellation Energy Group, Inc.	$	886,284
		Multi-Utilities
	18,700	DTE Energy Co.		815,133
	41,300	Public Service Enterprise Group, Inc.		1,373,225
				2,188,358
		Oil, Gas & Consumable Fuels
	171,100	El Paso Corp.		1,681,913
	100	General Maritime Corp.		699
	106,500	Southern Union Co.		2,417,550
	116,316	Spectra Energy Corp.		2,385,641
	192,200	Williams Cos., Inc. (The)		4,051,576
				10,537,379
		Total United States		19,323,025
		Total Common Stocks (Cost $74,817,324)		85,827,887
		Preferred Stock (0.5%) Brazil (a)
		Electric Utilities
	21,000	Eletropaulo Metropolitana Eletricidade de Sao Paulo SA (Cost $287,916)		409,654

PRINCIPAL AMOUNT IN THOUSANDS			VALUE
		Short-Term Investments (8.4%) Securities Held as Collateral on Loaned Securities
		Repurchase Agreements (1.7%)
$	124	Bank of America Securities LLC (0.01% dated 12/31/09, due 01/04/10; proceeds $123,979; fully collateralized by U.S. Government Agency security at the date of this Portfolio of Investments as follows: Government National Mortgage Association 5.00% due 11/20/39; valued at $126,458)	$	123,978
	944	Deutsche Bank (0.01% dated 12/31/09, due 01/04/10; proceeds $943,858; fully collateralized by U.S. Government Agency security at the date of this Portfolio of Investments as follows: Federal National Mortgage Association 5.50% - 7.00% due 11/01/30 - 05/01/39; valued at $962,734)		943,857
	416	ING (0.01% dated 12/31/09, due 01/04/10; proceeds $416,408; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Association 0.60% - 2.23% due 09/15/14 - 08/15/30; valued at $424,738)		416,408
		Total Repurchase Agreements (Cost $1,484,243)		1,484,243

See Notes to Financial Statements
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NUMBER OF SHARES (000)					VALUE
		Investment Company (6.4%)
	5,553	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $5,552,545)			$	5,552,545
		Total Securities Held as Collateral on Loaned Securities(Cost $7,036,788)				7,036,788
		Investment Company (0.3%)
	279	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $278,920)				278,920
		Total Short-Term Investments(Cost $7,315,708)				7,315,708
Total Investments(Cost $82,420,948) (i)(j)			108.1	%		93,553,249
Total Written Options Outstanding(premium received $29,784)			(0.1	)		(53,326	)
Liabilities in Excess of Other Assets			(8.0	)		(6,933,563	)
Net Assets			100.0	%	$	86,566,360

  ADR  American Depositary Receipt.

  (a)  Securities with a total market value equal to $59,796,644 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.

  (b)  Resale is restricted to qualified institutional investors.

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

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

  (e)  All or a portion of this security was on loan at December 31, 2009.

  (f)  Security trades on the Norwegian exchange.

  (g)  Security trades on the Hong Kong exchange.

  (h)  Non-income producing security.

  (i)  Securities have been designated as collateral in connection with options and open forward foreign currency contracts.

  (j)  The aggregate cost for federal income tax purposes is $83,506,318. The aggregate gross unrealized appreciation is $10,713,184 and the aggregate gross unrealized depreciation is $666,253 resulting in net unrealized appreciation of $10,046,931.

See Notes to Financial Statements
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FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 2009:

CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
$	1,988,682	AUD	2,182,894	01/14/10	$	(30,695	)
$	2,413,822	CAD	2,558,652	01/14/10		32,663
$	649,659	HKD	5,035,373	01/14/10		(151	)
$	717,082	HKD	5,555,949	01/14/10		(426	)
$	163,193	NOK	948,313	01/14/10		495
$	359,022	NZD	497,881	01/14/10		2,099
$	459,409	SGD	641,013	01/14/10		(3,193	)
BRL	1,407,722	$	804,412	01/14/10		(1,663	)
EUR	439,521	$	648,285	01/14/10		18,216
EUR	391,070	$	569,565	01/14/10		8,953
GBP	891,848	$	1,450,324	01/14/10		9,924
JPY	109,023,900	$	1,215,699	01/14/10		45,012
MXN	2,939,373	$	230,340	01/14/10		5,987
MYR	4,069,949	$	1,193,533	01/14/10		5,628
TRY	2,407,531	$	1,588,081	01/14/10		(21,065	)
ZAR	12,332,441	$	1,649,825	01/14/10		(16,690	)
Net Unrealized Appreciation					$	55,094

Currency Abbreviations:

AUD  Australian Dollar.

BRL  Brazilian Real.

CAD  Canadian Dollar.

EUR  Euro.

GBP  British Pound.

HKD  Hong Kong Dollar.

JPY  Japanese Yen.

MXN  Mexican New Peso.

MYR  Malaysian Ringgit.

NOK  Norwegian Krone.

NZD  New Zealand Dollar.

SGD  Singapore Dollar.

TRY  Turkish Lira.

ZAR  South African Rand.

See Notes to Financial Statements
71

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OPTIONS WRITTEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		DESCRIPTION	STRIKE PRICE		EXPIRATION DATE	PREMIUM		VALUE
	151	E.ON AG	$	29.00	January 2010	$	6,874	$	14,298
	116	EDF SA		42.00	January 2010		7,029		7,489
	118	Fraport AG Frankfurt Airport Services Worldwide		38.00	January 2010		5,372		3,217
	210	RWE AG		68.00	January 2010		10,509		28,322
Total						$29,784		$53,326

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Transportation Infrastructure	$	31,129,324		36.0	%
Oil, Gas & Consumable Fuels		16,373,177		18.9
Multi-Utilities		13,603,139		15.7
Electric Utilities		8,859,303		10.2
Gas Utilities		5,803,524		6.7
Diversified Telecommunication Services		2,825,231		3.3
Construction & Engineering		2,181,251		2.5
Independent Power Producers & Energy Traders		2,071,499		2.4

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Wireless Telecommunication Services	$	1,553,509			1.8	%
Metals & Mining		1,215,315			1.4
Machinery		413,424			0.5
Investment Company		278,920			0.3
Communications Equipment		208,845			0.3
	$	86,516,461	^		100.0	%

^  Does not reflect the value of securities held as collateral on loaned securities. Also does not include open forward foreign currency contracts with net unrealized appreciation of $55,094 and options written with a value of $53,326.

See Notes to Financial Statements
72

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NUMBER OF SHARES			VALUE
		Common Stocks (72.1%)
		Aerospace & Defense (0.4%)
	1,900	General Dynamics Corp.	$	129,523
		Air Freight & Logistics (0.4%)
	1,500	FedEx Corp.		125,175
		Automobiles (0.5%)
	3,100	Ford Motor Co. (a)		31,000
	5,125	Harley-Davidson, Inc.		129,150
				160,150
		Beverages (0.7%)
	3,890	Coca-Cola Co. (The)		221,730
		Capital Markets (1.5%)
	19,133	Charles Schwab Corp. (The)		360,083
	3,200	State Street Corp.		139,328
				499,411
		Chemicals (0.8%)
	9,900	Dow Chemical Co. (The)		273,537
		Commercial Banks (3.5%)
	6,400	BB&T Corp.		162,368
	13,300	Fifth Third Bancorp		129,675
	5,093	First Horizon National Corp. (a)		68,248
	8,904	PNC Financial Services Group, Inc.		470,042
	4,800	US Bancorp		108,048
	8,600	Wells Fargo & Co.		232,114
				1,170,495
		Commercial Services & Supplies (0.7%)
	3,400	Avery Dennison Corp.		124,066
	4,700	Cintas Corp.		122,435
				246,501
		Communications Equipment (1.1%)
	15,600	Cisco Systems, Inc. (a)		373,464
		Computers & Peripherals (1.9%)
	9,000	Dell, Inc. (a)		129,240
	9,621	Hewlett-Packard Co.		495,578
				624,818
		Diversified Financial Services (5.1%)
	29,500	Bank of America Corp.		444,270
	46,500	Citigroup, Inc. (See Note 6)		153,915
	26,511	JPMorgan Chase & Co.		1,104,713
				1,702,898

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 (continued)

NUMBER OF SHARES			VALUE
		Diversified Telecommunication Services (0.8%)
	7,839	Verizon Communications, Inc.	$	259,706
		Electric Utilities (3.2%)
	14,357	American Electric Power Co., Inc.		499,480
	3,200	Edison International		111,296
	2,363	Entergy Corp.		193,388
	5,170	FirstEnergy Corp.		240,147
				1,044,311
		Electronic Equipment, Instruments & Components (0.9%)
	9,600	Agilent Technologies, Inc. (a)		298,272
		Energy Equipment & Services (1.5%)
	4,740	Schlumberger Ltd. (Netherlands Antilles)		308,527
	7,300	Smith International, Inc.		198,341
				506,868
		Food & Staples Retailing (3.0%)
	9,500	Sysco Corp.		265,430
	9,200	Wal-Mart Stores, Inc.		491,740
	6,800	Walgreen Co.		249,696
				1,006,866
		Food Products (2.1%)
	18,400	Kraft Foods, Inc. (Class A)		500,112
	6,160	Unilever N.V. (NY Registered Shares) (Netherlands)		199,153
				699,265
		Health Care Equipment & Supplies (1.5%)
	18,640	Boston Scientific Corp. (a)		167,760
	6,950	Covidien PLC (Ireland)		332,836
				500,596
		Health Care Providers & Services (1.1%)
	4,450	Cardinal Health, Inc.		143,468
	7,000	UnitedHealth Group, Inc.		213,360
				356,828
		Hotels, Restaurants & Leisure (0.2%)
	2,750	Starbucks Corp. (a)		63,415
		Household Durables (0.9%)
	10,530	Sony Corp. (ADR) (Japan)		305,370
		Industrial Conglomerates (3.7%)
	42,100	General Electric Co.		636,973
	2,870	Siemens AG (ADR) (Germany)		263,179
	9,540	Tyco International Ltd. (Luxembourg)		340,387
				1,240,539

See Notes to Financial Statements
74

Morgan Stanley Variable Investment Series - Income Builder

Portfolio of Investments n December 31, 2009 (continued)

NUMBER OF SHARES			VALUE
		Insurance (4.5%)
	6,424	Chubb Corp.	$	315,932
	32,327	Marsh & McLennan Cos., Inc.		713,780
	1,500	Transatlantic Holdings, Inc.		78,165
	7,445	Travelers Companies, Inc. (The)		371,208
				1,479,085
		Internet Software & Services (2.1%)
	22,230	eBay, Inc. (a)		523,294
	11,000	Yahoo!, Inc. (a)		184,580
				707,874
		Machinery (1.6%)
	7,900	Dover Corp.		328,719
	5,605	Ingersoll-Rand PLC (Ireland)		200,323
				529,042
		Media (4.8%)
	20,640	Comcast Corp. (Class A)		347,991
	5,177	Time Warner Cable, Inc.		214,276
	14,836	Time Warner, Inc.		432,321
	20,143	Viacom, Inc. (Class B) (a)		598,851
				1,593,439
		Metals & Mining (1.1%)
	2,300	Freeport-McMoRan Copper & Gold, Inc. (a)		184,667
	3,550	Newmont Mining Corp.		167,951
				352,618
		Oil, Gas & Consumable Fuels (8.4%)
	8,000	Anadarko Petroleum Corp.		499,360
	4,680	BP PLC (ADR) (United Kingdom)		271,300
	4,008	ConocoPhillips		204,689
	3,460	Devon Energy Corp.		254,310
	4,660	Exxon Mobil Corp.		317,765
	3,097	Hess Corp.		187,368
	7,060	Occidental Petroleum Corp.		574,331
	7,630	Royal Dutch Shell PLC (ADR) (United Kingdom)		458,639
				2,767,762
		Personal Products (0.8%)
	5,140	Estee Lauder Cos., Inc. (The) (Class A)		248,570
		Pharmaceuticals (8.0%)
	3,660	Abbott Laboratories		197,603
	4,830	Bayer AG (ADR) (Germany)		385,434
	16,530	Bristol-Myers Squibb Co.		417,383

See Notes to Financial Statements
75

Morgan Stanley Variable Investment Series - Income Builder

Portfolio of Investments n December 31, 2009 (continued)

NUMBER OF SHARES			VALUE
	27,171	Merck & Co., Inc.	$	992,828
	20,100	Pfizer, Inc.		365,619
	6,800	Roche Holding AG (ADR) (Switzerland)		287,912
				2,646,779
		Professional Services (0.9%)
	2,940	Manpower, Inc.		160,465
	4,500	Robert Half International, Inc.		120,285
				280,750
		Semiconductors & Semiconductor Equipment (1.4%)
	12,989	Intel Corp.		264,975
	5,237	Lam Research Corp. (a)		205,343
				470,318
		Software (0.2%)
	3,296	Symantec Corp. (a)		58,965
		Specialty Retail (1.9%)
	8,800	Gap, Inc. (The)		184,360
	14,930	Home Depot, Inc.		431,925
				616,285
		Wireless Telecommunication Services (0.9%)
	13,200	Vodafone Group PLC (ADR) (United Kingdom)		304,788
		Total Common Stocks(Cost $22,362,446)		23,866,013

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE
		Convertible Bonds (13.6%)
		Brewery (4.0%)
$	1,200	Molson Coors Brewing Co.		2.50	%	07/30/13	1,332,000
		Electric - Integrated (1.6%)
	173	PG&E Corp.		9.50		06/30/10	530,461
		Electronic Component - Semiconductor (4.2%)
	1,450	Intel Corp. (144A) (b)		2.95		12/15/35	1,406,500
		Gold Mining (3.8%)
	1,000	Newmont Mining Corp.		1.25		07/15/14	1,252,500
		Total Convertible Bonds (Cost $4,147,897)					4,521,461

See Notes to Financial Statements
76

Morgan Stanley Variable Investment Series - Income Builder

Portfolio of Investments n December 31, 2009 (continued)

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (11.2%)
		Hotels & Motels (6.5%)
$	2,000	Starwood Hotels & Resorts Worldwide, Inc.		7.875	%	05/01/12	$	2,167,500
		Paper & Related Products (4.7%)
	1,500	Buckeye Technologies, Inc.		8.50		10/01/13		1,539,375
		Total Corporate Bonds (Cost $3,577,500)						3,706,875

NUMBER OF SHARES
		Convertible Preferred Stocks (1.3%)
		Diversified Financial Services (0.3%)
	6,000	Bank of America Corp. $10.00	90,120
		Real Estate Investment Trusts (REITs) (1.0%)
	9,000	Equity Residential (Series E) $1.75	345,420
		Total Convertible Preferred Stocks (Cost $315,040)	435,540
NUMBER OF SHARES (000)
		Short-Term Investment (1.4%)
		Investment Company
	455	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $455,415)	455,415

Total Investments(Cost $30,858,298) (c)	99.6	%		32,985,304
Other Assets in Excess of Liabilities	0.4			129,241
Net Assets	100.0	%	$	33,114,545

  ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  Resale is restricted to qualified institutional investors.

  (c)  The aggregate cost for federal income tax purposes is $31,360,854. The aggregate gross unrealized appreciation is $2,878,915 and the aggregate gross unrealized depreciation is $1,254,465 resulting in net unrealized appreciation of $1,624,450.

See Notes to Financial Statements
77

Morgan Stanley Variable Investment Series - Income Builder

Summary of Investments n December 31, 2009

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil, Gas & Consumable Fuels	$	2,767,762		8.4	%
Pharmaceuticals		2,646,779		8.0
Hotels & Motels		2,167,500		6.6
Diversified Financial Services		1,793,018		5.4
Media		1,593,439		4.8
Paper & Related Products		1,539,375		4.7
Insurance		1,479,085		4.5
Electronic Component - Semiconductor		1,406,500		4.3
Brewery		1,332,000		4.0
Gold Mining		1,252,500		3.8
Industrial Conglomerates		1,240,539		3.8
Commercial Banks		1,170,495		3.5
Electric Utilities		1,044,311		3.2
Food & Staples Retailing		1,006,866		3.1
Internet Software & Services		707,874		2.1
Food Products		699,265		2.1
Computers & Peripherals		624,818		1.9
Specialty Retail		616,285		1.9
Electric - Integrated		530,461		1.6
Machinery		529,042		1.6
Energy Equipment & Services		506,868		1.5
Health Care Equipment & Supplies		500,596		1.5
Capital Markets		499,411		1.5
Semiconductors & Semiconductor Equipment		470,318		1.4

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Investment Company	$	455,415		1.4	%
Communications Equipment		373,464		1.1
Health Care Providers & Services		356,828		1.1
Metals & Mining		352,618		1.1
Real Estate Investment Trusts (REITs)		345,420		1.0
Household Durables		305,370		0.9
Wireless Telecommunication Services		304,788		0.9
Electronic Equipment, Instruments & Components		298,272		0.9
Professional Services		280,750		0.9
Chemicals		273,537		0.8
Diversified Telecommunication Services		259,706		0.8
Personal Products		248,570		0.8
Commercial Services & Supplies		246,501		0.7
Beverages		221,730		0.7
Automobiles		160,150		0.5
Aerospace & Defense		129,523		0.4
Air Freight & Logistics		125,175		0.4
Hotels, Restaurants & Leisure		63,415		0.2
Software		58,965		0.2
	$	32,985,304		100.0	%

See Notes to Financial Statements
78

Morgan Stanley Variable Investment Series - Dividend Growth

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (98.5%)
		Aerospace & Defense (4.9%)
	40,200	Boeing Co. (The)	$	2,176,026
	25,610	L-3 Communications Holdings, Inc.		2,226,790
	60,100	Raytheon Co.		3,096,352
	74,679	United Technologies Corp.		5,183,469
				12,682,637
		Biotechnology (1.2%)
	55,000	Amgen, Inc. (a)		3,111,350
		Capital Markets (2.0%)
	30,568	Goldman Sachs Group, Inc. (The)		5,161,101
		Chemicals (1.4%)
	48,580	Lubrizol Corp. (The)		3,543,911
		Commercial Banks (2.1%)
	198,960	Wells Fargo & Co.		5,369,930
		Commercial Services & Supplies (1.0%)
	113,166	Pitney Bowes, Inc.		2,575,658
		Computers & Peripherals (7.1%)
	30,580	Apple, Inc. (a)		6,448,099
	96,220	Hewlett-Packard Co.		4,956,292
	51,430	International Business Machines Corp.		6,732,187
				18,136,578
		Construction & Engineering (1.4%)
	78,890	Fluor Corp.		3,553,206
		Diversified Financial Services (2.8%)
	174,442	JPMorgan Chase & Co.		7,268,998
		Diversified Telecommunication Services (1.8%)
	167,600	AT&T, Inc.		4,697,828
		Electronic Equipment, Instruments & Components (1.4%)
	183,680	Corning, Inc.		3,546,861

NUMBER OF SHARES			VALUE
		Energy Equipment & Services (3.0%)
	86,130	Halliburton Co.	$	2,591,652
	61,070	Transocean Ltd. (Switzerland) (a)		5,056,596
				7,648,248
		Food & Staples Retailing (1.7%)
	138,427	CVS Caremark Corp.		4,458,734
		Health Care Providers & Services (3.4%)
	146,460	UnitedHealth Group, Inc.		4,464,101
	73,980	WellPoint, Inc. (a)		4,312,294
				8,776,395
		Hotels, Restaurants & Leisure (3.2%)
	77,750	McDonald's Corp.		4,854,710
	132,240	Royal Caribbean Cruises Ltd. (Liberia) (a)		3,343,027
				8,197,737
		Household Durables (1.1%)
	33,900	Whirlpool Corp.		2,734,374
		Household Products (3.1%)
	74,730	Kimberly-Clark Corp.		4,761,048
	50,714	Procter & Gamble Co. (The)		3,074,790
				7,835,838
		Independent Power Producers & Energy Traders (1.2%)
	133,050	NRG Energy, Inc. (a)		3,141,311
		Industrial Conglomerates (2.4%)
	400,527	General Electric Co.		6,059,974
		Information Technology Services (1.3%)
	55,920	Computer Sciences Corp. (a)		3,217,078
		Insurance (5.8%)
	50,000	ACE Ltd. (Switzerland) (a)		2,520,000
	94,990	Aflac, Inc.		4,393,287
	114,925	MetLife, Inc. (See Note 6)		4,062,599
	76,870	Travelers Cos., Inc. (The)		3,832,738
				14,808,624

See Notes to Financial Statements
79

Morgan Stanley Variable Investment Series - Dividend Growth

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Internet Software & Services (2.1%)
	8,891	Google, Inc. (Class A) (a)	$	5,512,242
		Leisure Equipment & Products (1.6%)
	199,950	Mattel, Inc.		3,995,001
		Metals & Mining (1.8%)
	58,970	Freeport-McMoRan Copper & Gold, Inc. (a)		4,734,701
		Multi-Utilities (3.0%)
	115,160	Public Service Enterprise Group, Inc.		3,829,070
	70,000	Sempra Energy		3,918,600
				7,747,670
		Multiline Retail (1.5%)
	81,930	Target Corp.		3,962,954
		Oil, Gas & Consumable Fuels (9.0%)
	45,500	Apache Corp.		4,694,235
	32,990	BP PLC (ADR) (United Kingdom)		1,912,430
	65,150	Chevron Corp.		5,015,899
	52,530	ConocoPhillips		2,682,707
	80,243	Exxon Mobil Corp.		5,471,770
	102,620	Marathon Oil Corp.		3,203,796
	1	XTO Energy, Inc.		47
				22,980,884
		Paper & Forest Products (1.6%)
	150,190	International Paper Co.		4,022,088
		Pharmaceuticals (8.2%)
	116,330	Bristol-Myers Squibb Co.		2,937,333
	20,075	Johnson & Johnson		1,293,031
	161,720	Merck & Co., Inc.		5,909,249
	404,697	Pfizer, Inc.		7,361,438
	92,050	Watson Pharmaceuticals, Inc. (a)		3,646,100
				21,147,151
		Road & Rail (1.9%)
	100,760	CSX Corp.		4,885,852

NUMBER OF SHARES					VALUE
		Semiconductors & Semiconductor Equipment (2.2%)
	271,090	Intel Corp.			$	5,530,236
		Software (3.5%)
	297,247	Microsoft Corp.				9,063,061
		Specialty Retail (4.0%)
	153,970	Gap, Inc. (The)				3,225,671
	106,260	Guess?, Inc.				4,494,798
	42,400	Sherwin-Williams Co. (The)				2,613,960
						10,334,429
		Textiles, Apparel & Luxury Goods (1.1%)
	39,449	VF Corp.				2,889,245
		Tobacco (3.7%)
	177,968	Altria Group, Inc.				3,493,512
	126,528	Philip Morris International, Inc.				6,097,384
						9,590,896
		Total Common Stocks(Cost $245,051,136)				252,922,781
NUMBER OF SHARES (000)
		Short-Term Investment (1.5%)
		Investment Company
	3,778	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $3,778,181)				3,778,181
Total Investments(Cost $248,829,317) (b)(c)			100.0	%		256,700,962
Total Written Options Outstanding (premium received $11,657)			0.0			(3,422	)
Other Assets in Excess of Liabilities			0.0			43,901
Net Assets			100.0	%	$	256,741,441

See Notes to Financial Statements
80

Morgan Stanley Variable Investment Series - Dividend Growth

Portfolio of Investments n December 31, 2009 continued

  ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  Securities have been designated as collateral in connection with options.

  (c)  The aggregate cost for federal income tax purposes is $249,146,390. The aggregate gross unrealized appreciation is $30,125,813 and the aggregate gross unrealized depreciation is $22,571,241 resulting in net unrealized appreciation of $7,554,572.

OPTIONS WRITTEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		DESCRIPTION	STRIKE PRICE		EXPIRATION DATE	PREMIUM		VALUE
	58	MetLife, Inc.	$	36.00	January 2010	$	11,657	$	3,422

See Notes to Financial Statements
81

Morgan Stanley Variable Investment Series - Dividend Growth

Summary of Investments n December 31, 2009

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil, Gas & Consumable Fuels	$	22,980,884		9.0	%
Pharmaceuticals		21,147,151		8.2
Computers & Peripherals		18,136,578		7.1
Insurance		14,808,624		5.8
Aerospace & Defense		12,682,637		4.9
Specialty Retail		10,334,429		4.0
Tobacco		9,590,896		3.7
Software		9,063,061		3.5
Health Care Providers & Services		8,776,395		3.4
Hotels, Restaurants & Leisure		8,197,737		3.2
Household Products		7,835,838		3.1
Multi-Utilities		7,747,670		3.0
Energy Equipment & Services		7,648,248		3.0
Diversified Financial Services		7,268,998		2.8
Industrial Conglomerates		6,059,974		2.4
Semiconductors & Semiconductor Equipment		5,530,236		2.2
Internet Software & Services		5,512,242		2.1
Commercial Banks		5,369,930		2.1
Capital Markets		5,161,101		2.0
Road & Rail		4,885,852		1.9
Metals & Mining		4,734,701		1.8

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Diversified Telecommunication Services	$	4,697,828			1.8	%
Food & Staples Retailing		4,458,734			1.7
Paper & Forest Products		4,022,088			1.6
Leisure Equipment & Products		3,995,001			1.6
Multiline Retail		3,962,954			1.5
Investment Company		3,778,181			1.5
Construction & Engineering		3,553,206			1.4
Electronic Equipment, Instruments & Components		3,546,861			1.4
Chemicals		3,543,911			1.4
Information Technology Services		3,217,078			1.3
Independent Power Producers & Energy Traders		3,141,311			1.2
Biotechnology		3,111,350			1.2
Textiles, Apparel & Luxury Goods		2,889,245			1.1
Household Durables		2,734,374			1.1
Commercial Services & Supplies		2,575,658			1.0
	$	256,700,962	^		100.0	%

^  Does not include options written with a value of $3,422.

See Notes to Financial Statements
82

Morgan Stanley Variable Investment Series - Global Dividend Growth

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (97.4%) Austria (a)(0.9%)
		Diversified Telecommunication Services
	60,538	Telekom Austria AG	$	864,334
		Bermuda (1.5%)
		Insurance
	51,821	Willis Group Holdings Ltd.		1,367,038
		Finland (a)(1.6%)
		Machinery
	16,925	Konecranes Oyj		460,326
		Metals & Mining
	41,386	Rautaruukki Oyj		950,243
		Total Finland		1,410,569
		France (a)(9.0%)
		Commercial Banks
	10,714	BNP Paribas		845,479
		Diversified Telecommunication Services
	50,823	France Telecom SA		1,268,917
		Information Technology Services
	19,616	Cap Gemini SA		888,515
		Insurance
	5,736	Euler Hermes SA		426,145
		Machinery
	8,244	Vallourec SA		1,499,464
		Multi-Utilities
	27,174	GDF Suez (b)		1,178,908
		Oil, Gas & Consumable Fuels
	19,882	Total SA (b)		1,274,068
		Real Estate Investment Trusts (REITs)
	8,063	ICADE		766,816
		Total France		8,148,312
		Germany (a)(3.2%)
		Air Freight & Logistics
	50,656	Deutsche Post AG (Registered Shares)		974,682

NUMBER OF SHARES			VALUE
		Electric Utilities
	31,804	E.ON AG	$	1,327,741
		Industrial Conglomerates
	6,744	Siemens AG (Registered Shares) (c)		618,578
		Total Germany		2,921,001
		Greece (a)(1.0%)
		Commercial Banks
	33,980	National Bank of Greece SA		866,457
		Ireland (a)(2.8%)
		Construction Materials
	92,951	CRH PLC		2,517,823
		Italy (a)(2.5%)
		Oil, Gas & Consumable Fuels
	89,084	Eni SpA		2,267,994
		Japan (a)(10.7%)
		Commercial Banks
	53,300	Sumitomo Mitsui Financial Group, Inc. (b)		1,519,562
	55,500	Tokyo Tomin Bank, Ltd. (The)		753,558
				2,273,120
		Electronic Equipment, Instruments & Components
	18,834	Hoya Corp. (b)		499,304
	21,053	TDK Corp. (b)		1,283,737
				1,783,041
		Machinery
	158,448	Amada Co., Ltd. (b)		983,345
	235,680	Daifuku Co., Ltd. (b)		1,490,049
	117,000	Mori Seiki Co., Ltd. (b)		1,044,885
				3,518,279
		Office Electronics
	27,200	Canon, Inc.		1,149,882
		Software
	4,085	Nintendo Co., Ltd.		968,415
		Total Japan		9,692,737

See Notes to Financial Statements
83

Morgan Stanley Variable Investment Series - Global Dividend Growth

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Netherlands (a)(6.0%)
		Chemicals
	9,522	Akzo Nobel N.V.	$	627,620
		Food Products
	34,226	Unilever N.V.		1,115,261
		Media
	152,876	Reed Elsevier N.V.		1,875,792
	83,743	Wolters Kluwer N.V.		1,835,491
				3,711,283
		Total Netherlands		5,454,164
		Singapore (a)(2.0%)
		Air Freight & Logistics
	1,266,000	Singapore Post Ltd.		908,063
		Road & Rail
	746,406	ComfortDelgro Corp., Ltd.		867,935
		Total Singapore		1,775,998
		Spain (a)(1.1%)
		Diversified Telecommunication Services
	36,400	Telefonica SA		1,014,523
		Switzerland (a)(4.1%)
		Food Products
	23,182	Nestle SA (Registered Shares)		1,126,246
		Hotels, Restaurants & Leisure
	1,742	Kuoni Reisen Holding AG (Registered Shares)		588,171
		Pharmaceuticals
	37,143	Novartis AG (Registered Shares)		2,023,634
		Total Switzerland		3,738,051
		Taiwan (a)(1.7%)
		Computers & Peripherals
	511,000	Acer, Inc.		1,526,588
		United Kingdom (a)(16.0%)
		Beverages
	52,295	Diageo PLC		911,989
		Commercial Banks
	58,598	HSBC Holdings PLC		668,738

NUMBER OF SHARES			VALUE
		Electric Utilities
	49,053	Scottish & Southern Energy PLC	$	916,664
		Insurance
	213,746	Prudential PLC		2,177,437
		Machinery
	52,846	IMI PLC		442,227
		Metals & Mining
	16,127	BHP Billiton PLC		515,139
		Oil, Gas & Consumable Fuels
	162,535	BP PLC		1,571,901
	56,244	Royal Dutch Shell PLC (A Shares)		1,698,152
				3,270,053
		Pharmaceuticals
	53,070	GlaxoSmithKline PLC		1,124,187
		Tobacco
	83,495	British American Tobacco PLC		2,708,619
		Wireless Telecommunication Services
	780,196	Vodafone Group PLC		1,806,695
		Total United Kingdom		14,541,748
		United States (33.3%)
		Capital Markets
	64,551	Bank of New York Mellon Corp. (The)		1,805,491
	4,758	Goldman Sachs Group, Inc. (The)		803,341
				2,608,832
		Chemicals
	44,445	EI Du Pont de Nemours & Co.		1,496,463
		Commercial Services & Supplies
	24,378	Avery Dennison Corp.		889,553
		Computers & Peripherals
	34,826	Diebold, Inc.		990,800
		Containers & Packaging
	29,820	Bemis Co., Inc.		884,163
	31,706	Sonoco Products Co.		927,400
				1,811,563

See Notes to Financial Statements
84

Morgan Stanley Variable Investment Series - Global Dividend Growth

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Diversified Financial Services
	40,562	JPMorgan Chase & Co.	$	1,690,218
	52,172	Moody's Corp. (b)		1,398,210
				3,088,428
		Diversified Telecommunication Services
	34,075	AT&T, Inc.		955,122
	58,787	Verizon Communications, Inc.		1,947,614
				2,902,736
		Electric Utilities
	21,939	Allete, Inc.		716,967
		Household Products
	10,563	Procter & Gamble Co. (The)		640,435
		Media
	27,495	McGraw-Hill Cos., Inc. (The)		921,357
		Multiline Retail
	44,819	JC Penney Co., Inc.		1,192,634
		Personal Products
	13,899	Mead Johnson Nutrition Co. (b)		607,386
		Pharmaceuticals
	100,089	Bristol-Myers Squibb Co.		2,527,247
	30,294	Eli Lilly & Co.		1,081,799
				3,609,046
		Real Estate Investment Trusts (REITs)
	44,222	Potlatch Corp. (b)		1,409,797
		Semiconductors & Semiconductor Equipment
	42,253	Intel Corp.		861,961
	42,990	Texas Instruments, Inc.		1,120,320
				1,982,281
		Tobacco
	71,989	Philip Morris International, Inc.		3,469,150
	36,286	Reynolds American, Inc. (b)		1,922,069
				5,391,219
		Total United States		30,259,497
		Total Common Stocks(Cost $74,221,573)		88,366,834

PRINCIPAL AMOUNT IN THOUSANDS			VALUE
		Short-Term Investments (13.8%) Securities Held as Collateral on Loaned Securities (11.9%)
		Repurchase Agreements (2.5%)
$	190	Bank of America Securities LLC (0.01% dated 12/31/09, due 01/04/10; proceeds $189,722; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Government National Mortgage Association 5.00% due 11/20/39; valued at $193,516)	$	189,722
	1,444	Deutsche Bank (0.01% dated 12/31/09, due 01/04/10; proceeds $1,444,368; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal National Mortgage Association 5.50% - 7.00% due 11/1/30 - 05/1/39; valued at $1,473,254)		1,444,367
	637	ING (0.01% dated 12/31/09, due 01/04/10; proceeds $637,221 fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Association 0.60% - 2.23% due 09/15/14 - 08/15/30; valued at $649,968)		637,220
		Total Repurchase Agreements (Cost $2,271,309)		2,271,309

See Notes to Financial Statements
85

Morgan Stanley Variable Investment Series - Global Dividend Growth

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES (000)					VALUE
		Investment Company (9.4%)
	8,497	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $8,496,954)			$	8,496,954
		Total Securities Held as Collateral on Loaned Securities (Cost $10,768,263)				10,768,263
		Investment Company (1.9%)
	1,768	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,767,767)				1,767,767
		Total Short-Term Investments(Cost $12,536,030)				12,536,030
Total Investments (Cost $86,757,603) (d)(e)			111.2	%		100,902,864
Liabilities in Excess of Other Assets			(11.2	)		(10,142,594	)
Net Assets			100.0	%	$	90,760,270

  (a)  Securities with a total market value equal to $56,740,299 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.

  (b)  All or a portion of this security was on loan at December 31, 2009.

  (c)  Non-income producing security.

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

  (e)  The aggregate cost for federal income tax purposes is $87,246,315. The aggregate gross unrealized appreciation is $15,403,423 and the aggregate gross unrealized depreciation is $1,746,874 resulting in net unrealized appreciation of $13,656,549.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 2009:

CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
$	7,816,148	EUR	5,443,000	01/06/10	$	(13,347	)
$	2,589,522	GBP	1,631,000	01/06/10		44,789
GBP	1,631,000	$	2,710,657	01/06/10		76,346
EUR	5,443,000	$	8,151,328	01/06/10		348,527
GBP	1,722,000	$	2,733,451	02/08/10		(47,274	)
EUR	5,088,000	$	7,305,961	02/08/10		12,404
Net Unrealized Appreciation					$	421,445

Currency Abbreviations:

EUR  Euro.

GBP  British Pound.

See Notes to Financial Statements
86

Morgan Stanley Variable Investment Series - Global Dividend Growth

Summary of Investments n December 31, 2009

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Tobacco	$	8,099,838		9.0	%
Oil, Gas & Consumable Fuels		6,812,115		7.5
Pharmaceuticals		6,756,867		7.5
Diversified Telecommunication Services		6,050,510		6.7
Machinery		5,920,296		6.6
Commercial Banks		4,653,794		5.2
Media		4,632,640		5.1
Insurance		3,970,620		4.4
Diversified Financial Services		3,088,428		3.4
Electric Utilities		2,961,372		3.3
Capital Markets		2,608,832		2.9
Construction Materials		2,517,823		2.8
Computers & Peripherals		2,517,388		2.8
Food Products		2,241,507		2.5
Real Estate Investment Trusts (REITs)		2,176,613		2.4
Chemicals		2,124,083		2.3
Semiconductors & Semiconductor Equipment		1,982,281		2.2
Air Freight & Logistics		1,882,745		2.1
Containers & Packaging		1,811,563		2.0
Wireless Telecommunication Services		1,806,695		2.0

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Electronic Equipment, Instruments & Components	$	1,783,041			2.0	%
Investment Company		1,767,767			2.0
Metals & Mining		1,465,382			1.6
Multiline Retail		1,192,634			1.3
Multi-Utilities		1,178,908			1.3
Office Electronics		1,149,882			1.3
Software		968,415			1.1
Beverages		911,989			1.0
Commercial Services & Supplies		889,553			1.0
Information Technology Services		888,515			1.0
Road & Rail		867,935			1.0
Household Products		640,435			0.7
Industrial Conglomerates		618,578			0.7
Personal Products		607,386			0.7
Hotels, Restaurants & Leisure		588,171			0.6
	$	90,134,601	^		100.0	%

^  Does not include open forward foreign currency contracts with net unrealized appreciation of $421,445. Also does not reflect the value of securities held as collateral on loaned securities.

See Notes to Financial Statements
87

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (95.4%) Belgium (a)(1.8%)
		Chemicals
	43,206	Umicore	$	1,438,754
		France (a)(9.9%)
		Commercial Banks
	26,996	BNP Paribas		2,130,349
	21,890	Societe Generale		1,514,621
				3,644,970
		Electrical Equipment
	14,807	Schneider Electric SA		1,715,416
		Hotels, Restaurants & Leisure
	17,540	ACCOR SA		952,839
		Multi-Utilities
	38,873	GDF Suez (b)		1,686,454
		Total France		7,999,679
		Germany (a)(14.3%)
		Automobiles
	32,349	Daimler AG		1,728,308
		Diversified Telecommunication Services
	88,208	Deutsche Telecom AG		1,302,742
		Industrial Conglomerates
	22,122	Siemens AG (Registered Shares)		2,029,092
		Insurance
	13,644	Allianz SE (Registered Shares)		1,698,305
	8,490	Muenchener Rueckversicherungs AG (Registered Shares)		1,323,479
				3,021,784
		Machinery
	15,979	MAN SE		1,244,493
		Pharmaceuticals
	27,205	Bayer AG		2,174,360
		Total Germany		11,500,779

NUMBER OF SHARES			VALUE
		Greece (a)(1.2%)
		Commercial Banks
	38,280	National Bank of Greece SA (c)	$	976,103
		Italy (a)(2.7%)
		Oil, Gas & Consumable Fuels
	85,016	Eni SpA		2,164,427
		Luxembourg (a)(2.3%)
		Metals & Mining
	40,420	ArcelorMittal (b)		1,833,243
		Netherlands (a)(1.8%)
		Diversified Telecommunication Services
	86,096	Koninklijke KPN		1,460,335
		Spain (a)(5.2%)
		Commercial Banks
	102,593	Banco Bilbao Vizcaya Argentaria SA (b)		1,858,397
		Diversified Telecommunication Services
	83,341	Telefonica SA		2,322,840
		Total Spain		4,181,237
		Sweden (a)(1.7%)
		Auto Components
	30,735	Autoliv, Inc. (SDR)		1,358,822
		Switzerland (a)(15.3%)
		Capital Markets
	93,971	UBS AG (Registered Shares) (c)		1,443,571
		Food Products
	68,035	Nestle SA (Registered Shares)		3,305,331
		Health Care Equipment & Supplies
	29,726	Nobel Biocare Holding AG (Registered Shares)		994,865

See Notes to Financial Statements
88

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Insurance
	6,271	Zurich Financial Services AG	$	1,363,482
		Pharmaceuticals
	47,887	Novartis AG (Registered Shares)		2,608,991
	15,443	Roche Holding AG		2,627,104
				5,236,095
		Total Switzerland		12,343,344
		United Kingdom (a)(39.2%)
		Aerospace & Defense
	275,524	BAE Systems PLC		1,587,793
	137,199	Rolls-Royce Group PLC (c)		1,070,678
				2,658,471
		Capital Markets
	196,602	Man Group PLC		967,097
		Commercial Banks
	262,702	Barclays PLC		1,157,640
	291,737	HSBC Holdings PLC		3,329,389
				4,487,029
		Food & Staples Retailing
	253,828	Tesco PLC		1,744,000
	222,000	WM Morrison Supermarkets PLC		989,735
				2,733,735
		Health Care Equipment & Supplies
	76,945	SSL International PLC		970,974
		Insurance
	129,520	Prudential PLC		1,319,424
		Media
	107,858	Reed Elsevier PLC		885,702
		Metals & Mining
	53,750	Anglo American PLC (c)		2,326,230
		Oil, Gas & Consumable Fuels
	117,011	BG Group PLC		2,095,401

NUMBER OF SHARES			VALUE
	102,690	Royal Dutch Shell PLC (A Shares)	$	3,100,476
				5,195,877
		Pharmaceuticals
	103,822	GlaxoSmithKline PLC		2,199,272
		Specialty Retail
	254,292	Carphone Warehouse Group PLC		766,526
	1,495,107	DSG International PLC (b)(c)		879,784
				1,646,310
		Tobacco
	62,027	British American Tobacco PLC		2,012,187
	54,334	Imperial Tobacco Group PLC		1,712,341
				3,724,528
		Wireless Telecommunication Services
	1,076,254	Vodafone Group PLC		2,492,274
		Total United Kingdom		31,606,923
		Total Common Stocks (Cost $69,722,844)		76,863,646
		Preferred Stock (1.4%) Germany (a)
		Health Care Equipment & Supplies
	16,178	Fresenius SE (Cost $1,279,733)		1,156,193

See Notes to Financial Statements
89

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			VALUE
		Short-Term Investments (5.3%) Securities Held as Collateral on Loaned Securities (2.4%)
		Repurchase Agreements (0.5%)
$	34	Bank of America Securities LLC (0.01% dated 12/31/09, due 01/04/10; proceeds $33,540; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Government National Mortgage Association 5.00% due 11/20/39; valued at $34,211)	$	33,540
	255	Deutsche Bank (0.01% dated 12/31/09, due 01/04/10; proceeds $255,345; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal National Mortgage Association 5.50% - 7.00% due 11/01/30 - 05/01/39; valued at $260,451)		255,344
	113	ING (0.01% dated 12/31/09, due 01/04/10; proceeds $112,652; fully collateralized by U.S. Government Agency securities at the date of this Portfolio of Investments as follows: Federal Home Loan Mortgage Association 0.60% - 2.23% due 09/15/14 - 08/15/30; valued at $114,905)		112,652
		Total Repurchase Agreements (Cost $401,536)		401,536

NUMBER OF SHARES (000)					VALUE
		Investment Company (1.9%)
	1,502	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,502,146)			$	1,502,146
		Total Securities Held as Collateral on Loaned Securities (Cost $1,903,682)				1,903,682
		Investment Company (2.9%)
	2,304	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $2,303,654)				2,303,654
		Total Short-Term Investments (Cost $4,207,336)				4,207,336
Total Investments (Cost $75,209,913) (d)			102.1	%		82,227,175
Liabilities in Excess of Other Assets			(2.1	)		(1,707,330	)
Net Assets			100.0	%	$	80,519,845

SDR  Swedish Depositary Receipt.

  (a)  Securities with a total market value equal to $78,019,839 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.

  (b)  All or a portion of this security was on loan at December 31, 2009.

  (c)  Non-income producing security.

  (d)  The aggregate cost for federal income tax purposes is $76,630,771. The aggregate gross unrealized appreciation is $12,937,394 and the aggregate gross unrealized depreciation is $7,340,990 resulting in net unrealized appreciation of $5,596,404.

See Notes to Financial Statements
90

Morgan Stanley Variable Investment Series - European Equity

Summary of Investments n December 31, 2009

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Commercial Banks	$	10,966,499		13.7	%
Pharmaceuticals		9,609,727		12.0
Oil, Gas & Consumable Fuels		7,360,304		9.2
Insurance		5,704,690		7.1
Diversified Telecommunication Services		5,085,917		6.3
Metals & Mining		4,159,473		5.2
Tobacco		3,724,528		4.6
Food Products		3,305,331		4.1
Health Care Equipment & Supplies		3,122,032		3.9
Food & Staples Retailing		2,733,735		3.4
Aerospace & Defense		2,658,471		3.3
Wireless Telecommunication Services		2,492,274		3.1

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Capital Markets	$	2,410,668			3.0	%
Investment Company		2,303,654			2.9
Industrial Conglomerates		2,029,092			2.5
Automobiles		1,728,308			2.2
Electrical Equipment		1,715,416			2.1
Multi-Utilities		1,686,454			2.1
Specialty Retail		1,646,310			2.0
Chemicals		1,438,754			1.8
Auto Components		1,358,822			1.7
Machinery		1,244,493			1.5
Hotels, Restaurants & Leisure		952,839			1.2
Media		885,702			1.1
	$	80,323,493	^		100.0	%

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

See Notes to Financial Statements
91

Morgan Stanley Variable Investment Series - Capital Opportunities

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (97.3%)
		Air Freight & Logistics (2.1%)
	162,243	Expeditors International of Washington, Inc.	$	5,634,699
		Capital Markets (3.8%)
	124,976	Greenhill & Co., Inc.		10,028,074
		Chemicals (4.2%)
	136,165	Monsanto Co.		11,131,489
		Computers & Peripherals (9.9%)
	85,465	Apple, Inc. (a)		18,021,150
	264,402	Teradata Corp. (a)		8,310,155
				26,331,305
		Distributors (3.3%)
	2,116,000	Li & Fung Ltd. (Bermuda) (b)(c)		8,708,354
		Diversified Financial Services (7.0%)
	796,806	BM&F BOVESPA SA (Brazil) (b)		5,537,683
	236,838	Leucadia National Corp. (a)		5,634,376
	235,087	MSCI, Inc. (Class A) (a)		7,475,767
				18,647,826
		Health Care Technology (3.0%)
	179,179	athenahealth, Inc. (a)		8,106,058
		Hotels, Restaurants & Leisure (6.1%)
	133,241	Ctrip.com International Ltd. (ADR) (Cayman Islands) (a)		9,574,698
	116,420	Wynn Resorts Ltd.		6,779,137
				16,353,835
		Information Technology Services (6.3%)
	43,198	Mastercard, Inc. (Class A)		11,057,824
	354,591	Redecard SA (Brazil) (b)		5,822,730
				16,880,554
		Internet & Catalog Retail (7.3%)
	145,499	Amazon.com, Inc. (a)		19,572,525

NUMBER OF SHARES			VALUE
		Internet Software & Services (18.3%)
	23,246	Baidu, Inc. (ADR) (Cayman Islands) (a)	$	9,559,453
	32,315	Google, Inc. (Class A) (a)		20,034,654
	883,100	Tencent Holdings Ltd. (Cayman Islands) (b)(c)		19,032,936
				48,627,043
		Life Sciences Tools & Services (5.0%)
	190,887	Illumina, Inc. (a)		5,850,686
	107,810	Techne Corp.		7,391,454
				13,242,140
		Oil, Gas & Consumable Fuels (6.5%)
	134,532	Range Resources Corp.		6,706,420
	210,744	Ultra Petroleum Corp. (Canada) (a)		10,507,696
				17,214,116
		Professional Services (5.4%)
	155,672	CoStar Group, Inc. (a)		6,502,420
	260,158	Verisk Analytics, Inc. (Class A) (a)		7,877,584
				14,380,004
		Real Estate Management & Development (3.4%)
	412,484	Brookfield Asset Management, Inc. (Class A) (Canada)		9,148,895
		Semiconductors & Semiconductor Equipment (2.4%)
	276,555	Tessera Technologies, Inc. (a)		6,435,435
		Software (3.3%)
	117,680	Salesforce.com, Inc. (a)		8,681,254
		Total Common Stocks (Cost $210,941,276)		259,123,606

See Notes to Financial Statements
92

Morgan Stanley Variable Investment Series - Capital Opportunities

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES (000)					VALUE
		Short-Term Investment (2.8%)
		Investment Company
	7,508	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $7,508,265)			$	7,508,265
Total Investments (Cost $218,449,541) (d)			100.1	%		266,631,871
Liabilities in Excess of Other Assets			(0.1	)		(230,630	)
Net Assets			100.0	%	$	266,401,241

ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  Securities with a total market value equal to $39,101,703 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.

  (c)  Security trades on the Hong Kong exchange.

  (d)  The aggregate cost for federal income tax purposes is $220,099,158. The aggregate gross unrealized appreciation is $66,641,326 and the aggregate gross unrealized depreciation is $20,108,613 resulting in net unrealized appreciation of $46,532,713.

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Internet Software & Services	$	48,627,043		18.2	%
Computers & Peripherals		26,331,305		9.9
Internet & Catalog Retail		19,572,525		7.3
Diversified Financial Services		18,647,826		7.0
Oil, Gas & Consumable Fuels		17,214,116		6.5
Information Technology Services		16,880,554		6.3
Hotels, Restaurants & Leisure		16,353,835		6.1
Professional Services		14,380,004		5.4
Life Sciences Tools & Services		13,242,140		5.0
Chemicals		11,131,489		4.2
Capital Markets		10,028,074		3.8
Real Estate Management & Development		9,148,895		3.4
Distributors		8,708,354		3.3
Software		8,681,254		3.3
Health Care Technology		8,106,058		3.0
Investment Company		7,508,265		2.8
Semiconductors & Semiconductor Equipment		6,435,435		2.4
Air Freight & Logistics		5,634,699		2.1
	$	266,631,871		100.0	%

See Notes to Financial Statements
93

Morgan Stanley Variable Investment Series - S&P 500 Index

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (99.1%)
		Aerospace & Defense (2.7%)
	9,276	Boeing Co. (The)	$	502,110
	5,064	General Dynamics Corp.		345,213
	1,738	Goodrich Corp.		111,666
	9,536	Honeywell International, Inc.		373,811
	2,564	ITT Corp.		127,533
	1,350	L-3 Communications Holdings, Inc.		117,382
	4,065	Lockheed Martin Corp.		306,298
	4,141	Northrop Grumman Corp.		231,275
	1,713	Precision Castparts Corp.		189,030
	4,701	Raytheon Co.		242,196
	2,235	Rockwell Collins, Inc.		123,730
	11,956	United Technologies Corp.		829,866
				3,500,110
		Air Freight & Logistics (1.0%)
	2,389	C.H. Robinson Worldwide, Inc.		140,306
	2,994	Expeditors International of Washington, Inc.		103,982
	4,049	FedEx Corp.		337,889
	12,653	United Parcel Service, Inc. (Class B)		725,902
				1,308,079
		Airlines (0.1%)
	10,446	Southwest Airlines Co.		119,398
		Auto Components (0.2%)
	3,407	Goodyear Tire & Rubber Co. (The) (a)		48,039
	8,390	Johnson Controls, Inc.		228,543
				276,582
		Automobiles (0.4%)
	42,579	Ford Motor Co. (a)		425,790
	3,288	Harley-Davidson, Inc.		82,858
				508,648
		Beverages (2.6%)
	1,385	Brown-Forman Corp. (Class B)		74,194

NUMBER OF SHARES			VALUE
	30,166	Coca-Cola Co. (The)	$	1,719,462
	4,483	Coca-Cola Enterprises, Inc.		95,040
	2,749	Constellation Brands, Inc. (Class A) (a)		43,791
	3,582	Dr Pepper Snapple Group, Inc.		101,371
	2,102	Molson Coors Brewing Co. (Class B)		94,926
	1,908	Pepsi Bottling Group, Inc.		71,550
	20,251	PepsiCo, Inc.		1,231,261
				3,431,595
		Biotechnology (1.5%)
	13,423	Amgen, Inc. (a)		759,339
	3,674	Biogen Idec, Inc. (a)		196,559
	6,308	Celgene Corp. (a)		351,229
	967	Cephalon, Inc. (a)		60,351
	3,307	Genzyme Corp. (a)		162,076
	11,212	Gilead Sciences, Inc. (a)		485,255
				2,014,809
		Building Products (0.1%)
	5,082	Masco Corp.		70,182
		Capital Markets (2.7%)
	3,059	Ameriprise Financial, Inc.		118,750
	15,304	Bank of New York Mellon Corp. (The)		428,053
	11,768	Charles Schwab Corp. (The)		221,474
	12,787	E*Trade Financial Corp. (a)		22,377
	1,251	Federated Investors, Inc. (Class B)		34,402
	1,885	Franklin Resources, Inc.		198,585
	6,633	Goldman Sachs Group, Inc. (The)		1,119,916
	5,436	Invesco Ltd. (Bermuda)		127,692
	2,229	Janus Capital Group, Inc.		29,980
	2,004	Legg Mason, Inc.		60,441
	17,449	Morgan Stanley (See Note 6)		516,490
	3,149	Northern Trust Corp.		165,008
	6,636	State Street Corp.		288,931
	3,150	T. Rowe Price Group, Inc.		167,737
				3,499,836

See Notes to Financial Statements
94

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NUMBER OF SHARES			VALUE
		Chemicals (2.0%)
	2,602	Air Products & Chemicals, Inc.	$	210,918
	1,095	Airgas, Inc.		52,122
	669	CF Industries Holdings, Inc.		60,732
	14,948	Dow Chemical Co. (The)		413,013
	1,024	Eastman Chemical Co.		61,686
	2,912	Ecolab, Inc.		129,817
	12,015	EI Du Pont de Nemours & Co.		404,545
	990	FMC Corp.		55,202
	1,111	International Flavors & Fragrances, Inc.		45,707
	6,988	Monsanto Co.		571,269
	2,319	PPG Industries, Inc.		135,754
	4,057	Praxair, Inc.		325,818
	1,770	Sigma-Aldrich Corp.		89,438
				2,556,021
		Commercial Banks (2.7%)
	8,796	BB&T Corp.		223,155
	2,125	Comerica, Inc.		62,836
	9,750	Fifth Third Bancorp		95,063
	3,115	First Horizon National Corp. (a)		41,740
	6,049	Huntington Bancshares, Inc.		22,079
	10,036	Keycorp		55,700
	1,090	M&T Bank Corp.		72,910
	4,480	Marshall & Ilsley Corp.		24,416
	6,085	PNC Financial Services Group, Inc.		321,229
	13,934	Regions Financial Corp.		73,711
	6,261	SunTrust Banks, Inc.		127,036
	24,744	US Bancorp		556,987
	66,440	Wells Fargo & Co.		1,793,208
	1,629	Zions BanCorp.		20,900
				3,490,970
		Commercial Services & Supplies (0.5%)
	1,501	Avery Dennison Corp.		54,771
	1,855	Cintas Corp.		48,323

NUMBER OF SHARES			VALUE
	2,538	Iron Mountain, Inc. (a)	$	57,765
	2,911	Pitney Bowes, Inc.		66,254
	4,533	Republic Services, Inc.		128,329
	2,895	RR Donnelley & Sons Co.		64,472
	1,208	Stericycle, Inc. (a)		66,645
	6,075	Waste Management, Inc.		205,396
				691,955
		Communications Equipment (2.6%)
	75,103	Cisco Systems, Inc. (a)		1,797,966
	1,901	Harris Corp.		90,392
	3,104	JDS Uniphase Corp. (a)		25,608
	6,576	Juniper Networks, Inc. (a)		175,382
	30,087	Motorola, Inc. (a)		233,475
	21,514	QUALCOMM, Inc.		995,238
	5,620	Tellabs, Inc. (a)		31,922
				3,349,983
		Computers & Peripherals (5.9%)
	11,706	Apple, Inc. (a)		2,468,327
	22,832	Dell, Inc. (a)		327,868
	26,219	EMC Corp. (a)		458,046
	30,961	Hewlett-Packard Co.		1,594,801
	17,091	International Business Machines Corp.		2,237,212
	1,107	Lexmark International, Inc. (Class A) (a)		28,760
	4,662	NetApp, Inc. (a)		160,326
	1,806	QLogic Corp. (a)		34,079
	3,192	SanDisk Corp. (a)		92,536
	10,430	Sun Microsystems, Inc. (a)		97,729
	2,485	Teradata Corp. (a)		78,104
	3,115	Western Digital Corp. (a)		137,527
				7,715,315
		Construction & Engineering (0.2%)
	2,563	Fluor Corp.		115,438

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
	1,735	Jacobs Engineering Group, Inc. (a)	$	65,253
	2,726	Quanta Services, Inc. (a)		56,810
				237,501
		Construction Materials (0.1%)
	1,555	Vulcan Materials Co.		81,902
		Consumer Finance (0.8%)
	15,603	American Express Co.		632,233
	5,850	Capital One Financial Corp.		224,289
	6,777	Discover Financial Services		99,690
	6,599	SLM Corp. (a)		74,371
				1,030,583
		Containers & Packaging (0.2%)
	1,336	Ball Corp.		69,071
	1,407	Bemis Co., Inc.		41,717
	2,356	Owens-Illinois, Inc. (a)		77,442
	1,855	Pactiv Corp. (a)		44,780
	2,229	Sealed Air Corp.		48,726
				281,736
		Distributors (0.1%)
	2,251	Genuine Parts Co.		85,448
		Diversified Consumer Services (0.2%)
	1,504	Apollo Group, Inc. (Class A) (a)		91,112
	851	DeVry, Inc.		48,277
	4,786	H&R Block, Inc.		108,260
				247,649
		Diversified Financial Services (4.3%)
	129,434	Bank of America Corp.		1,949,274
	255,584	Citigroup, Inc. (See Note 6)		845,983
	849	CME Group, Inc.		285,222
	1,020	IntercontinentalExchange, Inc. (a)		114,546
	51,284	JPMorgan Chase & Co.		2,137,004
	2,499	Leucadia National Corp. (a)		59,451
	2,743	Moody's Corp.		73,512

NUMBER OF SHARES			VALUE
	1,922	NASDAQ OMX Group, Inc. (The) (a)	$	38,094
	3,742	NYSE Euronext		94,673
				5,597,759
		Diversified Telecommunication Services (2.8%)
	76,890	AT&T, Inc.		2,155,227
	3,490	CenturyTel, Inc.		126,373
	4,396	Frontier Communications Corp.		34,333
	20,687	Qwest Communications International, Inc.		87,092
	36,834	Verizon Communications, Inc.		1,220,310
	6,205	Windstream Corp.		68,193
				3,691,528
		Electric Utilities (2.0%)
	2,387	Allegheny Energy, Inc.		56,047
	6,499	American Electric Power Co., Inc.		226,100
	16,225	Duke Energy Corp.		279,232
	3,819	Edison International		132,825
	2,290	Entergy Corp.		187,414
	8,262	Exelon Corp.		403,764
	3,706	FirstEnergy Corp.		172,144
	5,359	FPL Group, Inc.		283,062
	2,199	Northeast Utilities		56,712
	3,053	Pepco Holdings, Inc.		51,443
	1,424	Pinnacle West Capital Corp.		52,090
	5,295	PPL Corp.		171,082
	3,715	Progress Energy, Inc.		152,352
	10,291	Southern Co.		342,896
				2,567,163
		Electrical Equipment (0.5%)
	9,552	Emerson Electric Co.		406,915
	647	First Solar, Inc. (a)		87,604
	1,998	Rockwell Automation, Inc.		93,866
	1,193	Roper Industries, Inc.		62,477
				650,862

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Electronic Equipment, Instruments & Components (0.6%)
	4,027	Agilent Technologies, Inc. (a)	$	125,119
	2,482	Amphenol Corp. (Class A)		114,619
	20,542	Corning, Inc.		396,666
	1,960	FLIR Systems, Inc. (a)		64,131
	2,975	Jabil Circuit, Inc.		51,676
	1,989	Molex, Inc.		42,863
				795,074
		Energy Equipment & Services (1.8%)
	3,645	Baker Hughes, Inc.		147,550
	4,122	BJ Services Co.		76,669
	3,100	Cameron International Corp. (a)		129,580
	969	Diamond Offshore Drilling, Inc.		95,369
	1,414	FMC Technologies, Inc. (a)		81,786
	11,662	Halliburton Co.		350,910
	4,018	Nabors Industries Ltd. (Bermuda) (a)		87,954
	5,324	National Oilwell Varco, Inc.		234,735
	1,596	Rowan Cos., Inc. (a)		36,133
	15,515	Schlumberger Ltd. (Netherlands Antilles)		1,009,871
	3,090	Smith International, Inc.		83,955
				2,334,512
		Food & Staples Retailing (2.6%)
	5,652	Costco Wholesale Corp.		334,429
	18,504	CVS Caremark Corp.		596,014
	8,011	Kroger Co. (The)		164,466
	4,919	Safeway, Inc.		104,726
	2,990	SUPERVALU, Inc.		38,003
	7,528	Sysco Corp.		210,332
	27,373	Wal-Mart Stores, Inc.		1,463,087
	12,695	Walgreen Co.		466,160
	1,981	Whole Foods Market, Inc. (a)		54,378
				3,431,595

NUMBER OF SHARES			VALUE
		Food Products (1.6%)
	8,291	Archer-Daniels-Midland Co.	$	259,591
	2,043	Campbell Soup Co.		69,053
	5,141	ConAgra Foods, Inc.		118,500
	2,174	Dean Foods Co. (a)		39,219
	4,006	General Mills, Inc.		283,665
	2,342	Hershey Co. (The)		83,820
	3,833	HJ Heinz Co.		163,899
	980	Hormel Foods Corp.		37,681
	1,672	JM Smucker Co. (The)		103,246
	3,024	Kellogg Co.		160,877
	19,323	Kraft Foods, Inc. (Class A)		525,199
	1,836	McCormick & Co., Inc.		66,335
	9,982	Sara Lee Corp.		121,581
	4,266	Tyson Foods, Inc. (Class A)		52,344
				2,085,010
		Gas Utilities (0.2%)
	1,848	EQT Corp.		81,164
	638	Nicor, Inc.		26,860
	2,449	Questar Corp.		101,805
				209,829
		Health Care Equipment & Supplies (1.9%)
	7,685	Baxter International, Inc.		450,956
	3,102	Becton Dickinson and Co.		244,624
	18,343	Boston Scientific Corp. (a)		165,087
	1,014	C.R. Bard, Inc.		78,991
	2,539	CareFusion Corp. (a)		63,500
	2,103	DENTSPLY International, Inc.		73,962
	2,254	Hospira, Inc. (a)		114,954
	451	Intuitive Surgical, Inc. (a)		136,797
	14,524	Medtronic, Inc.		638,766
	3,965	St Jude Medical, Inc. (a)		145,833
	3,523	Stryker Corp.		177,453
	1,755	Varian Medical Systems, Inc. (a)		82,222
	2,683	Zimmer Holdings, Inc. (a)		158,592
				2,531,737

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
		Health Care Providers & Services (2.1%)
	5,700	Aetna, Inc.	$	180,690
	3,265	AmerisourceBergen Corp.		85,119
	5,078	Cardinal Health, Inc.		163,715
	3,142	CIGNA Corp.		110,818
	2,104	Coventry Health Care, Inc. (a)		51,106
	1,466	DaVita, Inc. (a)		86,113
	3,596	Express Scripts, Inc. (a)		310,874
	2,382	Humana, Inc. (a)		104,546
	1,525	Laboratory Corp. of America Holdings (a)		114,131
	3,502	McKesson Corp.		218,875
	6,130	Medco Health Solutions, Inc. (a)		391,768
	1,288	Patterson Cos., Inc. (a)		36,038
	1,834	Quest Diagnostics, Inc.		110,737
	5,862	Tenet Healthcare Corp. (a)		31,596
	15,173	UnitedHealth Group, Inc.		462,473
	5,689	WellPoint, Inc. (a)		331,612
				2,790,211
		Health Care Technology (0.0%)
	2,568	IMS Health, Inc.		54,082
		Hotels, Restaurants & Leisure (1.4%)
	5,348	Carnival Corp. (Units) (Panama) (a)(b)		169,478
	1,959	Darden Restaurants, Inc.		68,702
	4,161	International Game Technology		78,102
	2,916	Marriott International, Inc. (Class A)		79,461
	13,837	McDonald's Corp.		863,982
	9,509	Starbucks Corp. (a)		219,278
	2,585	Starwood Hotels & Resorts Worldwide, Inc.		94,533
	2,504	Wyndham Worldwide Corp.		50,506
	870	Wynn Resorts Ltd.		50,660
	5,764	Yum! Brands, Inc.		201,567
				1,876,269

NUMBER OF SHARES			VALUE
		Household Durables (0.4%)
	849	Black & Decker Corp.	$	55,041
	3,890	DR Horton, Inc.		42,284
	2,117	Fortune Brands, Inc.		91,454
	827	Harman International Industries, Inc.		29,177
	2,206	Leggett & Platt, Inc.		45,002
	1,995	Lennar Corp. (Class A)		25,476
	3,914	Newell Rubbermaid, Inc.		58,749
	3,326	Pulte Homes, Inc. (a)		33,260
	811	Snap-On, Inc.		34,273
	1,113	Stanley Works (The)		57,331
	1,038	Whirlpool Corp.		83,725
				555,772
		Household Products (2.5%)
	1,959	Clorox Co.		119,499
	6,203	Colgate-Palmolive Co.		509,576
	5,474	Kimberly-Clark Corp.		348,749
	37,971	Procter & Gamble Co. (The)		2,302,182
				3,280,006
		Independent Power Producers & Energy Traders (0.2%)
	9,500	AES Corp. (The) (a)		126,445
	2,519	Constellation Energy Group, Inc.		88,593
				215,038
		Industrial Conglomerates (2.2%)
	9,069	3M Co.		749,734
	138,405	General Electric Co. (c)		2,094,068
	3,405	Textron, Inc.		64,048
				2,907,850
		Information Technology Services (1.6%)
	1,378	Affiliated Computer Services, Inc. (Class A) (a)		82,253
	6,564	Automatic Data Processing, Inc.		281,070

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
	3,558	Cognizant Technology Solutions Corp. (Class A) (a)	$	161,177
	2,139	Computer Sciences Corp. (a)		123,057
	3,745	Fidelity National Information Services, Inc.		87,783
	2,262	Fiserv, Inc. (a)		109,662
	1,230	Mastercard, Inc. (Class A)		314,855
	4,534	Paychex, Inc.		138,922
	3,214	SAIC, Inc. (a)		60,873
	2,779	Total System Services, Inc.		47,993
	5,783	Visa, Inc. (Class A)		505,781
	8,842	Western Union Co. (The)		166,672
				2,080,098
		Insurance (2.4%)
	5,980	Aflac, Inc.		276,575
	6,784	Allstate Corp. (The) (See Note 6)		203,791
	1,898	American International Group, Inc. (a)		56,902
	3,810	AON Corp.		146,075
	1,661	Assurant, Inc.		48,966
	4,580	Chubb Corp.		225,244
	2,293	Cincinnati Financial Corp.		60,168
	6,116	Genworth Financial, Inc. (Class A) (a)		69,417
	4,701	Hartford Financial Services Group, Inc.		109,345
	3,613	Lincoln National Corp.		89,891
	4,416	Loews Corp.		160,522
	7,259	Marsh & McLennan Cos., Inc.		160,279
	10,372	MetLife, Inc. (See Note 6)		366,650
	3,845	Principal Financial Group, Inc.		92,434
	8,451	Progressive Corp. (The) (a)		152,034
	6,105	Prudential Financial, Inc.		303,785
	1,201	Torchmark Corp.		52,784
	7,209	Travelers Companies, Inc. (The)		359,441
	4,676	Unum Group		91,276
	4,671	XL Capital Ltd. (Class A) (Cayman Islands)		85,619
				3,111,198

NUMBER OF SHARES			VALUE
		Internet & Catalog Retail (0.6%)
	4,323	Amazon.com, Inc. (a)	$	581,530
	2,958	Expedia, Inc. (a)		76,050
	567	Priceline.com, Inc. (a)		123,890
				781,470
		Internet Software & Services (2.0%)
	2,388	Akamai Technologies, Inc. (a)		60,488
	14,552	eBay, Inc. (a)		342,554
	3,133	Google, Inc. (Class A) (a)		1,942,397
	2,740	VeriSign, Inc. (a)		66,418
	15,291	Yahoo!, Inc. (a)		256,583
				2,668,440
		Leisure Equipment & Products (0.1%)
	3,791	Eastman Kodak Co. (a)		15,998
	1,749	Hasbro, Inc.		56,073
	5,061	Mattel, Inc.		101,119
				173,190
		Life Sciences Tools & Services (0.4%)
	2,437	Life Technologies Corp. (a)		127,285
	780	Millipore Corp. (a)		56,433
	1,668	PerkinElmer, Inc.		34,344
	5,408	Thermo Fisher Scientific, Inc. (a)		257,908
	1,388	Waters Corp. (a)		86,000
				561,970
		Machinery (1.6%)
	8,105	Caterpillar, Inc.		461,904
	2,844	Cummins, Inc.		130,426
	3,223	Danaher Corp.		242,370
	5,525	Deere & Co.		298,847
	2,626	Dover Corp.		109,268
	1,927	Eaton Corp.		122,596
	798	Flowserve Corp.		75,435
	4,979	Illinois Tool Works, Inc.		238,942
	4,446	PACCAR, Inc.		161,256

See Notes to Financial Statements
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NUMBER OF SHARES			VALUE
	1,667	Pall Corp.	$	60,345
	2,276	Parker Hannifin Corp.		122,631
				2,024,020
		Media (2.8%)
	9,601	CBS Corp. (Class B)		134,894
	36,784	Comcast Corp. (Class A)		620,178
	12,250	DIRECTV (Class A) (a)		408,538
	3,221	Gannett Co., Inc.		47,832
	6,729	Interpublic Group of Cos., Inc. (a)		49,660
	3,695	McGraw-Hill Cos., Inc. (The)		123,819
	510	Meredith Corp.		15,734
	1,645	New York Times Co. (The) (Class A) (a)		20,332
	28,473	News Corp. (Class A)		389,795
	4,389	Omnicom Group, Inc.		171,829
	1,272	Scripps Networks Interactive, Inc. (Class A)		52,788
	4,325	Time Warner Cable, Inc.		179,012
	15,150	Time Warner, Inc.		441,471
	7,744	Viacom, Inc. (Class B) (a)		230,229
	23,939	Walt Disney Co. (The)		772,033
	85	Washington Post Co. (The) (Class B)		37,366
				3,695,510
		Metals & Mining (1.1%)
	1,582	AK Steel Holding Corp.		33,776
	12,445	Alcoa, Inc.		200,613
	1,360	Allegheny Technologies, Inc.		60,887
	1,414	Cliffs Natural Resources, Inc.		65,171
	5,526	Freeport-McMoRan Copper & Gold, Inc. (a)		443,683
	6,176	Newmont Mining Corp.		292,187
	3,817	Nucor Corp.		178,063
	1,202	Titanium Metals Corp. (a)		15,049
	1,679	United States Steel Corp.		92,546
				1,381,975
		Multi-Utilities (1.4%)
	2,986	Ameren Corp.		83,459

NUMBER OF SHARES			VALUE
	4,860	Centerpoint Energy, Inc.	$	70,519
	3,194	CMS Energy Corp.		50,018
	3,864	Consolidated Edison, Inc.		175,542
	7,463	Dominion Resources, Inc.		290,460
	2,302	DTE Energy Co.		100,344
	1,079	Integrys Energy Group, Inc.		45,307
	3,873	NiSource, Inc.		59,567
	5,097	PG&E Corp.		227,581
	6,394	Public Service Enterprise Group, Inc.		212,601
	1,658	SCANA Corp.		62,473
	2,978	Sempra Energy		166,708
	3,005	TECO Energy, Inc.		48,741
	1,651	Wisconsin Energy Corp.		82,269
	6,341	Xcel Energy, Inc.		134,556
				1,810,145
		Multiline Retail (0.9%)
	1,160	Big Lots, Inc. (a)		33,617
	1,973	Family Dollar Stores, Inc.		54,909
	3,137	JC Penney Co., Inc.		83,475
	3,784	Kohl's Corp. (a)		204,071
	5,939	Macy's, Inc.		99,538
	2,251	Nordstrom, Inc.		84,592
	786	Sears Holdings Corp. (a)		65,592
	10,027	Target Corp.		485,006
				1,110,800
		Office Electronics (0.1%)
	12,223	Xerox Corp.		103,407
		Oil, Gas & Consumable Fuels (9.6%)
	6,240	Anadarko Petroleum Corp.		389,501
	4,457	Apache Corp.		459,829
	1,459	Cabot Oil & Gas Corp.		63,598
	8,243	Chesapeake Energy Corp.		213,329
	26,138	Chevron Corp.		2,012,365
	19,211	ConocoPhillips		981,106
	2,559	Consol Energy, Inc.		127,438
	3,950	Denbury Resources, Inc. (a)		58,460
	5,826	Devon Energy Corp.		428,211

See Notes to Financial Statements
100

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Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
	9,902	El Paso Corp.	$	97,337
	3,229	EOG Resources, Inc.		314,182
	61,703	Exxon Mobil Corp.		4,207,527
	4,006	Hess Corp.		242,363
	9,211	Marathon Oil Corp.		287,567
	1,202	Massey Energy Co.		50,496
	2,690	Murphy Oil Corp.		145,798
	2,074	Noble Energy, Inc.		147,710
	10,579	Occidental Petroleum Corp.		860,602
	3,183	Peabody Energy Corp.		143,903
	1,662	Pioneer Natural Resources Co.		80,058
	2,194	Range Resources Corp.		109,371
	4,362	Southwestern Energy Co. (a)		210,248
	8,629	Spectra Energy Corp.		176,981
	1,650	Sunoco, Inc.		43,065
	1,955	Tesoro Corp.		26,490
	7,287	Valero Energy Corp.		122,057
	8,171	Williams Cos., Inc. (The)		172,245
	7,232	XTO Energy, Inc.		336,505
				12,508,342
		Paper & Forest Products (0.3%)
	6,037	International Paper Co.		161,671
	2,412	MeadWestvaco Corp.		69,055
	2,984	Weyerhaeuser Co.		128,730
				359,456
		Personal Products (0.3%)
	5,227	Avon Products, Inc.		164,650
	1,636	Estee Lauder Cos., Inc. (The) (Class A)		79,117
	2,307	Mead Johnson Nutrition Co.		100,816
				344,583
		Pharmaceuticals (6.4%)
	19,683	Abbott Laboratories		1,062,685
	4,045	Allergan, Inc.		254,876
	22,295	Bristol-Myers Squibb Co.		562,949
	13,359	Eli Lilly & Co.		477,050
	4,256	Forest Laboratories, Inc. (a)		136,660
	35,896	Johnson & Johnson		2,312,061
	3,480	King Pharmaceuticals, Inc. (a)		42,700

NUMBER OF SHARES			VALUE
	39,636	Merck & Co., Inc.	$	1,448,299
	4,303	Mylan, Inc. (a)		79,304
	105,029	Pfizer, Inc.		1,910,478
	1,477	Watson Pharmaceuticals, Inc. (a)		58,504
				8,345,566
		Professional Services (0.2%)
	761	Dun & Bradstreet Corp.		64,206
	1,784	Equifax, Inc.		55,108
	1,740	Monster Worldwide, Inc. (a)		30,276
	2,191	Robert Half International, Inc.		58,565
				208,155
		Real Estate Investment Trusts (REITs) (1.2%)
	1,642	Apartment Investment & Management Co. (Class A)		26,141
	1,123	AvalonBay Communities, Inc.		92,210
	1,706	Boston Properties, Inc.		114,421
	3,841	Equity Residential		129,749
	3,568	HCP, Inc.		108,967
	1,403	Health Care REIT, Inc.		62,181
	7,534	Host Hotels & Resorts, Inc. (a)		87,922
	4,224	Kimco Realty Corp.		57,151
	2,355	Plum Creek Timber Co., Inc.		88,925
	5,063	ProLogis		69,312
	1,770	Public Storage		144,166
	3,695	Simon Property Group, Inc.		294,861
	2,081	Ventas, Inc.		91,023
	2,008	Vornado Realty Trust		140,439
				1,507,468
		Real Estate Management & Development (0.0%)
	3,149	CB Richard Ellis Group, Inc. (Class A) (a)		42,732
		Road & Rail (1.0%)
	3,363	Burlington Northern Santa Fe Corp.		331,659
	5,026	CSX Corp.		243,711
	4,716	Norfolk Southern Corp.		247,213

See Notes to Financial Statements
101

Morgan Stanley Variable Investment Series - S&P 500 Index

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
	785	Ryder System, Inc.	$	32,318
	6,713	Union Pacific Corp.		428,961
				1,283,862
		Semiconductors & Semiconductor Equipment (2.6%)
	8,592	Advanced Micro Devices, Inc. (a)		83,171
	4,199	Altera Corp.		95,023
	4,112	Analog Devices, Inc.		129,857
	17,167	Applied Materials, Inc.		239,308
	5,407	Broadcom Corp. (Class A) (a)		170,050
	72,761	Intel Corp.		1,484,324
	2,384	Kla-Tencor Corp.		86,206
	3,131	Linear Technology Corp.		95,621
	9,109	LSI Corp. (a)		54,745
	3,169	MEMC Electronic Materials, Inc. (a)		43,162
	2,568	Microchip Technology, Inc.		74,626
	10,785	Micron Technology, Inc. (a)		113,890
	2,755	National Semiconductor Corp.		42,317
	1,379	Novellus Systems, Inc. (a)		32,186
	7,584	Nvidia Corp. (a)		141,669
	2,391	Teradyne, Inc. (a)		25,655
	16,038	Texas Instruments, Inc.		417,950
	3,868	Xilinx, Inc.		96,932
				3,426,692
		Software (4.4%)
	6,806	Adobe Systems, Inc. (a)		250,325
	3,195	Autodesk, Inc. (a)		81,185
	2,648	BMC Software, Inc. (a)		106,185
	5,562	CA, Inc.		124,923
	2,565	Citrix Systems, Inc. (a)		106,730
	3,481	Compuware Corp. (a)		25,168
	4,531	Electronic Arts, Inc. (a)		80,425
	4,520	Intuit, Inc. (a)		138,809
	2,157	McAfee, Inc. (a)		87,509
	101,223	Microsoft Corp.		3,086,289
	4,875	Novell, Inc. (a)		20,231

NUMBER OF SHARES			VALUE
	50,823	Oracle Corp.	$	1,247,196
	2,639	Red Hat, Inc. (a)		81,545
	1,482	Salesforce.com, Inc. (a)		109,327
	10,294	Symantec Corp. (a)		184,160
				5,730,007
		Specialty Retail (1.9%)
	1,229	Abercrombie & Fitch Co. (Class A)		42,831
	1,523	AutoNation, Inc. (a)		29,166
	348	AutoZone, Inc. (a)		55,008
	3,667	Bed Bath & Beyond, Inc. (a)		141,656
	4,179	Best Buy Co., Inc.		164,903
	2,313	GameStop Corp. (Class A) (a)		50,747
	6,584	Gap, Inc. (The)		137,935
	21,883	Home Depot, Inc.		633,075
	3,821	Limited Brands, Inc.		73,516
	18,482	Lowe's Cos., Inc.		432,294
	1,853	O'Reilly Automotive, Inc. (a)		70,636
	3,882	Office Depot, Inc. (a)		25,039
	1,766	RadioShack Corp.		34,437
	1,324	Ross Stores, Inc.		56,548
	1,387	Sherwin-Williams Co. (The)		85,509
	8,908	Staples, Inc.		219,048
	1,738	Tiffany & Co.		74,734
	5,237	TJX Cos., Inc.		191,412
				2,518,494
		Textiles, Apparel & Luxury Goods (0.5%)
	3,886	Coach, Inc.		141,956
	5,100	NIKE, Inc. (Class B)		336,957
	794	Polo Ralph Lauren Corp.		64,298
	1,244	VF Corp.		91,110
				634,321
		Thrifts & Mortgage Finance (0.1%)
	5,424	Hudson City Bancorp, Inc.		74,471
	4,911	People's United Financial, Inc.		82,014
				156,485

See Notes to Financial Statements
102

Morgan Stanley Variable Investment Series - S&P 500 Index

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES					VALUE
		Tobacco (1.5%)
	26,207	Altria Group, Inc.			$	514,444
	2,045	Lorillard, Inc.				164,070
	24,776	Philip Morris International, Inc.				1,193,956
	2,387	Reynolds American, Inc.				126,439
						1,998,909
		Trading Companies & Distributors (0.1%)
	1,825	Fastenal Co.				75,993
	913	WW Grainger, Inc.				88,406
						164,399
		Wireless Telecommunication Services (0.3%)
	4,953	American Tower Corp. (Class A) (a)				214,019
	2,582	MetroPCS Communications, Inc. (a)				19,701
	40,341	Sprint Nextel Corp. (a)				147,648
						381,368
		Total Common Stocks (Cost $101,233,790)				129,185,661
NUMBER OF SHARES (000)
		Short-Term Investment (0.9%)
		Investment Company
	1,184	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,183,795)				1,183,795
Total Investments (Cost $102,417,585) (d)(e)			100.0	%		130,369,456
Other Assets in Excess of Liabilities			0.0			18,398
Net Assets			100.0	%	$	130,387,854

  (a)  Non-income producing security.

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

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

  (d)  Securities have been designated as collateral in connection with open futures contracts.

  (e)  The aggregate cost for federal income tax purposes is $107,972,112. The aggregate gross unrealized appreciation is $37,935,235 and the aggregate gross unrealized depreciation is $15,537,891 resulting in net unrealized appreciation of $22,397,344.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		LONG/ SHORT	DESCRIPTION, DELIVERY MONTH, AND YEAR	UNDERLYING FACE AMOUNT AT VALUE		UNREALIZED APPRECIATION
	33	Long	S&P 500 E-MINI, March 2010	$	1,832,655	$	20,244

See Notes to Financial Statements
103

Morgan Stanley Variable Investment Series - S&P 500 Index

Summary of Investments n December 31, 2009

SECTOR	VALUE			PERCENT OF NET ASSETS
Information Technology Services	$	25,869,016			19.8	%
Financials		18,437,031			14.1
Health Care		16,298,375			12.5
Energy		14,842,854			11.4
Consumer Staples		14,571,698			11.2
Industrials		13,257,977			10.2
Consumer Discretionary		12,372,549			9.5
Utilities		4,802,175			3.7
Materials		4,661,090			3.6
Telecommunication Services		4,072,896			3.1
Investment Company		1,183,795			0.9
	$	130,369,456	^		100.0	%

  ^  Does not include open long futures contracts with an underlying face amount of $1,832,655 and total unrealized appreciation of $20,244.

See Notes to Financial Statements
104

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (97.7%)
		Air Freight & Logistics (2.1%)
	19,856	Expeditors International of Washington, Inc.	$	689,599
		Capital Markets (3.8%)
	15,295	Greenhill & Co., Inc.		1,227,271
		Chemicals (4.2%)
	16,665	Monsanto Co.		1,362,364
		Computers & Peripherals (9.9%)
	10,460	Apple, Inc. (a)		2,205,596
	32,099	Teradata Corp. (a)		1,008,871
				3,214,467
		Distributors (3.3%)
	260,000	Li & Fung Ltd. (Bermuda) (b)(c)		1,070,025
		Diversified Financial Services (7.0%)
	97,518	BM&F BOVESPA SA (Brazil) (c)		677,738
	28,986	Leucadia National Corp. (a)		689,577
	28,771	MSCI, Inc. (Class A) (a)		914,918
				2,282,233
		Health Care Technology (3.1%)
	21,929	athenahealth, Inc. (a)		992,068
		Hotels, Restaurants & Leisure (6.2%)
	16,307	Ctrip.com International Ltd. (ADR) (Cayman Islands) (a)		1,171,821
	14,249	Wynn Resorts Ltd.		829,719
				2,001,540
		Information Technology Services (6.4%)
	5,287	Mastercard, Inc. (Class A)		1,353,366
	43,397	Redecard SA (Brazil) (c)		712,621
				2,065,987
		Internet & Catalog Retail (7.3%)
	17,664	Amazon.com, Inc. (a)		2,376,161

NUMBER OF SHARES			VALUE
		Internet Software & Services (18.3%)
	2,845	Baidu, Inc. (ADR) (Cayman Islands) (a)	$	1,169,949
	3,955	Google, Inc. (Class A) (a)		2,452,021
	108,100	Tencent Holdings Ltd. (Cayman Islands) (b)(c)		2,329,816
				5,951,786
		Life Sciences Tools & Services (5.0%)
	23,362	Illumina, Inc. (a)		716,045
	13,194	Techne Corp.		904,581
				1,620,626
		Oil, Gas & Consumable Fuels (6.5%)
	16,465	Range Resources Corp.		820,780
	25,792	Ultra Petroleum Corp. (Canada) (a)		1,285,989
				2,106,769
		Professional Services (5.4%)
	19,052	CoStar Group, Inc. (a)		795,802
	31,840	Verisk Analytics, Inc. (Class A) (a)		964,115
				1,759,917
		Real Estate Management & Development (3.5%)
	50,482	Brookfield Asset Management, Inc. (Class A) (Canada)		1,119,691
		Semiconductors & Semiconductor Equipment (2.4%)
	33,847	Tessera Technologies, Inc. (a)		787,620
		Software (3.3%)
	14,402	Salesforce.com, Inc. (a)		1,062,436
		Total Common Stocks (Cost $25,485,260)		31,690,560

See Notes to Financial Statements
105

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES (000)					VALUE
		Short-Term Investment (2.5%)
		Investment Company
	815	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $815,431)			$	815,431
Total Investments (Cost $26,300,691) (d)			100.2	%		32,505,991
Liabilities in Excess of Other Assets			(0.2	)		(67,408	)
Net Assets			100.0	%	$	32,438,583

ADR  American Depositary Receipt.

  (a)  Non-income producing security.

  (b)  Security trades on the Hong Kong exchange.

  (c)  Securities with a total market value equal to $4,790,200 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Such fair value measurements may be level 2 measurements if observable inputs are available. See Note 2.

  (d)  The aggregate cost for federal income tax purposes is $26,431,972. The aggregate gross unrealized appreciation is $8,455,423 and the aggregate gross unrealized depreciation is $2,381,404 resulting in net unrealized appreciation of $6,074,019.

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Internet Software & Services	$	5,951,786		18.3	%
Computers & Peripherals		3,214,467		9.9
Internet & Catalog Retail		2,376,161		7.3
Diversified Financial Services		2,282,233		7.0
Oil, Gas & Consumable Fuels		2,106,769		6.5
Information Technology Services		2,065,987		6.4
Hotels, Restaurants & Leisure		2,001,540		6.2
Professional Services		1,759,917		5.4
Life Sciences Tools & Services		1,620,626		5.0
Chemicals		1,362,364		4.2
Capital Markets		1,227,271		3.8
Real Estate Management & Development		1,119,691		3.4
Distributors		1,070,025		3.3
Software		1,062,436		3.3
Health Care Technology		992,068		3.0
Investment Company		815,431		2.5
Semiconductors & Semiconductor Equipment		787,620		2.4
Air Freight & Logistics		689,599		2.1
	$	32,505,991		100.0	%

See Notes to Financial Statements
106

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2009

NUMBER OF SHARES			VALUE
		Common Stocks (59.9%)
		Aerospace & Defense (2.4%)
	19,290	Boeing Co. (The)	$	1,044,168
	26,755	Northrop Grumman Corp.		1,494,267
	41,255	Raytheon Co.		2,125,457
				4,663,892
		Airlines (1.1%)
	117,820	Continental Airlines, Inc. (Class B) (a)		2,111,334
		Automobiles (0.7%)
	41,110	Honda Motor Co. Ltd. (ADR) (Japan)		1,393,629
		Biotechnology (4.3%)
	31,500	Alexion Pharmaceuticals, Inc. (a)		1,537,830
	23,010	Amgen, Inc. (a)		1,301,676
	42,680	Biogen Idec, Inc. (a)		2,283,380
	14,930	Celgene Corp. (a)		831,302
	28,460	Gilead Sciences, Inc. (a)		1,231,749
	30,620	Vertex Pharmaceuticals, Inc. (a)		1,312,067
				8,498,004
		Capital Markets (1.6%)
	45,650	Charles Schwab Corp. (The)		859,133
	7,065	Goldman Sachs Group, Inc. (The)		1,192,855
	31,090	Lazard Ltd. (Class A) (Bermuda)		1,180,487
				3,232,475
		Chemicals (0.6%)
	36,130	EI Du Pont de Nemours & Co.		1,216,497
		Commercial Services & Supplies (1.3%)
	77,490	Waste Management, Inc.		2,619,937
		Communications Equipment (0.9%)
	70,100	Cisco Systems, Inc. (a)		1,678,194
		Computers & Peripherals (3.4%)
	11,085	Apple, Inc. (a)		2,337,383
	104,645	EMC Corp. (a)		1,828,148
	19,873	International Business Machines Corp.		2,601,376
				6,766,907
		Construction & Engineering (0.8%)
	79,420	Chicago Bridge & Iron Co. (NY Registered Shares) (Netherlands) (a)		1,605,872
		Diversified Financial Services (1.8%)
	69,525	Bank of America Corp.		1,047,047
	164,430	Citigroup, Inc. (See Note 6)		544,263

See Notes to Financial Statements
107

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
	34,920	JPMorgan Chase & Co.	$	1,455,116
	19,515	NYSE Euronext		493,730
				3,540,156
		Diversified Telecommunication Services (2.0%)
	49,025	AT&T, Inc.		1,374,171
	52,400	Verizon Communications, Inc.		1,736,012
	84,990	Windstream Corp.		934,040
				4,044,223
		Electric Utilities (1.0%)
	56,200	American Electric Power Co., Inc.		1,955,198
		Electrical Equipment (0.9%)
	41,770	Emerson Electric Co.		1,779,402
		Electronic Equipment, Instruments & Components (1.6%)
	159,320	Corning, Inc.		3,076,469
		Energy Equipment & Services (2.0%)
	12,750	Diamond Offshore Drilling, Inc.		1,254,855
	47,920	Halliburton Co.		1,441,913
	74,725	Weatherford International Ltd. (Switzerland) (a)		1,338,325
				4,035,093
		Food & Staples Retailing (0.6%)
	18,685	Costco Wholesale Corp.		1,105,591
		Food Products (1.3%)
	32,220	Kellogg Co.		1,714,104
	28,570	Kraft Foods, Inc. (Class A)		776,533
				2,490,637
		Health Care Equipment & Supplies (1.0%)
	11,290	C.R. Bard, Inc.		879,491
	22,660	Covidien PLC (Ireland)		1,085,187
				1,964,678
		Hotels, Restaurants & Leisure (1.1%)
	28,440	Carnival Corp. (Units) (Panama) (a)(b)		901,264
	20,460	McDonald's Corp.		1,277,522
				2,178,786
		Household Durables (0.9%)
	36,010	Gafisa SA (ADR) (Brazil)		1,165,284
	22,355	Sony Corp. (ADR) (Japan)		648,295
				1,813,579
		Household Products (0.4%)
	8,910	Colgate-Palmolive Co.		731,957

See Notes to Financial Statements
108

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Industrial Conglomerates (0.6%)
	80,150	General Electric Co.	$	1,212,670
		Information Technology Services (0.6%)
	13,695	Visa, Inc. (Class A)		1,197,765
		Insurance (1.6%)
	23,770	Chubb Corp.		1,169,009
	106,250	XL Capital Ltd. (Class A) (Cayman Islands)		1,947,562
				3,116,571
		Internet Software & Services (1.1%)
	21,350	eBay, Inc. (a)		502,579
	2,745	Google, Inc. (Class A) (a)		1,701,845
				2,204,424
		Life Sciences Tools & Services (0.6%)
	25,560	Thermo Fisher Scientific, Inc. (a)		1,218,956
		Machinery (1.6%)
	42,845	PACCAR, Inc.		1,553,988
	11,930	Parker Hannifin Corp.		642,789
	60,625	Trinity Industries, Inc.		1,057,300
				3,254,077
		Metals & Mining (2.3%)
	61,395	AK Steel Holding Corp.		1,310,783
	11,760	Freeport-McMoRan Copper & Gold, Inc. (a)		944,210
	25,775	Kinross Gold Corp. (Canada)		474,260
	33,055	United States Steel Corp.		1,821,992
				4,551,245
		Multiline Retail (0.5%)
	19,240	Kohl's Corp. (a)		1,037,613
		Oil, Gas & Consumable Fuels (1.8%)
	17,020	Exxon Mobil Corp.		1,160,594
	40,435	Hess Corp.		2,446,317
				3,606,911
		Pharmaceuticals (2.7%)
	26,280	Johnson & Johnson		1,692,695
	53,685	Merck & Co., Inc.		1,961,650
	92,360	Pfizer, Inc.		1,680,028
				5,334,373
		Real Estate Investment Trusts (REITs) (0.7%)
	38,040	Plum Creek Timber Co., Inc.		1,436,390

See Notes to Financial Statements
109

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2009 continued

NUMBER OF SHARES			VALUE
		Real Estate Management & Development (1.6%)
	136,220	CB Richard Ellis Group, Inc. (Class A) (a)	$	1,848,505
	69,680	E-House China Holdings Ltd. (ADR) (Cayman Islands) (a)		1,262,602
				3,111,107
		Semiconductors & Semiconductor Equipment (3.1%)
	73,700	Applied Materials, Inc.		1,027,378
	94,105	Intel Corp.		1,919,742
	30,000	Kla-Tencor Corp.		1,084,800
	181,117	Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (Taiwan)		2,071,979
				6,103,899
		Software (5.4%)
	179,585	Activision Blizzard, Inc. (a)		1,995,189
	88,050	Microsoft Corp.		2,684,645
	131,745	Oracle Corp.		3,233,022
	61,850	Sybase, Inc. (a)		2,684,290
				10,597,146
		Specialty Retail (1.6%)
	51,120	Staples, Inc.		1,257,041
	25,670	TJX Cos., Inc.		938,239
	328,570	Zale Corp. (a)		893,710
				3,088,990
		Tobacco (1.4%)
	53,010	Altria Group, Inc.		1,040,586
	35,245	Philip Morris International, Inc.		1,698,457
				2,739,043
		Water Utilities (1.0%)
	87,945	American Water Works Co., Inc.		1,970,847
		Total Common Stocks (Cost $94,822,825)		118,284,537

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE
		Corporate Bonds (8.3%)
		Advertising Services (0.1%)
$	100	WPP Finance (United Kingdom)		8.00	%	09/15/14	113,839
		Aerospace/Defense (0.0%)
	84	Systems 2001 Asset Trust (144A) (Cayman Islands) (c)		6.664		09/15/13	85,770

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Agricultural Chemicals (0.1%)
$	65	Potash Corp. of Saskatchewan, Inc. (Canada)		5.875	%	12/01/36	$	64,208
	25	Potash Corp. of Saskatchewan, Inc. (Canada)		6.50		05/15/19		27,738
								91,946
		Agricultural Operations (0.1%)
	55	Archer-Daniels-Midland Co.		5.45		03/15/18		58,679
	35	Bunge Ltd. Finance Corp.		8.50		06/15/19		39,963
								98,642
		Airlines (0.1%)
	145	America West Airlines LLC (Series 011G) (AMBAC Insd)		7.10		04/02/21		114,803
		Auto - Cars/Light Trucks (0.0%)
	60	Daimler Finance North America LLC		7.30		01/15/12		65,259
		Beverages - Wine/Spirits (0.0%)
	25	Constellation Brands, Inc.		7.25		09/01/16		25,500
		Brewery (0.1%)
	25	Anheuser-Busch InBev Worldwide, Inc. (144A) (c)		5.375		11/15/14		26,497
	50	Anheuser-Busch InBev Worldwide, Inc. (144A) (c)		7.20		01/15/14		56,758
	95	FBG Finance Ltd. (144A) (Australia) (c)		5.125		06/15/15		98,447
								181,702
		Building Product - Cement/Aggregation (0.1%)
	75	CRH America, Inc.		6.00		09/30/16		78,443
	30	Holcim US Finance Sarl & Cie SCS (144A) (Luxembourg) (c)		6.00		12/30/19		31,285
								109,728
		Building Societies (0.1%)
	110	Nationwide Building Society (144A) (United Kingdom) (c)		4.25		02/01/10		110,035
		Cable/Satellite TV (0.3%)
	115	Comcast Corp.		5.70		05/15/18		121,095
	15	Comcast Corp.		6.45		03/15/37		15,516
	30	Comcast Corp.		6.50		01/15/15		33,647
	100	COX Communications, Inc. (144A) (c)		8.375		03/01/39		124,907
	45	CSC Holdings, Inc.		7.625		07/15/18		46,575
	30	DIRECTV Holdings LLC/Financing Co., Inc. (144A) (c)		5.875		10/01/19		30,569
	30	DIRECTV Holdings LLC/Financing Co., Inc.		7.625		05/15/16		32,817
	20	Time Warner Cable, Inc.		6.75		07/01/18		22,007
	25	Time Warner Cable, Inc.		6.75		06/15/39		26,269

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	25	Time Warner Cable, Inc.		8.25	%	04/01/19	$	29,827
	65	Time Warner Cable, Inc.		8.75		02/14/19		79,350
								562,579
		Commercial Banks Non-U.S. (0.3%)
	175	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		195,545
	110	Commonwealth Bank of Australia (144A) (Australia) (c)		5.00		10/15/19		109,421
	130	HBOS PLC (144A) (United Kingdom) (c)		6.75		05/21/18		120,815
	100	Royal Bank of Scotland PLC (The) (144A) (United Kingdom) (c)		4.875		08/25/14		101,473
	75	Westpac Banking Corp. (Australia)		4.20		02/27/15		76,323
								603,577
		Commercial Banks - Eastern U.S. (0.2%)
	200	Credit Suisse (Switzerland)		5.30		08/13/19		205,780
	50	Credit Suisse (Switzerland)		6.00		02/15/18		52,401
	65	UBS AG/Stamford Branch (Switzerland)		5.875		12/20/17		66,906
								325,087
		Commercial Banks - Southern U.S. (0.1%)
	50	BB&T Corp. (MTN)		6.85		04/30/19		56,179
	60	Regions Financial Corp.		7.75		11/10/14		59,232
								115,411
		Computers (0.1%)
	100	International Business Machines Corp.		7.625		10/15/18		122,317
		Data Processing Services (0.0%)
	20	Fiserv, Inc.		6.80		11/20/17		22,103
		Diversified Financial Services (0.9%)
	135	Bank of America Corp. (Series L)		5.65		05/01/18		137,334
	185	Bank of America Corp.		5.75		12/01/17		189,743
	110	Citigroup, Inc. (See Note 6)		5.875		05/29/37		97,238
	185	Citigroup, Inc. (See Note 6)		6.125		11/21/17		186,764
	70	Citigroup, Inc. (See Note 6)		6.125		05/15/18		70,492
	120	Citigroup, Inc. (See Note 6)		8.50		05/22/19		138,801
	215	General Electric Capital Corp.		5.625		05/01/18		220,684
	225	General Electric Capital Corp. (Series G)		6.00		08/07/19		233,980
	245	Goldman Sachs Group, Inc. (The)		6.15		04/01/18		262,698
	80	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		82,492
	215	JPMorgan Chase & Co.		6.00		01/15/18		231,494
								1,851,720

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Diversified Manufactured Operation (0.3%)
$	90	Cooper US, Inc.		5.25	%	11/15/12	$	96,642
	305	General Electric Co.		5.25		12/06/17		312,171
	200	Tyco Electronics Group SA (Luxembourg)		5.95		01/15/14		209,382
								618,195
		Diversified Minerals (0.1%)
	50	Rio Tinto Finance USA Ltd. (Australia)		9.00		05/01/19		63,385
	60	Vale Overseas Ltd. (Cayman Islands)		5.625		09/15/19		60,884
	25	Vale Overseas Ltd. (Cayman Islands)		6.875		11/10/39		25,293
								149,562
		Electric - Integrated (0.5%)
	85	Electricite de France (EDF) (144A) (France) (c)		6.50		01/26/19		95,588
	125	Enel Finance International SA (144A) (Luxembourg) (c)		5.125		10/07/19		126,012
	150	Exelon Generation Co. LLC		5.20		10/01/19		150,351
	140	FirstEnergy Solutions Corp.		6.05		08/15/21		141,525
	75	NiSource Finance Corp.		6.80		01/15/19		80,345
	75	Ohio Power Co. (Series 1)		5.375		10/01/21		75,363
	50	Ohio Power Co. (Series K)		6.00		06/01/16		53,079
	55	PPL Energy Supply LLC		6.30		07/15/13		59,274
	35	PPL Energy Supply LLC		6.50		05/01/18		36,553
	80	Progress Energy, Inc.		7.05		03/15/19		89,654
	110	Virginia Electric & Power Co.		8.875		11/15/38		155,773
								1,063,517
		Electronic Component (0.0%)
	75	Koninklijke Philips Electronics N.V. (Netherlands)		5.75		03/11/18		79,935
		Electronic Connectors (0.0%)
	45	Amphenol Corp.		4.75		11/15/14		45,064
		Electronic Measuring Instrument (0.0%)
	50	Agilent Technologies, Inc.		5.50		09/14/15		52,474
		Enterprise Software/Service (0.0%)
	85	CA, Inc.		5.375		12/01/19		85,640
		Finance - Consumer Loans (0.1%)
	75	HSBC Finance Corp.		6.375		10/15/11		79,798
	115	HSBC Finance Corp.		6.75		05/15/11		121,581
	40	SLM Corp. (MTN)		8.45		06/15/18		39,528
								240,907

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Finance - Credit Card (0.1%)
$	70	American Express Co.		8.125	%	05/20/19	$	83,095
	110	American Express Credit Corp. (Series C)		7.30		08/20/13		123,727
								206,822
		Finance - Investment Banker/Broker (0.4%)
	60	Bear Stearns Cos. LLC (The)		6.40		10/02/17		65,505
	200	Bear Stearns Cos. LLC (The)		7.25		02/01/18		229,929
	45	Credit Suisse USA, Inc.		5.125		08/15/15		47,903
	225	Merrill Lynch & Co., Inc. (MTN)		6.875		04/25/18		242,810
	105	TD Ameritrade Holding Corp.		5.60		12/01/19		104,499
								690,646
		Finance - Other Services (0.1%)
	100	Iberdrola Finance Ireland Ltd. (144A) (Ireland) (c)		5.00		09/11/19		99,705
		Food - Miscellaneous/Diversified (0.2%)
	30	ConAgra Foods, Inc.		7.00		10/01/28		32,235
	55	ConAgra Foods, Inc.		8.25		09/15/30		66,106
	180	Kraft Foods, Inc.		7.00		08/11/37		192,307
								290,648
		Food - Retail (0.1%)
	15	Delhaize America, Inc.		9.00		04/15/31		19,256
	50	Delhaize Group SA (Belgium)		5.875		02/01/14		53,749
	20	Kroger Co. (The)		3.90		10/01/15		20,135
	10	Kroger Co. (The)		6.40		08/15/17		10,941
								104,081
		Gold Mining (0.1%)
	125	Newmont Mining Corp.		5.125		10/01/19		125,296
		Independent Power Producer (0.0%)
	45	NRG Energy, Inc.		8.50		06/15/19		46,350
		Life/Health Insurance (0.1%)
	50	Principal Financial Group, Inc.		8.875		05/15/19		57,771
	85	Prudential Financial, Inc. (MTN)		4.75		09/17/15		86,298
	40	Prudential Financial, Inc. (MTN)		6.625		12/01/37		41,134
	20	Prudential Financial, Inc. (Series D)		7.375		06/15/19		22,462
								207,665
		Medical Instruments (0.0%)
	45	Boston Scientific Corp.		6.00		01/15/20		46,066

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Medical Labs & Testing Services (0.1%)
$	55	Quest Diagnostics, Inc.		4.75	%	01/30/20	$	53,847
	115	Roche Holdings, Inc. (144A) (c)		6.00		03/01/19		126,593
								180,440
		Medical - Biomedical/Genetics (0.0%)
	60	Biogen Idec, Inc.		6.875		03/01/18		64,682
		Medical - Drugs (0.0%)
	15	Wyeth		5.45		04/01/17		16,011
	20	Wyeth		6.45		02/01/24		22,334
								38,345
		Medical - Generic Drugs (0.0%)
	60	Watson Pharmaceuticals, Inc.		6.125		08/15/19		62,020
		Medical - HMO (0.1%)
	80	UnitedHealth Group, Inc.		6.00		02/15/18		82,768
	15	WellPoint, Inc.		7.00		02/15/19		16,805
								99,573
		Medical - Wholesale Drug Distribution (0.0%)
	45	AmerisourceBergen Corp.		4.875		11/15/19		44,512
		Metal - Copper (0.0%)
	30	Freeport-McMoRan Copper & Gold, Inc.		8.375		04/01/17		32,895
		Mortgage Banks (0.1%)
	100	Abbey National Treasury Services PLC (144A) (United Kingdom) (c)		3.875		11/10/14		100,466
		Multi-line Insurance (0.1%)
	50	Allstate Corp. (The) (See Note 6)		7.45		05/16/19		58,192
	75	MetLife, Inc. (Series A) (See Note 6)		6.817		08/15/18		83,670
	75	MetLife, Inc. (See Note 6)		6.75		06/01/16		84,098
	10	MetLife, Inc. (See Note 6)		7.717		02/15/19		11,771
								237,731
		Multimedia (0.2%)
	100	News America, Inc.		7.85		03/01/39		117,341
	40	Time Warner, Inc.		5.875		11/15/16		43,241
	60	Time Warner, Inc.		7.70		05/01/32		70,663
	20	Viacom, Inc.		5.625		09/15/19		20,921
	80	Viacom, Inc.		6.875		04/30/36		86,778
	45	Vivendi (144A) (France) (c)		6.625		04/04/18		48,848
								387,792

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Networking Products (0.0%)
$	60	Cisco Systems, Inc.		4.95	%	02/15/19	$	61,613
		Non-Hazardous Waste Disposal (0.1%)
	60	Republic Services, Inc. (144A) (c)		5.50		09/15/19		61,041
	80	Waste Management, Inc.		6.125		11/30/39		79,772
								140,813
		Office Automation & Equipment (0.0%)
	15	Xerox Corp.		5.625		12/15/19		15,007
	45	Xerox Corp.		6.35		05/15/18		47,017
								62,024
		Oil & Gas Drilling (0.0%)
	55	Transocean, Inc. (Cayman Islands)		6.00		03/15/18		58,777
		Oil Companies - Exploration & Production (0.2%)
	100	Gaz Capital SA (144A) (Luxembourg) (c)		6.51		03/07/22		92,250
	30	Pioneer Natural Resources Co.		6.65		03/15/17		29,738
	95	Questar Market Resources, Inc.		6.80		04/01/18		99,156
	105	XTO Energy, Inc.		5.50		06/15/18		112,190
	10	XTO Energy, Inc.		6.50		12/15/18		11,446
								344,780
		Oil Company - Integrated (0.1%)
	75	Hess Corp.		6.00		01/15/40		74,525
	80	Petrobras International Finance Co. (Cayman Islands)		5.75		01/20/20		81,783
								156,308
		Oil - Field Services (0.1%)
	150	Weatherford International Ltd. (Switzerland)		9.625		03/01/19		187,306
		Paper & Related Products (0.1%)
	10	International Paper Co.		7.30		11/15/39		10,642
	75	International Paper Co.		7.50		08/15/21		84,202
								94,844
		Pharmacy Services (0.1%)
	110	Medco Health Solutions, Inc.		7.125		03/15/18		123,850
		Pipelines (0.4%)
	55	CenterPoint Energy Resources Corp.		6.25		02/01/37		53,487
	25	CenterPoint Energy Resources Corp. (Series B)		7.875		04/01/13		28,180
	20	Colorado Interstate Gas Co.		6.80		11/15/15		22,181
	50	El Paso Corp. (MTN)		8.25		02/15/16		53,625
	75	Energy Transfer Partners LP		8.50		04/15/14		86,651
	35	Enterprise Products Operating LLC		5.25		01/31/20		34,690
	90	Enterprise Products Operating LLC (Series N)		6.50		01/31/19		97,254

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	50	Kinder Morgan Energy Partners LP		5.95	%	02/15/18	$	53,046
	135	Kinder Morgan Finance Co. ULC (Canada)		5.70		01/05/16		130,275
	60	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		61,383
	60	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		70,862
	50	Spectra Energy Capital LLC		7.50		09/15/38		55,530
	55	Texas Eastern Transmission LP		7.00		07/15/32		62,003
								809,167
		Property Trust (0.0%)
	75	WEA Finance LLC/WT Finance Aust Pty Ltd. (144A) (c)		6.75		09/02/19		80,675
		Property/Casualty Insurance (0.0%)
	80	ACE INA Holdings, Inc.		5.60		05/15/15		85,949
		Real Estate Operation/Development (0.0%)
	35	Brookfield Asset Management, Inc. (Canada)		5.80		04/25/17		31,939
	30	Brookfield Asset Management, Inc. (Canada)		7.125		06/15/12		31,510
								63,449
		Reinsurance (0.1%)
	85	Platinum Underwriters Finance, Inc. (Series B)		7.50		06/01/17		87,053
	60	Reinsurance Group of America, Inc.		6.45		11/15/19		59,911
								146,964
		REITS - Apartments (0.0%)
	60	AvalonBay Communities, Inc. (MTN)		6.10		03/15/20		61,385
		REITS - Office Property (0.0%)
	75	Boston Properties LP		5.875		10/15/19		75,374
		REITS - Regional Malls (0.1%)
	100	Simon Property Group LP		6.75		05/15/14		106,669
		Retail - Building Products (0.1%)
	90	Home Depot, Inc. (The)		5.875		12/16/36		87,161
		Retail - Drug Store (0.1%)
	153	CVS Pass-Through Trust		6.036		12/10/28		145,315
		Retail - Regional Department Store (0.0%)
	75	Kohl's Corp.		6.875		12/15/37		85,344
		Retail - Restaurants (0.1%)
	60	Yum! Brands, Inc.		5.30		09/15/19		60,378
	30	Yum! Brands, Inc.		6.25		03/15/18		32,777
	5	Yum! Brands, Inc.		6.875		11/15/37		5,420
								98,575
		Satellite Telecommunication (0.0%)
	50	Intelsat Subsidiary Holding Co. Ltd. (Bermuda)		8.50		01/15/13		51,250

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Schools (0.0%)
$	65	Duke University		5.15	%	04/01/19	$	67,885
		Semiconductor Equipment (0.0%)
	45	KLA-Tencor Corp.		6.90		05/01/18		47,421
		Special Purpose Entity (0.3%)
	190	AIG SunAmerica Global Financing (144A) (c)		6.30		05/10/11		189,051
	140	Farmers Exchange Capital (144A) (c)		7.05		07/15/28		122,259
	65	Harley-Davidson Funding Corp. (144A) (c)		6.80		06/15/18		64,922
	100	Pearson Dollar Finance Two PLC (144A) (United Kingdom) (c)		6.25		05/06/18		105,169
	130	Xlliac Global Funding (144A) (c)		4.80		08/10/10		130,774
								612,175
		Steel - Producers (0.1%)
	190	ArcelorMittal (Luxembourg)		9.85		06/01/19		246,150
		Super - Regional Banks-U.S. (0.3%)
	155	Capital One Financial Corp.		6.75		09/15/17		167,042
	60	PNC Funding Corp.		6.70		06/10/19		67,258
	385	Wells Fargo & Co.		5.625		12/11/17		401,099
								635,399
		Telecom Equipment Fiber Optics (0.0%)
	30	Corning, Inc.		6.625		05/15/19		32,750
		Telecommunication Services (0.0%)
	20	Qwest Corp.		6.50		06/01/17		19,750
	40	Qwest Corp.		6.875		09/15/33		35,400
								55,150
		Telephone - Integrated (0.5%)
	95	AT&T, Inc.		6.15		09/15/34		94,203
	155	AT&T, Inc.		6.30		01/15/38		157,959
	25	CenturyTel, Inc. (Series Q)		6.15		09/15/19		25,606
	60	Deutsche Telekom International Finance BV (Netherlands)		8.75		06/15/30		77,374
	60	Telecom Italia Capital SA (Luxembourg)		6.999		06/04/18		66,124
	90	Telecom Italia Capital SA (Luxembourg)		7.175		06/18/19		100,513
	125	Telefonica Europe BV (Netherlands)		8.25		09/15/30		156,057
	110	Verizon Communications, Inc.		5.50		02/15/18		114,980
	15	Verizon Communications, Inc.		5.85		09/15/35		14,675
	120	Verizon Communications, Inc.		6.35		04/01/19		132,622
	65	Verizon Communications, Inc.		8.95		03/01/39		88,224
								1,028,337

See Notes to Financial Statements
118

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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Tobacco (0.1%)
$	60	Altria Group, Inc.		9.25	%	08/06/19	$	73,240
	50	BAT International Finance PLC (144A) (United Kingdom) (c)		9.50		11/15/18		63,595
	75	Philip Morris International, Inc.		5.65		05/16/18		79,000
								215,835
		Transport - Rail (0.1%)
	45	CSX Corp.		7.375		02/01/19		51,496
	55	Norfolk Southern Corp.		5.75		01/15/16		58,587
	40	Union Pacific Corp.		6.125		02/15/20		43,382
	75	Union Pacific Corp.		7.875		01/15/19		90,902
								244,367
		Total Corporate Bonds(Cost $15,547,889)						16,314,108
		Foreign Government Obligations (0.2%)
	230	Federative Republic of Brazil (Brazil)		6.00		01/17/17		249,550
	105	Italian Republic (Italy)		6.875		09/27/23		119,121
	25	Republic of Peru (Peru)		7.125		03/30/19		28,875
		Total Foreign Government Obligations(Cost $376,635)						397,546
		U.S. Government Agencies and Obligations (11.0%)
		Commercial Banks - Central U.S. - FDIC Guaranteed (0.1%)
	200	KeyBank NA		3.20		06/15/12		207,719
		Diversified Banking Institution (0.1%)
	200	GMAC, Inc.		2.20		12/19/12		201,326
		Diversified Financial Services - FDIC Guaranteed (1.4%)
	1,200	Citigroup Funding, Inc. (See Note 6)		2.25		12/10/12		1,210,273
	300	General Electric Capital Corp.		2.20		06/08/12		304,387
	1,200	General Electric Capital Corp. (Series G)		2.625		12/28/12		1,222,969
								2,737,629
		Finance - Consumer Loans - FDIC Guaranteed (0.5%)
	1,000	John Deere Capital Corp.		2.875		06/19/12		1,031,086
		U.S. Government Agencies (1.1%)
		Federal Home Loan Mortgage Corp.,
	150			3.75		03/27/19		147,347
	400			4.875		06/13/18		428,606
	250			6.75		03/15/31		305,376

See Notes to Financial Statements
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PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	500	Federal National Mortgage Assoc		2.875	%	12/11/13	$	510,484
	700	Federal National Mortgage Assoc.		4.375		10/15/15		745,642
								2,137,455
		U.S. Government Obligations (7.8%)
		U.S. Treasury Bond,
	1,715			3.50		02/15/39		1,405,230
	350			4.25		05/15/39		328,453
		U.S. Treasury Note,
	2,400			0.875		03/31/11		2,405,158
	500			1.375		09/15/12		497,813
	325			1.75		01/31/14		318,932
	1,700			1.75		03/31/14		1,660,157
	300			2.125		11/30/14		292,993
	5,950			2.375		10/31/14		5,887,245
	1,000			2.75		02/15/19		920,938
	50			3.375		11/15/19		48,110
	480			3.75		11/15/18		480,113
		U.S. Treasury Strip,
	735			0.00		11/15/19		488,183
	1,330			0.00		11/15/21		781,609
								15,514,934
		Total U.S. Government Agencies and Obligations(Cost $22,325,577)						21,830,149
		Asset-Backed Securities (0.1%)
	46	Harley-Davidson Motorcycle Trust 2005-2 A2		4.07		02/15/12		46,858
	56	Harley-Davidson Motorcycle Trust 2005-3 A2		4.41		06/15/12		57,262
		Total Asset-Backed Securities(Cost $102,844)						104,120
		U.S. Government Agencies - Mortgage-Backed Securities (0.0%)
		Federal Home Loan Mortgage Corp (ARM)
	2			6.50		05/01/29 - 12/01/31		2,812
		Federal National Mortgage Assoc.
	2			6.50		11/01/29		2,473
		Total U.S. Government Agencies - Mortgage-Backed Securities (Cost $5,069)						5,285
		Municipal Bonds (0.1%)
	45	State of California Various Purpose General Obligation Bonds		5.95		04/01/16		45,462

See Notes to Financial Statements
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Portfolio of Investments n December 31, 2009 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Transportation (0.1%)
$	85	Illinois State Toll Highway Authority (The) 2009 (Series A)		6.184	%	01/01/34	$	86,541
		Total Municipal Bonds (Cost $130,209)						132,003

NUMBER OF SHARES
		Investment Trusts/Mutual Funds (1.0%)
	23,935	iShares FTSE/Xinhua China 25 Index Fund	1,011,493
	38,155	ProShares UltraShort Financials	924,496

		Total Investment Trusts/Mutual Funds(Cost $1,688,223)			1,935,989
PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investments (19.4%)
		U.S. Government Obligation (d)(e) (0.2%)
$	450	U.S. Treasury Bills (Cost $449,763)	0.152	05/06/10	449,769

NUMBER OF SHARES (000)
		Investment Company (19.2%)
	37,997	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $37,996,759)	37,996,759
		Total Short-Term Investments(Cost $38,446,522)	38,446,528

Total Investments (Cost $173,445,793) (f)(g)	100.0	%		197,450,265
Other Assets in Excess of Liabilities	0.0			17,845
Net Assets	100.0	%	$	197,468,110

  ADR  American Depositary Receipt.

  ARM  Adjustable Rate Mortgage. Interest rate in effect as of December 31, 2009.

  FDIC  Federal Deposit Insurance Corporation.

  MTN  Medium Term Note.

  (a)  Non-income producing security.

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

  (c)  Resale is restricted to qualified institutional investors.

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Portfolio of Investments n December 31, 2009 continued

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

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

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

  (g)  The aggregate cost for federal income tax purposes is $173,772,670. The aggregate gross unrealized appreciation is $28,185,374 and the aggregate gross unrealized depreciation is $4,507,779 resulting in net unrealized appreciation of $23,677,595.

Bond Insurance:

AMBAC  AMBAC Assurance Corporation.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2009:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	29	Long	U.S. Treasury Notes 5 Year, March 2010	$	3,317,102		$	(56,445	)
	5	Short	U.S. Treasury Bonds 30 Year, March 2010		(576,875	)		24,141
	11	Short	U.S. Treasury Notes 2 Year, March 2010		(2,378,922	)		11,955
	28	Short	U.S. Treasury Notes 10 Year, March 2010		(3,232,688	)		80,046
Net Unrealized Appreciation							$	59,697

CREDIT DEFAULT SWAPS CONTRACTS OPEN AT DECEMBER 31, 2009:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000's)		INTEREST RATE			TERMINATION DATE	UNREALIZED DEPRECIATION			UPFRONT PAYMENTS			VALUE			CREDIT RATING OF REFERENCE OBLIGATION+
																	(unaudited)
Bank of America, N.A.   Tyco Electronics Ltd.	Buy	$	165		5.00	%	June 20, 2014	$	(23,798	)	$	(6,932	)	$	(30,730	)	BBB-

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

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INTEREST RATE SWAP CONTRACTS OPEN AT DECEMBER 31, 2009:

COUNTERPARTY	NOTIONAL AMOUNT (000's)		PAYMENTS RECEIVED BY FUND	PAYMENTS MADE BY FUND†	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank^^	$	710	Fixed Rate 0.00%	Floating Rate 0.816#%	November 15, 2019	$	(42,573	)
Barclays Bank^		710	Floating Rate 4.141#	Fixed Rate 0.00	November 15, 2019		(31,991	)
Credit Suisse Group***		2,560	Fixed Rate 5.086	Floating Rate 0.00#	December 23, 2019		(12,288	)
Credit Suisse Group		614	Floating Rate 0.25#	Fixed Rate 4.39	December 23, 2039		14,159
Deutsche Bank AG***		7,840	Fixed Rate 4.40	Floating Rate 0.00#	October 01, 2016		(48,059	)
Deutsche Bank AG***		4,218	Floating Rate 0.00#	Fixed Rate 4.41	October 03, 2018		50,068
JPMorgan Chase Bank N.A. New York^		735	Floating Rate 4.314#	Fixed Rate 0.00	November 15, 2019		(27,221	)
JPMorgan Chase Bank N.A. New York^		1,330	Floating Rate 4.141#	Fixed Rate 0.00	November 15, 2021		(43,619	)
Net Unrealized Depreciation						$	(141,524	)

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

  #  Floating rate based on USD-3 Months LIBOR.

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

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

SUMMARY OF INVESTMENTS

PORTFOLIO COMPOSITION	VALUE			PERCENT OF TOTAL INVESTMENTS
Common Stocks	$	118,284,537			59.9	%
Investment Companies		37,996,759			19.2
U.S. Government Agencies and Obligations		21,830,149			11.0
Corporate Bonds		16,314,108			8.3
Investment Trusts/Mutual Funds		1,935,989			1.0
U.S. Government Obligation		449,769			0.2
Foreign Government Obligations		397,546			0.2
Tax-Exempt Municipal Bonds		132,003			0.1
Asset-Backed Securities		104,120			0.1
U.S. Government Agencies - Mortgage-Backed Securities		5,285			—
	$	197,450,265	^		100.0	%

^{^}  Does not include open long/short futures contracts with an underlying face amount of $9,505,587 with net unrealized appreciation of $59,697. Also does not include open swap contracts with net unrealized depreciation of $165,322.

See Notes to Financial Statements
123

Morgan Stanley Variable Investment Series

Financial Statements

Statements of Assets and Liabilities
December 31, 2009

	Money Market			Limited Duration			Income Plus			High Yield			Global Infrastructure
Assets:
Investments in securities, at value*	$	165,941,767	(1)	$	71,713,600		$	242,696,996		$	33,710,977	(2)	$	87,721,784	(2)
Investments in affiliates, at value**		—			5,697,676			16,697,616			8,309,745			5,831,465
Unrealized appreciation on open swap contracts		—			144,026			14,669			—			—
Unrealized appreciation on open forward foreign currency contracts		—			—			—			—			128,977
Cash		5,302			—			—			10,544			26,045	(3)
Receivable for:
Interest		40,659			512,502			3,495,477			605,528			—
Dividends		—			—			—			—			202,958
Foreign withholding taxes reclaimed		—			—			—			—			33,519
Interest and dividends from affiliates		—			29,950			150,996			247			108
Premium paid on open swap contracts		—			—			24,263			—			—
Variation margin		—			22,249			143,551			—			—
Investments sold		—			—			—			—			—
Principal paydowns		—			4,374			—			—			—
Shares of beneficial interest sold		—			—			—			—			780
Swap contracts termination		—			—			3,778			—			—
Periodic interest on open swap contracts		—			36			—			—			—
Prepaid expenses and other assets		16,737			6,377			21,285			4,204			8,355
Total Assets		166,004,465			78,130,790			263,248,631			42,641,245			93,953,991
Liabilities:
Collateral on securities loaned, at value		—			—			—			8,706,576			7,036,788
Written options outstanding, at value		—			—			—			—			53,326	(4)
Unrealized depreciation on open swap contracts		—			406,080			305,128			—			—
Unrealized depreciation on open forward foreign currency contracts		—			—			—			—			73,883
Payable for:
Shares of beneficial interest redeemed		292,763			5,645			97,552			35,193			104,128
Investment advisory fee		20,511			19,552			93,134			11,559			41,638
Distribution fee (Class Y)		—			12,973			31,463			3,534			3,761
Swap contracts termination		—			—			—			251,972			—
Administration fee		7,207			5,300			17,909			2,272			5,856
Premium received on open swap contracts		—			—			38,859			—			—
Variation margin		—			—			—			—			—
Transfer agent fee		500			500			500			500			500
Periodic interest on open swap contracts		—			626			4,116			—			—
Accrued expenses and other payables		52,289			38,401			64,314			83,035			67,751
Total Liabilities		373,270			489,077			652,975			9,094,641			7,387,631
Net Assets	$	165,631,195		$	77,641,713		$	262,595,656		$	33,546,604		$	86,566,360
Composition of Net Assets:
Paid-in-capital	$	165,627,579		$	111,272,210		$	273,356,485		$	285,118,221		$	68,354,127
Net unrealized appreciation (depreciation)		—			1,004,217			16,090,067			(50,439,067	)		11,169,556
Accumulated undistributed net investment income (net investment loss)		3,616			2,072,916			13,986,311			2,239,958			1,785,290
Accumulated net realized gain (loss)		—			(36,707,630	)		(40,837,207	)		(203,372,508	)		5,257,387
Net Assets	$	165,631,195		$	77,641,713		$	262,595,656		$	33,546,604		$	86,566,360
* Cost	$	165,941,767		$	70,610,887		$	228,384,461		$	84,150,044		$	76,589,483
** Affiliated Cost	$	—		$	5,647,597		$	15,853,607		$	8,309,745		$	5,831,465
Class X Shares:
Net Assets	$	84,486,463		$	16,888,923		$	114,487,919		$	16,823,918		$	68,747,956
Shares Outstanding (unlimited shares authorized, $.01 par value)		84,484,669			2,154,431			10,417,473			14,903,032			7,924,641
Net Asset Value Per Share	$	1.00		$	7.84		$	10.99		$	1.13		$	8.68
Class Y Shares:
Net Assets	$	81,144,732		$	60,752,790		$	148,107,737		$	16,722,686		$	17,818,404
Shares Outstanding (unlimited shares authorized, $.01 par value)		81,142,916			7,778,377			13,530,844			14,825,696			2,061,174
Net Asset Value Per Share	$	1.00		$	7.81		$	10.95		$	1.13		$	8.64

⁽¹⁾  Including repurchase agreements of $67,465,000.

⁽²⁾  Including securities loaned at value of $8,425,561, $6,728,840, $10,276,083, and $1,792,698, respectively.

⁽³⁾  Including foreign currency valued at $26,046, $168,513, and $157,137, respectively with a cost of $26,034, $168,578, and $156,029, respectively.

⁽⁴⁾  Premium received $29,784 and $11,657, respectively.

See Notes to Financial Statements
124

	Income Builder			Dividend Growth			Global Dividend Growth			European Equity			Capital Opportunities
Assets:
Investments in securities, at value*	$	32,375,974		$	248,860,182		$	90,638,143	(2)	$	78,421,375	(2)	$	259,123,606
Investments in affiliates, at value**		609,330			7,840,780			10,264,721			3,805,800			7,508,265
Unrealized appreciation on open swap contracts		—			—			—			—			—
Unrealized appreciation on open forward foreign currency contracts		—			—			482,066			—			—
Cash		36,055			—			168,513	(3)		157,137	(3)		—
Receivable for:
Interest		87,481			—			—			—			—
Dividends		50,424			396,455			199,255			117,668			12,446
Foreign withholding taxes reclaimed		3,644			48,714			21,360			94,868			—
Interest and dividends from affiliates		194			399			254			179			1,697
Premium paid on open swap contracts		—			—			—			—			—
Variation margin		—			—			—			—			—
Investments sold		3,523			—			—			—			—
Principal paydowns		—			—			—			—			—
Shares of beneficial interest sold		—			—			—			—			—
Swap contracts termination		—			—			—			—			—
Periodic interest on open swap contracts		—			—			—			—			—
Prepaid expenses and other assets		4,299			18,088			8,666			7,662			27,168
Total Assets		33,170,924			257,164,618			101,782,978			82,604,689			266,673,182
Liabilities:
Collateral on securities loaned, at value		—			—			10,768,263			1,903,682			—
Written options outstanding, at value		—			3,422	(4)		—			—			—
Unrealized depreciation on open swap contracts		—			—			—			—			—
Unrealized depreciation on open forward foreign currency contracts		—			—			60,621			—			—
Payable for:
Shares of beneficial interest redeemed		3,204			176,357			66,829			65,701			83,838
Investment advisory fee		18,746			117,022			51,331			50,376			92,222
Distribution fee (Class Y)		3,470			13,619			6,409			4,126			13,569
Swap contracts termination		—			—			—			—			—
Administration fee		2,276			17,364			6,164			5,489			17,952
Premium received on open swap contracts		—			—			—			—			—
Variation margin		—			—			—			—			—
Transfer agent fee		500			500			500			500			500
Periodic interest on open swap contracts		—			—			—			—			—
Accrued expenses and other payables		28,183			94,893			62,591			54,970			63,860
Total Liabilities		56,379			423,177			11,022,708			2,084,844			271,941
Net Assets	$	33,114,545		$	256,741,441		$	90,760,270		$	80,519,845		$	266,401,241
Composition of Net Assets:
Paid-in-capital	$	35,370,592		$	458,029,554		$	95,633,045		$	84,996,590		$	378,044,104
Net unrealized appreciation (depreciation)		2,127,006			7,879,880			14,562,737			7,023,990			48,182,605
Accumulated undistributed net investment income (net investment loss)		655,381			4,049,585			1,096,960			1,813,052			392,620
Accumulated net realized gain (loss)		(5,038,434	)		(213,217,578	)		(20,532,472	)		(13,313,787	)		(160,218,088	)
Net Assets	$	33,114,545		$	256,741,441		$	90,760,270		$	80,519,845		$	266,401,241
* Cost	$	30,207,669		$	239,241,840		$	76,492,882		$	71,404,113		$	210,941,276
** Affiliated Cost	$	650,629		$	9,587,477		$	10,264,721		$	3,805,800		$	7,508,265
Class X Shares:
Net Assets	$	17,116,436		$	192,278,680		$	60,521,089		$	61,196,712		$	202,278,979
Shares Outstanding (unlimited shares authorized, $.01 par value)		1,780,513			14,646,035			7,092,386			3,968,574			6,438,280
Net Asset Value Per Share	$	9.61		$	13.13		$	8.53		$	15.42		$	31.42
Class Y Shares:
Net Assets	$	15,998,109		$	64,462,761		$	30,239,181		$	19,323,133		$	64,122,262
Shares Outstanding (unlimited shares authorized, $.01 par value)		1,671,448			4,925,107			3,577,071			1,258,905			2,054,648
Net Asset Value Per Share	$	9.57		$	13.09		$	8.45		$	15.35		$	31.21

125

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Financial Statements continued

Statements of Assets and Liabilities continued
December 31, 2009

	S&P 500 Index			Aggressive Equity			Strategist
Assets:
Investments in securities, at value*	$	127,252,747		$	31,690,560		$	156,967,944
Investments in affiliates, at value**		3,116,709			815,431			40,482,321
Unrealized appreciation on open swap contracts		—			—			64,227
Unrealized appreciation on open forward foreign currency contracts		—			—			—
Cash		25,679			—			20,210
Receivable for:
Interest		—			—			349,273
Dividends		172,776			1,523			125,783
Foreign withholding taxes reclaimed		—			—			—
Interest and dividends from affiliates		1,689			169			14,320
Variation margin		—			—			8,377
Investments sold		—			—			61,572
Principal paydowns		—			—			—
Shares of beneficial interest sold		—			—			—
Swap contracts termination		—			—			—
Periodic interest on open swap contracts		—			—			38
Prepaid expenses and other assets		10,531			4,805			17,086
Total Assets		130,580,131			32,512,488			198,111,151
Liabilities:
Collateral on securities loaned, at value		—			—			—
Written options outstanding, at value		—			—			—
Unrealized depreciation on open swap contracts		—			—			229,549
Unrealized depreciation on open forward foreign currency contracts		—			—			—
Payable for:
Shares of beneficial interest redeemed		83,715			23,841			234,324
Investment advisory fee		12,849			18,039			62,979
Distribution fee (Class Y)		19,458			3,675			12,656
Swap contracts termination		—			—			7,478
Administration fee		8,868			2,180			13,426
Premium received on open swap contracts		—			—			6,932
Variation margin		18,810			—			—
Transfer agent fee		500			500			500
Periodic interest on open swap contracts		—			—			895
Accrued expenses and other payables		48,077			25,670			74,302
Total Liabilities		192,277			73,905			643,041
Net Assets	$	130,387,854		$	32,438,583		$	197,468,110
Composition of Net Assets:
Paid-in-capital	$	134,780,777		$	41,475,257		$	169,862,605
Net unrealized appreciation (depreciation)		27,972,115			6,205,334			23,930,568
Accumulated undistributed net investment income (net investment loss)		2,208,382			(38,217	)		3,945,368
Accumulated net realized gain (loss)		(34,573,420	)		(15,203,791	)		(270,431	)
Net Assets	$	130,387,854		$	32,438,583		$	197,468,110
* Cost	$	97,605,865		$	25,485,260		$	132,232,439
** Affiliated Cost	$	4,811,720		$	815,431		$	41,213,354
Class X Shares:
Net Assets	$	38,872,743		$	14,897,949		$	137,731,064
Shares Outstanding (unlimited shares authorized, $.01 par value)		3,833,102			969,431			11,107,189
Net Asset Value Per Share	$	10.14		$	15.37		$	12.40
Class Y Shares:
Net Assets	$	91,515,111		$	17,540,634		$	59,737,046
Shares Outstanding (unlimited shares authorized, $.01 par value)		9,076,761			1,163,539			4,836,227
Net Asset Value Per Share	$	10.08		$	15.08		$	12.35

See Notes to Financial Statements
126

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Operations
For the year ended December 31, 2009

	Money Market			Limited Duration			Income Plus
Net Investment Income:
Income
Dividends		—			—			—
Interest	$	836,468		$	2,330,343		$	15,134,955
Interest and dividends from affiliates		—			80,077			447,254
Total Income		836,468			2,410,420			15,582,209
Expenses
Investment advisory fee		886,358			233,337			1,054,790
Administration fee		98,484			62,223			200,912
Distribution fee (Class Y shares)		241,652			153,015			350,733
Mutual fund insurance (Note 9)		63,910			—			—
Professional fees		76,837			53,580			68,018
Shareholder reports and notices		15,737			5,797			13,742
Custodian fees		7,757			2,481			13,373
Trustees' fees and expenses		198			4,856			8,726
Transfer agent fees and expenses		500			500			500
Other		19,223			19,175			42,814
Total Expenses		1,410,656			534,964			1,753,608
Less: amounts waived		(615,281	)		—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		—			(2,429	)		(4,828	)
Net Expenses		795,375			532,535			1,748,780
Net Investment Income (Loss)		41,093			1,877,885			13,833,429
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		3,704			805,892			(1,181,255	)
Investments in affiliates		—			5,183			78,650
Futures contracts		—			(770,199	)		(4,200,425	)
Swap contracts		—			2,456,451			10,886,034
Options written		—			(30,688	)		—
Foreign currency translation		—			1,442			222
Net Realized Gain (Loss)		3,704			2,468,081			5,583,226
Change in Unrealized Appreciation/Depreciation on:
Investments		—			535,311			34,679,517
Investments in affiliates		—			75,943			844,009
Futures contracts		—			615,755			5,076,776
Swap contracts		—			(1,380,565	)		(9,424,040	)
Options written		—			35,017			—
Foreign currency translation		—			70			613
Net Change in Unrealized Appreciation/Depreciation		—			(118,469	)		31,176,875
Net Gain		3,704			2,349,612			36,760,101
Net Increase	$	44,797		$	4,227,497		$	50,593,530

See Notes to Financial Statements
127

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Operations continued
For the year ended December 31, 2009

	High Yield			Global Infrastructure			Income Builder			Dividend Growth			Global Dividend Growth
Net Investment Income:
Income
Dividends†	$	10,722		$	3,327,758		$	552,388		$	5,655,428		$	3,797,550
Interest†		3,163,684			—			487,771			—			75
Interest and dividends from affiliates		4,949			1,749			4,170			131,825			4,041
Income from securities loaned - net		19,077			157,698			—			—			117,962
Total Income		3,198,432			3,487,205			1,044,329			5,787,253			3,919,628
†Net of foreign withholding taxes		—			305,596			9,920			33,941			268,122
Expenses
Investment advisory fee		128,012			458,708			205,164			1,274,317			574,140
Administration fee		24,383			64,380			24,497			187,340			68,554
Distribution fee (Class Y shares)		38,336			40,487			37,271			144,775			70,567
Mutual fund insurance (Note 9)		—			—			—			—			—
Professional fees		350,248			67,665			55,047			68,433			75,162
Shareholder reports and notices		10,355			44,114			8,070			22,161			9,335
Custodian fees		1,291			119,065			11,135			5,061			53,157
Trustees' fees and expenses		769			1,996			1,248			2,953			4,254
Transfer agent fees and expenses		500			500			500			500			500
Registration fees		—			—			—			—			—
Other		16,793			20,303			5,421			18,986			17,670
Total Expenses		570,687			817,218			348,353			1,724,526			873,339
Less: amounts waived/reimbursed		—			—			—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		(2,156	)		(888	)		(1,836	)		(4,041	)		(1,775	)
Net Expenses		568,531			816,330			346,517			1,720,485			871,564
Net Investment Income (Loss)		2,629,901			2,670,875			697,812			4,066,768			3,048,064
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		(2,347,100	)		5,535,318			(3,545,083	)		(12,969,586	)		4,682,996
Investments in affiliates		—			—			(18,449	)		(2,450,660	)		—
Futures contracts		—			—			—			—			—
Swap contracts		—			—			—			—			—
Options written		—			3,363			—			218,965			—
Forward foreign currency contracts		35			(587,377	)		(628	)		—			(1,359,983	)
Foreign currency translation		(24	)		(276,024	)		252			—			(249,690	)
Net Realized Gain (Loss)		(2,347,089	)		4,675,280			(3,563,908	)		(15,201,281	)		3,073,323
Change in Unrealized Appreciation/Depreciation on:
Investments		10,752,985			6,235,423			9,720,379			60,481,623			5,862,678
Investments in affiliates		—			—			(41,299	)		1,772,779			—
Futures contracts		—			—			—			—			—
Swap contracts		—			—			—			—			—
Options written		—			(23,542	)		—			8,235			—
Forward foreign currency contracts		—			8,043			—			—			865,473
Foreign currency translation		—			29,303			—			—			2,469
Net Change in Unrealized Appreciation/Depreciation		10,752,985			6,249,227			9,679,080			62,262,637			6,730,620
Net Gain		8,405,896			10,924,507			6,115,172			47,061,356			9,803,943
Net Increase	$	11,035,797		$	13,595,382		$	6,812,984		$	51,128,124		$	12,852,007

See Notes to Financial Statements
128

	European Equity			Capital Opportunities			S&P 500 Index			Aggressive Equity			Strategist
Net Investment Income:
Income
Dividends†	$	2,538,903		$	2,217,779		$	2,701,536		$	267,222		$	2,305,306
Interest†		—			—			—			—			1,208,088
Interest and dividends from affiliates		2,699			13,991			25,551			3,093			148,527
Income from securities loaned - net		100,527			—			—			—			—
Total Income		2,642,129			2,231,770			2,727,087			270,315			3,661,921
†Net of foreign withholding taxes		294,115			49,161			76			5,891			32,663
Expenses
Investment advisory fee		625,907			942,140			138,225			182,938			786,575
Administration fee		57,555			179,455			92,150			21,843			149,824
Distribution fee (Class Y shares)		43,188			136,375			202,702			37,014			138,383
Mutual fund insurance (Note 9)		—			—			—			—			—
Professional fees		68,742			68,108			54,462			50,583			77,061
Shareholder reports and notices		11,000			14,427			13,456			6,669			9,070
Custodian fees		22,861			23,242			—			6,471			14,469
Trustees' fees and expenses		3,071			6,911			7,078			877			3,773
Transfer agent fees and expenses		500			500			500			500			500
Registration fees		—			1,003			—			1,006			—
Other		15,415			15,779			13,723			7,512			39,240
Total Expenses		848,239			1,387,940			522,296			315,413			1,218,895
Less: amounts waived/reimbursed		(84,388	)		—			—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		(1,185	)		(8,241	)		(1,546	)		(1,357	)		(47,722	)
Net Expenses		762,666			1,379,699			520,750			314,056			1,171,173
Net Investment Income (Loss)		1,879,463			852,071			2,206,337			(43,741	)		2,490,748
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		(5,360,939	)		(6,534,761	)		(1,166,372	)		24,493			6,334,960
Investments in affiliates		—			—			(165,421	)		—			(365,034	)
Futures contracts		—			—			244,431			—			95,696
Swap contracts		—			—			—			—			1,762,201
Options written		—			—			—			—			(26,773	)
Forward foreign currency contracts		(11,316	)		(3,460	)		—			(96	)		104
Foreign currency translation		3,352			13,482			—			1,907			(5,233	)
Net Realized Gain (Loss)		(5,368,903	)		(6,524,739	)		(1,087,362	)		26,304			7,795,921
Change in Unrealized Appreciation/Depreciation on:
Investments		21,065,851			124,982,172			26,713,751			14,260,246			25,266,980
Investments in affiliates		—			—			25,260			—			(693,955	)
Futures contracts		—			—			(50,810	)		—			(154,585	)
Swap contracts		—			—			—			—			(1,141,242	)
Options written		—			—			—			—			31,231
Forward foreign currency contracts		—			—			—			—			—
Foreign currency translation		18,899			187			—			24			4,840
Net Change in Unrealized Appreciation/Depreciation		21,084,750			124,982,359			26,688,201			14,260,270			23,313,269
Net Gain		15,715,847			118,457,620			25,600,839			14,286,574			31,109,190
Net Increase	$	17,595,310		$	119,309,691		$	27,807,176		$	14,242,833		$	33,599,938

129

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets

	Money Market						Limited Duration						Income Plus
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	41,093		$	5,148,906		$	1,877,885		$	4,209,957		$	13,833,429		$	15,826,167
Net realized gain (loss)		3,704			—			2,468,081			(26,979,435	)		5,583,226			(18,752,116	)
Net change in unrealized appreciation/depreciation		—			—			(118,469	)		5,025,245			31,176,875			(26,220,418	)
Net Increase (Decrease)		44,797			5,148,906			4,227,497			(17,744,233	)		50,593,530			(29,146,367	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(27,542	)		(2,750,646	)		(750,368	)		(403,890	)		(5,671,232	)		(2,630,821	)
Class Y shares		(13,660	)		(2,398,335	)		(2,578,098	)		(1,470,642	)		(6,874,880	)		(3,227,663	)
Net realized gain
Class X shares		—			—			—			—			—			—
Class Y shares		—			—			—			—			—			—
Total Dividends and Distributions		(41,202	)		(5,148,981	)		(3,328,466	)		(1,874,532	)		(12,546,112	)		(5,858,484	)
Net increase (decrease) from transactions in shares of beneficial interest		(61,899,672	)		14,525,817			(2,885,461	)		(28,033,410	)		(21,134,851	)		(71,964,921	)
Net Increase (Decrease)		(61,896,077	)		14,525,742			(1,986,430	)		(47,652,175	)		16,912,567			(106,969,772	)
Net Assets:
Beginning of period		227,527,272			213,001,530			79,628,143			127,280,318			245,683,089			352,652,861
End of Period	$	165,631,195		$	227,527,272		$	77,641,713		$	79,628,143		$	262,595,656		$	245,683,089
Accumulated Undistributed Net Investment Income	$	3,616		$	158		$	2,072,916		$	2,961,783		$	13,986,311		$	11,067,655

See Notes to Financial Statements
130

	High Yield						Global Infrastructure
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,629,901		$	2,545,180		$	2,670,875		$	3,065,023
Net realized gain (loss)		(2,347,089	)		(9,781,424	)		4,675,280			27,057,828
Net change in unrealized appreciation/depreciation		10,752,985			(1,476,560	)		6,249,227			(79,158,685	)
Net Increase (Decrease)		11,035,797			(8,712,804	)		13,595,382			(49,035,834	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(1,215,369	)		(437,443	)		(2,101,457	)		(647,408	)
Class Y shares		(1,195,423	)		(479,055	)		(498,225	)		(134,680	)
Net realized gain
Class X shares		—			—			(20,597,967	)		(20,127,613	)
Class Y shares		—			—			(5,301,817	)		(4,721,337	)
Total Dividends and Distributions		(2,410,792	)		(916,498	)		(28,499,466	)		(25,631,038	)
Net increase (decrease) from transactions in shares of beneficial interest		(2,278,057	)		(9,229,477	)		13,974,171			(3,124,164	)
Net Increase (Decrease)		6,346,948			(18,858,779	)		(929,913	)		(77,791,036	)
Net Assets:
Beginning of period		27,199,656			46,058,435			87,496,273			165,287,309
End of Period	$	33,546,604		$	27,199,656		$	86,566,360		$	87,496,273
Accumulated Undistributed Net Investment Income	$	2,239,958		$	1,886,536		$	1,785,290		$	2,512,439

131

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued

	Income Builder						Dividend Growth						Global Dividend Growth
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	697,812		$	1,323,971		$	4,066,768		$	5,989,301		$	3,048,064		$	4,283,236
Net realized gain (loss)		(3,563,908	)		(846,135	)		(15,201,281	)		(41,866,289	)		3,073,323			(24,882,731	)
Net change in unrealized appreciation/depreciation		9,679,080			(14,007,172	)		62,262,637			(118,615,870	)		6,730,620			(51,605,946	)
Net Increase (Decrease)		6,812,984			(13,529,336	)		51,128,124			(154,492,858	)		12,852,007			(72,205,441	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(528,794	)		(176,967	)		(3,466,136	)		(1,348,818	)		(2,992,150	)		(2,856,039	)
Class Y shares		(448,809	)		(191,122	)		(986,235	)		(367,487	)		(1,372,445	)		(1,205,469	)
Net realized gain
Class X shares		(8,092	)		(3,462,208	)		—			—			—			(19,931,578	)
Class Y shares		(7,525	)		(4,034,191	)		—			—			—			(9,677,516	)
Total Dividends and Distributions		(993,220	)		(7,864,488	)		(4,452,371	)		(1,716,305	)		(4,364,595	)		(33,670,602	)
Net decrease from transactions in shares of beneficial interest		(4,385,614	)		(9,887,251	)		(33,543,934	)		(85,189,189	)		(9,583,791	)		(4,126,470	)
Net Increase (Decrease)		1,434,150			(31,281,075	)		13,131,819			(241,398,352	)		(1,096,379	)		(110,002,513	)
Net Assets:
Beginning of period		31,680,395			62,961,470			243,609,622			485,007,974			91,856,649			201,859,162
End of Period	$	33,114,545		$	31,680,395		$	256,741,441		$	243,609,622		$	90,760,270		$	91,856,649
Accumulated Undistributed Net Investment Income (Loss)	$	655,381		$	725,589		$	4,049,585		$	4,433,824		$	1,096,960		$	4,100,875

See Notes to Financial Statements
132

	European Equity						Capital Opportunities
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,879,463		$	3,542,961		$	852,071		$	90,023
Net realized gain (loss)		(5,368,903	)		(4,874,519	)		(6,524,739	)		(22,270,280	)
Net change in unrealized appreciation/depreciation		21,084,750			(62,139,555	)		124,982,359			(160,018,627	)
Net Increase (Decrease)		17,595,310			(63,471,113	)		119,309,691			(182,198,884	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(2,185,883	)		(2,413,005	)		(639,379	)		(635,044	)
Class Y shares		(624,553	)		(642,298	)		(66,814	)		(146,796	)
Net realized gain
Class X shares		(2,763,964	)		(16,690,917	)		—			—
Class Y shares		(880,063	)		(5,203,748	)		—			—
Total Dividends and Distributions		(6,454,463	)		(24,949,968	)		(706,193	)		(781,840	)
Net decrease from transactions in shares of beneficial interest		(6,200,158	)		(3,791,426	)		(37,914,310	)		(70,259,908	)
Net Increase (Decrease)		4,940,689			(92,212,507	)		80,689,188			(253,240,632	)
Net Assets:
Beginning of period		75,579,156			167,791,663			185,712,053			438,952,685
End of Period	$	80,519,845		$	75,579,156		$	266,401,241		$	185,712,053
Accumulated Undistributed Net Investment Income (Loss)	$	1,813,052		$	2,751,600		$	392,620		$	(136,162	)

133

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued

	S&P 500 Index						Aggressive Equity
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,206,337		$	3,063,478		$	(43,741	)	$	(172,564	)
Net realized gain (loss)		(1,087,362	)		(610,275	)		26,304			(2,074,666	)
Net change in unrealized appreciation/depreciation		26,688,201			(74,828,095	)		14,260,270			(21,144,566	)
Net Increase (Decrease)		27,807,176			(72,374,892	)		14,242,833			(23,391,796	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(976,649	)		(1,233,419	)		—			(40,785	)
Class Y shares		(2,074,490	)		(2,473,396	)		—			—
Net realized gain
Class X shares		—			—			—			—
Class Y shares		—			—			—			—
Total Dividends and Distributions		(3,051,139	)		(3,706,815	)		—			(40,785	)
Net decrease from transactions in shares of beneficial interest		(8,284,436	)		(29,261,336	)		(4,365,317	)		(9,878,008	)
Net Increase (Decrease)		16,471,601			(105,343,043	)		9,877,516			(33,310,589	)
Net Assets:
Beginning of period		113,916,253			219,259,296			22,561,067			55,871,656
End of Period	$	130,387,854		$	113,916,253		$	32,438,583		$	22,561,067
Accumulated Undistributed Net Investment Income (Loss)	$	2,208,382		$	3,070,238		$	(38,217	)	$	28,289

See Notes to Financial Statements
134

	Strategist
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,490,748		$	5,496,368
Net realized gain (loss)		7,795,921			(6,195,603	)
Net change in unrealized appreciation/depreciation		23,313,269			(64,498,692	)
Net Increase (Decrease)		33,599,938			(65,197,927	)
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(3,009,491	)		(1,351,745	)
Class Y shares		(1,156,509	)		(508,327	)
Net realized gain
Class X shares		—			(17,620,917	)
Class Y shares		—			(7,191,427	)
Total Dividends and Distributions		(4,166,000	)		(26,672,416	)
Net decrease from transactions in shares of beneficial interest		(19,679,309	)		(26,332,133	)
Net Increase (Decrease)		9,754,629			(118,202,476	)
Net Assets:
Beginning of period		187,713,481			305,915,957
End of Period	$	197,468,110		$	187,713,481
Accumulated Undistributed Net Investment Income (Loss)	$	3,945,368		$	4,298,293

135

Morgan Stanley Variable Investment Series

Financial Statements continued

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

	Money Market						Limited Duration						Income Plus
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		14,093,090			39,272,429			320,280			219,481			217,229			318,057
Reinvestment of dividends and distributions		27,542			2,750,646			97,959			45,466			574,011			251,075
Redeemed		(45,050,887	)		(38,086,011	)		(379,007	)		(976,690	)		(1,994,330	)		(3,710,728	)
Net Increase (Decrease) - Class X		(30,930,255	)		3,937,064			39,232			(711,743	)		(1,203,090	)		(3,141,596	)
Amount
Sold	$	14,093,090		$	39,272,429		$	2,506,478		$	1,951,419		$	2,222,728		$	3,287,185
Reinvestment of dividends and distributions		27,542			2,750,646			750,368			403,890			5,671,232			2,630,821
Redeemed		(45,050,887	)		38,086,011			(2,959,936	)		(8,136,803	)		(20,079,631	)		(36,737,304	)
Net Increase (Decrease) - Class X	$	(30,930,255	)	$	3,937,064		$	296,910		$	(5,781,494	)	$	(12,185,671	)	$	(30,819,298	)
Class Y Shares
Shares
Sold		19,989,089			62,076,186			525,769			365,769			527,412			549,322
Reinvestment of dividends and distributions		13,660			2,398,335			337,447			165,939			697,250			308,624
Redeemed		(50,972,166	)		(53,885,768	)		(1,262,117	)		(3,269,102	)		(2,115,187	)		(5,102,030	)
Net Increase (Decrease) - Class Y		(30,969,417	)		10,588,753			(398,901	)		(2,737,394	)		(890,525	)		(4,244,084	)
Amount
Sold	$	19,989,089		$	62,076,186		$	4,083,133		$	3,336,110		$	5,391,890		$	5,807,550
Reinvestment of dividends and distributions		13,660			2,398,335			2,578,098			1,470,642			6,874,880			3,227,663
Redeemed		(50,972,166	)		(53,885,768	)		(9,843,602	)		(27,058,668	)		(21,215,950	)		(50,180,836	)
Net Increase (Decrease) - Class Y	$	(30,969,417	)	$	10,588,753		$	(3,182,371	)	$	(22,251,916	)	$	(8,949,180	)	$	(41,145,623	)

See Notes to Financial Statements
136

	High Yield						Global Infrastructure
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		885,547			439,070			38,571			136,433
Reinvestment of dividends and distributions		1,279,336			394,745			3,071,641			1,279,897
Redeemed		(2,812,285	)		(4,491,763	)		(1,464,640	)		(1,600,079	)
Net Increase (Decrease) - Class X		(647,402	)		(3,657,948	)		1,645,572			(183,749	)
Amount
Sold	$	849,248		$	468,293		$	350,423		$	2,528,018
Reinvestment of dividends and distributions		1,215,369			437,443			22,699,424			20,775,021
Redeemed		(2,762,208	)		(4,693,944	)		(13,246,644	)		(25,468,846	)
Net Increase (Decrease) - Class X	$	(697,591	)	$	(3,788,208	)	$	9,803,203		$	(2,165,807	)
Class Y Shares
Shares
Sold		408,859			224,818			114,210			65,397
Reinvestment of dividends and distributions		1,258,340			430,638			786,980			299,658
Redeemed		(3,277,685	)		(5,897,980	)		(308,094	)		(436,317	)
Net Increase (Decrease) - Class Y		(1,610,486	)		(5,242,524	)		593,096			(71,262	)
Amount
Sold	$	415,103		$	237,416		$	1,092,329		$	1,074,404
Reinvestment of dividends and distributions		1,195,423			479,055			5,800,042			4,856,017
Redeemed		(3,190,992	)		(6,157,740	)		(2,721,403	)		(6,888,778	)
Net Increase (Decrease) - Class Y	$	(1,580,466	)	$	(5,441,269	)	$	4,170,968		$	(958,357	)

137

Morgan Stanley Variable Investment Series

Financial Statements continued

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

	Income Builder						Dividend Growth						Global Dividend Growth
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		84,206			80,930			40,020			188,631			39,028			88,216
Reinvestment of dividends and distributions		68,133			367,205			321,236			87,699			412,142			2,049,246
Redeemed		(402,407	)		(614,459	)		(2,833,291	)		(4,839,160	)		(1,414,208	)		(2,174,259	)
Net Decrease - Class X		(250,068	)		(166,324	)		(2,472,035	)		(4,562,830	)		(963,038	)		(36,797	)
Amount
Sold	$	700,726		$	806,302		$	445,763		$	2,972,885		$	300,376		$	1,247,301
Reinvestment of dividends and distributions		536,886			3,639,175			3,466,136			1,348,818			2,992,150			22,787,617
Redeemed		(3,276,702	)		(6,520,735	)		(31,203,978	)		(70,063,288	)		(10,681,016	)		(26,457,893	)
Net Decrease - Class X	$	(2,039,090	)	$	(2,075,258	)	$	(27,292,079	)	$	(65,741,585	)	$	(7,388,490	)	$	(2,422,975	)
Class Y Shares
Shares
Sold		46,979			61,287			64,575			58,376			120,372			43,315
Reinvestment of dividends and distributions		58,058			427,890			91,572			23,925			190,617			987,567
Redeemed		(392,269	)		(1,237,576	)		(723,234	)		(1,435,936	)		(590,289	)		(1,087,949	)
Net Decrease - Class Y		(287,232	)		(748,399	)		(567,087	)		(1,353,635	)		(279,300	)		(57,067	)
Amount
Sold	$	393,492		$	707,013		$	656,925		$	794,273		$	854,130		$	599,490
Reinvestment of dividends and distributions		456,334			4,225,313			986,235			367,487			1,372,445			10,882,985
Redeemed		(3,196,350	)		(12,744,319	)		(7,895,015	)		(20,609,364	)		(4,421,876	)		(13,185,970	)
Net Decrease - Class Y	$	(2,346,524	)	$	(7,811,993	)	$	(6,251,855	)	$	(19,447,604	)	$	(2,195,301	)	$	(1,703,495	)

See Notes to Financial Statements
138

	European Equity						Capital Opportunities
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		24,684			38,114			20,590			86,342
Reinvestment of dividends and distributions		403,082			950,444			26,421			20,244
Redeemed		(793,662	)		(1,061,103	)		(1,215,413	)		(1,902,212	)
Net Decrease - Class X		(365,896	)		(72,545	)		(1,168,402	)		(1,795,626	)
Amount
Sold	$	337,718		$	924,340		$	531,421		$	2,683,773
Reinvestment of dividends and distributions		4,949,847			19,103,922			639,379			635,044
Redeemed		(10,207,492	)		(21,953,195	)		(28,719,023	)		(56,132,455	)
Net Decrease - Class X	$	(4,919,927	)	$	(1,924,933	)	$	(27,548,223	)	$	(52,813,638	)
Class Y Shares
Shares
Sold		9,175			16,951			21,100			188,849
Reinvestment of dividends and distributions		122,926			292,156			2,776			4,703
Redeemed		(221,102	)		(382,417	)		(466,830	)		(768,316	)
Net Decrease - Class Y		(89,001	)		(73,310	)		(442,954	)		(574,764	)
Amount
Sold	$	113,978		$	382,065		$	497,162		$	4,731,146
Reinvestment of dividends and distributions		1,504,616			5,846,046			66,814			146,796
Redeemed		(2,898,825	)		(8,094,604	)		(10,930,063	)		(22,324,212	)
Net Decrease - Class Y	$	(1,280,231	)	$	(1,866,493	)	$	(10,366,087	)	$	(17,446,270	)

139

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Financial Statements continued

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

	S&P 500 Index						Aggressive Equity
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008			For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		227,397			204,363			30,502			27,794
Reinvestment of dividends and distributions		117,952			106,605			—			2,460
Redeemed		(600,690	)		(1,144,889	)		(195,172	)		(361,194	)
Net Decrease - Class X		(255,341	)		(833,921	)		(164,670	)		(330,940	)
Amount
Sold	$	1,896,482		$	2,036,301		$	374,527		$	414,384
Reinvestment of dividends and distributions		976,649			1,233,419			—			40,785
Redeemed		(5,068,610	)		(12,941,380	)		(2,305,220	)		(5,409,021	)
Net Decrease - Class X	$	(2,195,479	)	$	(9,671,660	)	$	(1,930,693	)	$	(4,953,852	)
Class Y Shares
Shares
Sold		584,015			427,594			17,153			45,414
Reinvestment of dividends and distributions		251,759			214,891			—			—
Redeemed		(1,515,796	)		(2,335,950	)		(229,185	)		(376,129	)
Net Decrease - Class Y		(680,022	)		(1,693,465	)		(212,032	)		(330,715	)
Amount
Sold	$	5,084,799		$	4,418,421		$	238,698		$	670,281
Reinvestment of dividends and distributions		2,074,490			2,473,396			—			—
Redeemed		(13,248,246	)		(26,481,493	)		(2,673,322	)		(5,594,437	)
Net Decrease - Class Y	$	(6,088,957	)	$	(19,589,676	)	$	(2,434,624	)	$	(4,924,156	)

See Notes to Financial Statements
140

	Strategist
	For The Year Ended December 31, 2009			For The Year Ended December 31, 2008
Class X Shares
Shares
Sold		143,881			315,787
Reinvestment of dividends and distributions		274,839			1,454,772
Redeemed		(2,013,942	)		(3,039,684	)
Net Decrease - Class X		(1,595,222	)		(1,269,125	)
Amount
Sold	$	1,613,235		$	4,422,151
Reinvestment of dividends and distributions		3,009,491			18,972,662
Redeemed		(22,149,953	)		(40,695,307	)
Net Decrease - Class X	$	(17,527,227	)	$	(17,300,494	)
Class Y Shares
Shares
Sold		319,879			198,421
Reinvestment of dividends and distributions		105,907			592,076
Redeemed		(611,314	)		(1,478,670	)
Net Decrease - Class Y		(185,528	)		(688,173	)
Amount
Sold	$	3,458,405		$	2,749,332
Reinvestment of dividends and distributions		1,156,509			7,699,754
Redeemed		(6,766,996	)		(19,480,725	)
Net Decrease - Class Y	$	(2,152,082	)	$	(9,031,639	)

141

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2009

1. Organization and Accounting Policies

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

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

PORTFOLIO	COMMENCEMENT OF OPERATIONS	PORTFOLIO	COMMENCEMENT OF OPERATIONS
Money Market	March 9, 1984	Global Dividend Growth	February 23, 1994
Limited Duration	May 4, 1999	European Equity	March 1, 1991
Income Plus	March 1, 1987	Capital Opportunities	March 9, 1984
High Yield	March 9, 1984	S&P 500 Index	May 18, 1998
Global Infrastructure	March 1, 1990	Aggressive Equity	May 4, 1999
Income Builder	January 21, 1997	Strategist	March 1, 1987
Dividend Growth	March 1, 1990

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

The investment objectives of each Portfolio are as follows:

Money Market	Seeks high current income, preservation of capital and liquidity.
Limited Duration	Seeks to provide a high level of current income consistent with the preservation of capital.
Income Plus	Seeks, as its primary objective, to provide a high level of current income and, as a secondary objective, capital appreciation, but only when consistent with its primary objective.
High Yield	Seeks, as its primary objective, to provide a high level of current income and, as a secondary objective, capital appreciation, but only when consistent with its primary objective.
Global Infrastructure	Seeks both capital appreciation and current income.
Income Builder	Seeks, as its primary objective, reasonable income and, as a secondary objective, growth of capital.

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Notes to Financial Statements nDecember 31, 2009 continued

Dividend Growth Seeks to provide reasonable current income and long-term growth of income and capital.

Global Dividend Seeks to provide reasonable current income and long-term growth of income and Growth capital.

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

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

S&P 500 Index Seeks to provide investment results that, before expenses, correspond to the total return of the Standard & Poor's 500^® Composite Stock Price Index.

Aggressive Equity Seeks long-term capital growth.

Strategist Seeks high total investment return.

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. The Board of Trustees of the Fund approved an Agreement and Plan of Reorganization with respect to the High Yield, Income Builder, Dividend Growth, Global Dividend Growth and S&P 500 Index portfolios (each a "Plan"). Pursuant to each Plan, substantially all of the assets of the applicable Portfolio would be combined with those of a newly organized mutual fund advised by an affiliate of Invesco Ltd. (each a "New Portfolio"). Pursuant to each Plan, shareholders of the applicable Portfolio would become shareholders of a New Portfolio, receiving shares of such New Portfolio equal to the value of their holdings in the Portfolio. Each Plan is subject to the approval of the applicable Portfolio's shareholders at a special meeting of shareholders anticipated to be held during the second quarter of 2010.

The following is a summary of significant accounting policies:

A. Valuation of Investments — Money Market: Portfolio securities are valued at amortized cost, which approximates market value, in accordance with Rule 2a-7 under the Act. All remaining Portfolios: (1) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and ask price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and ask price; (3) all other portfolio securities for which over-the-counter market quotations are readily available are valu ed at the mean between the last reported bid and ask price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) credit default/interest rate/asset swaps are marked-to-market daily based upon quotations from market makers; (5) for equity securities traded on foreign exchanges, the last

143

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Notes to Financial Statements nDecember 31, 2009 continued

reported sale price or the latest bid price may be used if there were no sales on a particular day; (6) listed options are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they are valued at the mean between their latest bid and ask price; (7) futures are valued at the latest price published by the commodities exchange on which they trade; (8) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") or Morgan Stanley Investment Management Limited (the "Sub-Adviser"), each a wholly owned subsidiary of Morgan Stanley, determines that the latest sale price, the bid price or the mean between the last reported bid and ask price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good fai th under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (9) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees. (10) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (11) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates market value.

B. Accounting for Investments — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date except for certain dividends on foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. Interest income is accrued daily except where collection is not expected. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily as earned.

C. Repurchase Agreements — The Fund may invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization.

144

Morgan Stanley Variable Investment Series

Notes to Financial Statements nDecember 31, 2009 continued

D. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.

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

When the Fund purchases a call or put option, the premium paid is recorded as an investment which is subsequently marked-to-market to reflect the current market value. If a purchased option expires, the Fund will realize a loss to the extent of the premium paid. If the Fund enters into a closing sale transaction, a gain or loss is realized for the difference between the proceeds from the sale and the cost of the option. If a put option is exercised, the cost of the security or currency sold upon exercise will be increased by the premium originally paid. If a call option is exercised, the cost of the security purchased upon exercise will be increased by the premium originally paid. The maximum exposure to loss for any purchased option is limited to the premium initially paid for the option.

F. Futures — A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon closing of the contract, the Fund realizes a gain or loss 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.

145

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Notes to Financial Statements nDecember 31, 2009 continued

G. Foreign Currency Translation and Forward Foreign Currency Contracts — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gains/losses on foreign currency translations. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities held. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency translation gains or losses. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.

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

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

PORTFOLIO	VALUE OF LOANED SECURITIES		VALUE OF COLLATERAL CASH(1)
High Yield	$	8,425,561	$	8,706,576
Global Infrastructure		6,728,840		7,036,788
Global Dividend		10,276,083		10,768,263
European Equity		1,792,698		1,903,682

⁽¹⁾  The Portfolios received cash collateral which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the respective Portfolio of Investments.

The Portfolios have the right under the lending agreement to recover the securities from the borrower on demand.

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I. Swaps — Certain Portfolios may enter into credit default swap contracts, a type of credit derivative, for hedging purposes or to gain exposure to a credit or index of credits of underlying issue in which the Portfolio may otherwise invest. A credit default swap is an agreement between two parties to exchange the credit risk of an issuer or index of issuers. A buyer of a credit default swap is said to buy protection by paying periodic fees in return for a contingent payment from the seller if the issuer has a credit event such as bankruptcy, a failure to pay outstanding obligations or deteriorating credit while the swap is outstanding. A seller of a credit default swap is said to sell protection and thus collects the periodic fees and profits if the credit of the issuer remains stable or improves while the swap is outstanding. The seller in a c redit default swap contract would be required to pay an agreed upon amount, to the buyer in the event of an adverse credit event of the issuer. This agreed-upon amount approximates the notional amount of the swap as disclosed in the table following the Portfolio of Investments and is estimated to be the maximum potential future payment that the seller could be required to make under the credit default swap contract. In the event of an adverse credit event, the seller generally does not have any contractual remedies against the issuer or any other third party. However, if a physical settlement is elected, the seller would receive the defaulted credit and, as a result, become a creditor of the issuer.

The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as 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.

The Portfolios accrue for the periodic fees on credit default swaps on a daily basis as earned with the net amount accrued recorded within realized gains/losses on swap contracts on the Statements of Operations. Net unrealized gains are recorded as an asset or net unrealized losses are reported as a liability on the Statements of Assets and Liabilities. The change in value of the swap contracts is reported as unrealized gains or losses on the Statements of Operations. Payments received or made upon entering into a credit default swap contract, if any, are recorded as realized gains or losses on the Statements of Operations upon termination or maturity of the swap. Credit default swaps may involve greater risks than if a Portfolio had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk.

Certain Portfolios may also enter into interest rate swaps and asset swaps (where parties combine the purchase or sale of a bond/note with an interest rate swap) primarily to preserve a return or spread on a particular investment or portion of its portfolio, as a duration management technique or to protect against any increase in the price of securities the Portfolio anticipates purchasing at a later date. These are contractual agreements

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to exchange periodic interest payment streams calculated on a predetermined notional principal amount. They generally involve one party paying a fixed interest rate and the other party paying a variable rate. The Portfolio will usually enter into them on a net basis, i.e, the two payment streams are netted out in a cash settlement on the payment date or date specified in the instrument, with the Portfolio receiving or paying, as the case may be, only the net amount of the two payments. The Portfolio accrues the net amount with respect to each swap on a daily basis. This net amount is recorded within realized gains/losses on swap contracts on the Statements of Operations. Risk may arise as a result of the potential inability of the counterparties to meet the terms of the contracts.

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 the risk of default or non-performance by the counterparty. If there is a default by the counterparty to a swap agreement, the Portfolio will have contractual remedies pursuant to the agreements related to the transaction. Counterparties are required to pledge collateral daily (based on the valuation of each swap) on behalf of the Portfolio with a value approximately equal to the amount of any unrealized gain. Reciprocally, when the Portfolio has an unrealized loss on a swap contract, 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. For cash collateral received, the Portfolio pays a monthly fee to the counterparty based on the effective rate for Federal Funds.

J. Treasury Inflation-Protected Securities — Certain Portfolios may invest in Treasury Inflation-Protected Securities ("TIPS"), including structured bonds in which the principal amount is adjusted daily to keep pace with inflation, as measured by the U.S. Consumer Pricing Index for Urban Consumers. The adjustments to principal due to inflation/deflation are reflected as increases/decreases to interest income with a corresponding adjustment to cost. Such adjustments may have a significant impact on the Portfolio's distributions and may result in a return of capital to shareholders. The repayment of the original bond principal upon maturity is guaranteed by the full faith and credit of the U.S. Government.

K. Senior Loans — Certain Portfolios invest in Senior Loans to Borrowers. Senior Loans are typically structured by a syndicate of lenders ("Lenders"), one or more of which administers the Senior Loan on behalf of the Lenders ("Agent"). Lenders may sell interests in Senior Loans to third parties ("Participations") or may assign all or a portion of their interest in a Senior Loan to third parties ("Assignments"). Senior Loans are exempt from registration under the Securities Act of 1933. Presently, Senior Loans are not readily marketable and are often subject to restrictions on resale.

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L. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Fund recognizes the tax effects of a tax position taken or expected to be taken in a tax return only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of the benefit. The difference between the tax benefit recognized in the financial statements for a tax position t aken and the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. There are no unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statements of Operations. Each of the tax years in the four-year period ended December 31, 2009, remains subject to examination by taxing authorities.

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

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

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

P. Subsequent Events — The Fund considers events or transactions that occur after the date of the Statements of Assets and Liabilities but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through February 26, 2010, the date of issuance of these financial statements.

2. Fair Valuation Measurements

Fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. GAAP utilizes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about

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the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.

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

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

•  Level 3 — significant unobservable inputs (including the Fund's own assumptions in  determining the fair value of investments)

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

The following is the summary of the inputs used as of December 31, 2009 in valuing the Fund's investments carried at fair value:

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money Market
Assets:
Short-Term Investments
Repurchase Agreements	$	67,465,000		—	$	67,465,000		—
Commercial Paper		41,479,991		—		41,479,991		—
Certificates of Deposit		30,000,061		—		30,000,061		—
Floating Rate Notes — Corporate		10,000,000		—		10,000,000		—
Floating Rate Notes — U.S. Government Agency		8,996,715		—		8,996,715		—
Short-Term Bank Note		8,000,000		—		8,000,000		—
Total	$	165,941,767		—	$	165,941,767		—

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				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Limited Duration
Assets:
Asset-Backed Securities	$	13,872,189			—		$	13,872,189			—
Collateralized Mortgage Obligation — U.S. Government Agency		454,883			—			454,883			—
Commercial Mortgage-Backed Security		188,760			—			188,760			—
Corporate Bonds		39,447,522			—			39,447,522			—
Foreign Government Obligations		1,845,927			—			1,845,927			—
U.S. Government Agencies & Obligations		16,892,197			—			16,892,197			—
U.S. Government Agencies — Mortgage-Backed Securities		1,844,448			—			1,844,448			—
Short-Term Investments
Investment Company		1,960,815		$	1,960,815			—			—
U.S. Government Obligation		904,535			—			904,535			—
Total Short-Term Investments		2,865,350			1,960,815			904,535			—
Futures		227,437			227,437			—			—
Interest Rate Swaps		144,026			—			144,026			—
Total	$	77,782,739		$	2,188,252		$	75,594,487			—
Liabilities:
Futures	$	(113,958	)	$	(113,958	)		—			—
Interest Rate Swaps		(406,080	)		—		$	(406,080	)		—
Total	$	(520,038	)	$	(113,958	)	$	(406,080	)		—
Income Plus
Assets:
Commercial Mortgage-Backed Securities	$	2,114,451					$	2,114,451			—
Corporate Bonds		249,634,692						249,634,692			—
Municipal Bonds		606,162						606,162			—
U.S. Government Agency — Mortgage-Backed Security		1,586						1,586			—

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				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Short-Term Investments
Investment Company	$	5,618,450		$	5,618,450						—
U.S. Government Obligation		1,419,271					$	1,419,271			—
Total Short-Term Investments		7,037,721			5,618,450			1,419,271			—
Credit Default Swaps		14,669						14,669			—
Futures		1,814,839			1,814,839						—
Total	$	261,224,120		$	7,433,289		$	253,790,831			—
Liabilities:
Credit Default Swaps	$	(305,128	)		—		$	(305,128	)		—
Futures		(590,857	)	$	(590,857	)		—			—
Total	$	(895,985	)	$	(590,857	)	$	(305,128	)		—
High Yield
Assets:
Common Stocks
Casino Gaming	$	0			—			—		$	0
Communications Equipment		16,862		$	16,735			—			127
Food Products		0			—			—			0
Restaurants		26,992			—			—			26,992
Textile — Apparel		0			—			—			0
Wireless Telecommunication Services		5,736			5,736			—			—
Total Common Stocks		49,590			22,471			—			27,119
Preferred Stock		113,380			—		$	113,380			—
Warrants		0			—			—			0
Corporate Bonds		31,138,913			—			31,138,913			—
Senior Loan Notes		572,649			—			572,649			—
Short-Term Investments								—			—
Investment Company		8,309,745			8,309,745			—			—
Repurchase Agreements		1,836,445			—			1,836,445			—
Total Short-Term Investments		10,146,190			8,309,745			1,836,445			—
Total	$	42,020,722		$	8,332,216		$	33,661,387		$	27,119

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				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Global Infrastructure
Assets:
Common Stocks
Communications Equipment	$	208,845		$	208,845			—			—
Construction & Engineering		2,181,251			1,127,660		$	1,053,591			—
Diversified Telecommunication Services		2,825,231			235,693			2,589,538			—
Electric Utilities		8,449,649			1,662,360			6,787,289			—
Gas Utilities		5,803,524			3,052,724			2,750,800			—
Independent Power Producers & Energy Traders		2,071,499			886,284			1,185,215			—
Machinery		413,424			—			413,424			—
Metals & Mining		1,215,315			—			1,215,315			—
Multi-Utilities		13,603,139			2,912,722			10,690,417			—
Oil, Gas & Consumable Fuels		16,373,177			16,080,088			293,089			—
Transportation Infrastructure		31,129,324			274,521			30,854,803			—
Wireless Telecommunication Services		1,553,509			—			1,553,509			—
Total Common Stocks		85,827,887			26,440,897			59,386,990			—
Preferred Stocks		409,654			—			409,654			—
Short-Term Investments
Investment Company		5,831,465			5,831,465			—			—
Repurchase Agreements		1,484,243			—			1,484,243			—
Total Short-Term Investments		7,315,708			5,831,465			1,484,243			—
Forward Forward Currency Contracts		128,977			—			128,977			—
Total	$	93,682,226		$	32,272,362		$	61,409,864			—
Liabilities:
Forward Foreign Currency Contracts	$	(73,883	)		—		$	(73,883	)		—
Options Written		(53,326	)	$	(53,326	)		—			—
Total	$	(127,209	)	$	(53,326	)	$	(73,883	)		—

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			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Income Builder
Assets:
Common Stocks
Aerospace & Defense	$	129,523	$	129,523		—		—
Air Freight & Logistics		125,175		125,175		—		—
Automobiles		160,150		160,150		—		—
Beverages		221,730		221,730		—		—
Capital Markets		499,411		499,411		—		—
Chemicals		273,537		273,537		—		—
Commercial Banks		1,170,495		1,170,495		—		—
Commercial Services & Supplies		246,501		246,501		—		—
Communications Equipment		373,464		373,464		—		—
Computers & Peripherals		624,818		624,818		—		—
Diversified Financial Services		1,702,898		1,702,898		—		—
Diversified Telecommunication Services		259,706		259,706		—		—
Electric Utilities		1,044,311		1,044,311		—		—
Electronic Equipment, Instruments & Components		298,272		298,272		—		—
Energy Equipment & Services		506,868		506,868		—		—
Food & Staples Retailing		1,006,866		1,006,866		—		—
Food Products		699,265		699,265		—		—
Health Care Equipment & Supplies		500,596		500,596		—		—
Health Care Providers & Services		356,828		356,828		—		—
Hotels, Restaurants & Leisure		63,415		63,415		—		—
Household Durables		305,370		305,370		—		—
Industrial Conglomerates		1,240,539		1,240,539		—		—
Insurance		1,479,085		1,479,085		—		—
Internet Software & Services		707,874		707,874		—		—
Machinery		529,042		529,042		—		—
Media		1,593,439		1,593,439		—		—
Metals & Mining		352,618		352,618		—		—
Oil, Gas & Consumable Fuels		2,767,762		2,767,762		—		—
Personal Products		248,570		248,570		—		—

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			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Pharmaceuticals	$	2,646,779	$	2,646,779		—		—
Professional Services		280,750		280,750		—		—
Semiconductors & Semiconductor Equipment		470,318		470,318		—		—
Software		58,965		58,965		—		—
Specialty Retail		616,285		616,285		—		—
Wireless Telecommunication Services		304,788		304,788		—		—
Total Common Stocks		23,866,013		23,866,013		—		—
Convertible Bonds		4,521,461		—	$	4,521,461		—
Convertible Preferred Stock		435,540		—		435,540		—
Corporate Bonds		3,706,875		—		3,706,875		—
Short-Term Investments — Investment Company		455,415		455,415		—		—
Total	$	32,985,304	$	24,321,428	$	8,663,876		—
Dividend Growth
Assets:
Common Stocks
Aerospace & Defense	$	12,682,637	$	12,682,637		—		—
Biotechnology		3,111,350		3,111,350		—		—
Capital Markets		5,161,101		5,161,101		—		—
Chemicals		3,543,911		3,543,911		—		—
Commercial Banks		5,369,930		5,369,930		—		—
Commercial Services & Supplies		2,575,658		2,575,658		—		—
Computers & Peripherals		18,136,578		18,136,578		—		—
Construction & Engineering		3,553,206		3,553,206		—		—
Diversified Financial Services		7,268,998		7,268,998		—		—
Diversified Telecommunication Services		4,697,828		4,697,828		—		—
Electronic Equipment, Instruments & Components		3,546,861		3,546,861		—		—
Energy Equipment & Services		7,648,248		7,648,248		—		—
Food & Staples Retailing		4,458,734		4,458,734		—		—
Health Care Providers & Services		8,776,395		8,776,395		—		—
Hotels, Restaurants & Leisure		8,197,737		8,197,737		—		—

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				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Household Durables	$	2,734,374		$	2,734,374			—		—
Household Products		7,835,838			7,835,838			—		—
Independent Power Producers & Energy Traders		3,141,311			3,141,311			—		—
Industrial Conglomerates		6,059,974			6,059,974			—		—
Information Technology Services		3,217,078			3,217,078			—		—
Insurance		14,808,624			14,808,624			—		—
Internet Software & Services		5,512,242			5,512,242			—		—
Leisure Equipment & Products		3,995,001			3,995,001			—		—
Metals & Mining		4,734,701			4,734,701			—		—
Multi-Utilities		7,747,670			7,747,670			—		—
Multiline Retail		3,962,954			3,962,954			—		—
Oil, Gas & Consumable Fuels		22,980,884			22,980,884			—		—
Paper & Forest Products		4,022,088			4,022,088			—		—
Pharmaceuticals		21,147,151			21,147,151			—		—
Road & Rail		4,885,852			4,885,852			—		—
Semiconductors & Semiconductor Equipment		5,530,236			5,530,236			—		—
Software		9,063,061			9,063,061			—		—
Specialty Retail		10,334,429			10,334,429			—		—
Textiles, Apparel & Luxury Goods		2,889,245			2,889,245			—		—
Tobacco		9,590,896			9,590,896			—		—
Total Common Stocks		252,922,781			252,922,781			—		—
Short-Term Investments —
Investment Company		3,778,181			3,778,181			—		—
Total	$	256,700,962		$	256,700,962			—		—
Liabilities:
Options Written	$	(3,422	)	$	(3,422	)		—		—

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			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Global Dividend Growth
Assets:
Common Stocks
Air Freight & Logistics	$	1,882,745		—	$	1,882,745		—
Beverages		911,989		—		911,989		—
Capital Markets		2,608,832	$	2,608,832		—		—
Chemicals		2,124,083		1,496,463		627,620		—
Commercial Banks		4,653,794		—		4,653,794		—
Commercial Services & Supplies		889,553		889,553		—		—
Computers & Peripherals		2,517,388		990,800		1,526,588		—
Construction Materials		2,517,823		—		2,517,823		—
Containers & Packaging		1,811,563		1,811,563		—		—
Diversified Financial Services		3,088,428		3,088,428		—		—
Diversified Telecommunication Services		6,050,510		2,902,736		3,147,774		—
Electric Utilities		2,961,372		716,967		2,244,405		—
Electronic Equipment, Instruments & Components		1,783,041		—		1,783,041		—
Food Products		2,241,507		—		2,241,507		—
Hotels, Restaurants & Leisure		588,171		—		588,171		—
Household Products		640,435		640,435		—		—
Industrial Conglomerates		618,578		—		618,578		—
Information Technology Services		888,515		—		888,515		—
Insurance		3,970,620		1,367,038		2,603,582		—
Machinery		5,920,296		—		5,920,296		—
Media		4,632,640		921,357		3,711,283		—
Metals & Mining		1,465,382		—		1,465,382		—
Multiline Retail		1,192,634		1,192,634		—		—
Multi-Utilities		1,178,908		—		1,178,908		—
Office Electronics		1,149,882		—		1,149,882		—
Oil, Gas & Consumable Fuels		6,812,115		—		6,812,115		—
Personal Products		607,386		607,386		—		—
Pharmaceuticals		6,756,867		3,609,046		3,147,821		—
Real Estate Investment Trusts		2,176,613		1,409,797		766,816		—
Road & Rail		867,935		—		867,935		—

157

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Notes to Financial Statements nDecember 31, 2009 continued

				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Semiconductors & Semiconductor Equipment	$	1,982,281		$	1,982,281		—			—
Software		968,415			—	$	968,415			—
Tobacco		8,099,838			5,391,219		2,708,619			—
Wireless Telecommunication Services		1,806,695			—		1,806,695			—
Total Common Stocks		88,366,834			31,626,535		56,740,299			—
Short-Term Investments
Investment Company		10,264,721			10,264,721		—			—
Repurchase Agreements		2,271,309			—		2,271,309			—
Total Short-Term Investments		12,536,030			10,264,721		2,271,309			—
Forward Contracts		482,066			—		482,066			—
Total	$	101,384,930		$	41,891,256	$	59,493,674			—
Liabilities
Forward Contracts	$	(60,621	)		—	$	(60,621	)		—
European Equity
Assets:
Common Stocks
Aerospace & Defense	$	2,658,471			—	$	2,658,471			—
Auto Components		1,358,822			—		1,358,822			—
Automobiles		1,728,308			—		1,728,308			—
Capital Markets		2,410,668			—		2,410,668			—
Chemicals		1,438,754			—		1,438,754			—
Commercial Banks		10,966,499			—		10,966,499			—
Diversified Telecommunication Services		5,085,917			—		5,085,917			—
Electrical Equipment		1,715,416			—		1,715,416			—
Food & Staples Retailing		2,733,735			—		2,733,735			—
Food Products		3,305,331			—		3,305,331			—
Health Care Equipment & Supplies		1,965,839			—		1,965,839			—
Hotels, Restaurants & Leisure		952,839			—		952,839			—
Industrial Conglomerates		2,029,092			—		2,029,092			—
Insurance		5,704,690			—		5,704,690			—
Machinery		1,244,493			—		1,244,493			—

158

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Media	$	885,702		—	$	885,702		—
Metals & Mining		4,159,473		—		4,159,473		—
Multi-Utilities		1,686,454		—		1,686,454		—
Oil, Gas & Consumable Fuels		7,360,304		—		7,360,304		—
Pharmaceuticals		9,609,727		—		9,609,727		—
Specialty Retail		1,646,310		—		1,646,310		—
Tobacco		3,724,528		—		3,724,528		—
Wireless Telecommunication Services		2,492,274		—		2,492,274		—
Total Common Stocks		76,863,646		—		76,863,646		—
Preferred Stock		1,156,193		—		1,156,193		—
Short-Term Investments
Investment Company		3,805,800	$	3,805,800		—		—
Repurchase Agreements		401,536		—		401,536		—
Total Short-Term Investments		4,207,336		3,805,800		401,536		—
Total	$	82,227,175	$	3,805,800	$	78,421,375		—
Capital Opportunities
Assets:
Common Stocks
Air Freight & Logistics	$	5,634,699	$	5,634,699		—		—
Capital Markets		10,028,074		10,028,074		—		—
Chemicals		11,131,489		11,131,489		—		—
Computers & Peripherals		26,331,305		26,331,305		—		—
Distributors		8,708,354		—	$	8,708,354		—
Diversified Financial Services		18,647,826		13,110,143		5,537,683		—
Health Care Technology		8,106,058		8,106,058		—		—
Hotels, Restaurants & Leisure		16,353,835		16,353,835		—		—
Information Technology Services		16,880,554		11,057,824		5,822,730		—
Internet & Catalog Retail		19,572,525		19,572,525		—		—
Internet Software & Services		48,627,043		29,594,107		19,032,936		—
Life Sciences Tools & Services		13,242,140		13,242,140		—		—
Oil, Gas & Consumable Fuels		17,214,116		17,214,116		—		—
Professional Services		14,380,004		14,380,004		—		—
Real Estate Management & Development		9,148,895		9,148,895		—		—

159

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Semiconductors & Semiconductor Equipment	$	6,435,435	$	6,435,435		—		—
Software		8,681,254		8,681,254		—		—
Total Common Stocks		259,123,606		220,021,903	$	39,101,703		—
Short-Term Investments —
Investment Company		7,508,265		7,508,265		—		—
Total	$	266,631,871	$	227,530,168	$	39,101,703		—
S&P 500 Index
Assets:
Common Stocks
Aerospace & Defense	$	3,500,110	$	3,500,110		—		—
Air Freight & Logistics		1,308,079		1,308,079		—		—
Airlines		119,398		119,398		—		—
Auto Components		276,582		276,582		—		—
Automobiles		508,648		508,648		—		—
Beverages		3,431,595		3,431,595		—		—
Biotechnology		2,014,809		2,014,809		—		—
Building Products		70,182		70,182		—		—
Capital Markets		3,499,836		3,499,836		—		—
Chemicals		2,556,021		2,556,021		—		—
Commercial Banks		3,490,970		3,490,970		—		—
Commercial Services & Supplies		691,955		691,955		—		—
Communications Equipment		3,349,983		3,349,983		—		—
Computers & Peripherals		7,715,315		7,715,315		—		—
Construction & Engineering		237,501		237,501		—		—
Construction Materials		81,902		81,902		—		—
Consumer Finance		1,030,583		1,030,583		—		—
Containers & Packaging		281,736		281,736		—		—
Distributors		85,448		85,448		—		—
Diversified Consumer Services		247,649		247,649		—		—
Diversified Financial Services		5,597,759		5,597,759		—		—
Diversified Telecommunication Services		3,691,528		3,691,528		—		—
Electric Utilities		2,567,163		2,567,163		—		—
Electrical Equipment		650,862		650,862		—		—

160

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Electronic Equipment, Instruments & Components	$	795,074	$	795,074		—		—
Energy Equipment & Services		2,334,512		2,334,512		—		—
Food & Staples Retailing		3,431,595		3,431,595		—		—
Food Products		2,085,010		2,085,010		—		—
Gas Utilities		209,829		209,829		—		—
Health Care Equipment & Supplies		2,531,737		2,531,737		—		—
Health Care Providers & Services		2,790,211		2,790,211		—		—
Health Care Technology		54,082		54,082		—		—
Hotels, Restaurants & Leisure		1,876,269		1,876,269		—		—
Household Durables		555,772		555,772		—		—
Household Products		3,280,006		3,280,006		—		—
Independent Power Producers & Energy Traders		215,038		215,038		—		—
Industrial Conglomerates		2,907,850		2,907,850		—		—
Information Technology Services		2,080,098		2,080,098		—		—
Insurance		3,111,198		3,111,198		—		—
Internet & Catalog Retail		781,470		781,470		—		—
Internet Software & Services		2,668,440		2,668,440		—		—
Leisure Equipment & Products		173,190		173,190		—		—
Life Sciences Tools & Services		561,970		561,970		—		—
Machinery		2,024,020		2,024,020		—		—
Media		3,695,510		3,695,510		—		—
Metals & Mining		1,381,975		1,381,975		—		—
Multi-Utilities		1,810,145		1,810,145		—		—
Multiline Retail		1,110,800		1,110,800		—		—
Office Electronics		103,407		103,407		—		—
Oil, Gas & Consumable Fuels		12,508,342		12,508,342		—		—
Paper & Forest Products		359,456		359,456		—		—
Personal Products		344,583		344,583		—		—
Pharmaceuticals		8,345,566		8,345,566		—		—
Professional Services		208,155		208,155		—		—
Real Estate Investment Trusts		1,507,468		1,507,468		—		—
Real Estate Management & Development		42,732		42,732		—		—

161

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Road & Rail	$	1,283,862	$	1,283,862		—		—
Semiconductors & Semiconductor Equipment		3,426,692		3,426,692		—		—
Software		5,730,007		5,730,007		—		—
Specialty Retail		2,518,494		2,518,494		—		—
Textiles, Apparel & Luxury Goods		634,321		634,321		—		—
Thrifts & Mortgage Finance		156,485		156,485		—		—
Tobacco		1,998,909		1,998,909		—		—
Trading Companies & Distributors		164,399		164,399		—		—
Wireless Telecommunication Services		381,368		381,368		—		—
Total Common Stocks		129,185,661		129,185,661		—		—
Short-Term Investments —
Investment Company		1,183,795		1,183,795		—		—
Futures		20,244		20,244		—		—
Total	$	130,389,700	$	130,389,700		—		—
Aggressive Equity
Assets:
Common Stocks
Air Freight & Logistics	$	689,599	$	689,599		—		—
Capital Markets		1,227,271		1,227,271		—		—
Chemicals		1,362,364		1,362,364		—		—
Computers & Peripherals		3,214,467		3,214,467		—		—
Distributors		1,070,025		—	$	1,070,025		—
Diversified Financial Services		2,282,233		1,604,495		677,738		—
Health Care Technology		992,068		992,068		—		—
Hotels, Restaurants & Leisure		2,001,540		2,001,540		—		—
Information Technology Services		2,065,987		1,353,366		712,621		—
Internet & Catalog Retail		2,376,161		2,376,161		—		—
Internet Software & Services		5,951,786		3,621,970		2,329,816		—
Life Sciences Tools & Services		1,620,626		1,620,626		—		—
Oil, Gas & Consumable Fuels		2,106,769		2,106,769		—		—
Professional Services		1,759,917		1,759,917		—		—

162

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Real Estate Management & Development	$	1,119,691	$	1,119,691		—		—
Semiconductors & Semiconductor Equipment		787,620		787,620		—		—
Software		1,062,436		1,062,436		—		—
Total Common Stocks		31,690,560		26,900,360	$	4,790,200		—
Short-Term Investment —
Investment Company		815,431		815,431		—		—
Total	$	32,505,991	$	27,715,791	$	4,790,200		—
Strategist
Assets:
Common Stocks
Aerospace & Defense	$	4,663,892	$	4,663,892		—		—
Airlines		2,111,334		2,111,334		—		—
Automobiles		1,393,629		1,393,629		—		—
Biotechnology		8,498,004		8,498,004		—		—
Capital Markets		3,232,475		3,232,475		—		—
Chemicals		1,216,497		1,216,497		—		—
Commercial Services & Supplies		2,619,937		2,619,937		—		—
Communications Equipment		1,678,194		1,678,194		—		—
Computers & Peripherals		6,766,907		6,766,907		—		—
Construction & Engineering		1,605,872		1,605,872		—		—
Diversified Financial Services		3,540,156		3,540,156		—		—
Diversified Telecommunication Services		4,044,223		4,044,223		—		—
Electric Utilities		1,955,198		1,955,198		—		—
Electrical Equipment		1,779,402		1,779,402		—		—
Electronic Equipment, Instruments & Components		3,076,469		3,076,469		—		—
Energy Equipment & Services		4,035,093		4,035,093		—		—
Food & Staples Retailing		1,105,591		1,105,591		—		—
Food Products		2,490,637		2,490,637		—		—
Health Care Equipment & Supplies		1,964,678		1,964,678		—		—
Hotels, Restaurants & Leisure		2,178,786		2,178,786		—		—
Household Durables		1,813,579		1,813,579		—		—

163

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Notes to Financial Statements nDecember 31, 2009 continued

			Fair Value Measurements at December 31, 2009 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Household Products	$	731,957	$	731,957		—		—
Industrial Conglomerates		1,212,670		1,212,670		—		—
Information Technology Services		1,197,765		1,197,765		—		—
Insurance		3,116,571		3,116,571		—		—
Internet Software & Services		2,204,424		2,204,424		—		—
Life Sciences Tools & Services		1,218,956		1,218,956		—		—
Machinery		3,254,077		3,254,077		—		—
Metals & Mining		4,551,245		4,551,245		—		—
Multiline Retail		1,037,613		1,037,613		—		—
Oil, Gas & Consumable Fuels		3,606,911		3,606,911		—		—
Pharmaceuticals		5,334,373		5,334,373		—		—
Real Estate Investment Trusts		1,436,390		1,436,390		—		—
Real Estate Management & Development		3,111,107		3,111,107		—		—
Semiconductors & Semiconductor Equipment		6,103,899		6,103,899		—		—
Software		10,597,146		10,597,146		—		—
Specialty Retail		3,088,990		3,088,990		—		—
Tobacco		2,739,043		2,739,043		—		—
Water Utilities		1,970,847		1,970,847		—		—
Total Common Stocks		118,284,537		118,284,537		—		—
Asset-Backed Securities		104,120		—	$	104,120		—
Corporate Bonds		16,314,108		—		16,314,108		—
Foreign Government Obligations		397,546		—		397,546		—
Investment Trusts/Mutual Funds		1,935,989		1,935,989		—		—
Municipal Bonds		132,003		—		132,003		—
U.S. Government Agencies & Obligations		21,830,149		—		21,830,149		—
U.S. Government Agencies — Mortgage-Backed Securities		5,285		—		5,285		—
Short-Term Investments
Investment Company		37,996,759		37,996,759		—		—
U.S. Government Obligation		449,769		—		449,769		—
Total Short-Term Investments		38,446,528		37,996,759		449,769		—

164

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Notes to Financial Statements nDecember 31, 2009 continued

				Fair Value Measurements at December 31, 2009 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Futures	$	116,142		$	116,142			—			—
Interest Rate Swaps		64,227			—		$	64,227			—
Total	$	197,630,634		$	158,333,427		$	39,297,207			—
Liabilities:
Credit Default Swaps	$	(23,798	)		—		$	(23,798	)		—
Futures		(56,445	)	$	(56,445	)		—			—
Interest Rate Swaps		(205,751	)		—			(205,751	)		—
Total	$	(285,994	)	$	(56,445	)	$	(229,549	)		—

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

	Investments in Securities
	Income Plus			High Yield		S&P 500 Index			Strategist
Beginning Balance	$	10,003		$	27,119	$	0		$	114,063
Net purchases (sales)		(17,563	)		—		(431	)		(185,416	)
Transfers in and/or out		—			—		—			—
Change in unrealized appreciation/depreciation		1,357,974			—		—			314,429
Realized gains (losses)		(1,350,414	)		—		431			(243,076	)
Ending Balance	$	0		$	27,119	$	0		$	0
Net change in unrealized appreciation/ depreciation from investments still held as of December 31, 2009		—		$	0		—			—

3. Derivative Financial Instruments

A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index.

The Fund may use derivative instruments for a variety of reasons, such as to attempt to protect the Fund against possible changes in the market value of its portfolio or to manage the Fund's foreign currency exposure or to generate potential gain. All of the Fund's portfolio holdings, including derivative

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instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation/depreciation. Upon disposition, a realized gain or loss is recognized accordingly, except when taking delivery of a security underlying a contract. In these instances, the recognition of gain or loss is postponed until the disposal of the security underlying the contract. Risk may arise as a result of the potential inability of the counterparties to meet the terms of their contracts.

Summarized below are specific types of derivative financial instruments used by certain Portfolios.

Forward Foreign Currency Contracts Certain Portfolios may enter into forward contracts for many purposes, including to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. Forward contracts involve elements of market risk in excess of the amount reflected in the Statements of Assets and Liabilities. The respective Portfolios bear the risk of an unfavorable change in the foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

During the year ended December 31, 2009, the value of forward foreign currency contracts opened and closed were as follows:

PORTFOLIO	OPEN		CLOSE
High Yield	$	697	$	2,508
Global Infrastructure		264,287,214		276,803,523
Income Builder		23,017		85,868
Global Dividend Growth		247,815,751		257,976,888
European Equity		11,893,925		25,637,351
Capital Opportunities		500		5,998,166
Aggressive Equity		—		567,717
Strategist		—		91,750

Futures Certain Portfolios may purchase and sell interest rate, Eurodollar and index futures ("futures contracts") to facilitate trading, increase or decrease the Portfolio's market exposure, seek higher investment returns or to seek to protect against a decline in the value of the Portfolio's securities or an increase in prices of securities that may be purchased. These futures involve elements of market risk in excess of the amount reflected in the Statements of Assets and Liabilities. The respective Portfolios bear the risk of an unfavorable change in the value of the underlying securities. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

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Transactions in futures contracts for the year ended December 31, 2009, were as follows:

Limited Duration
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		249
Futures opened		1,741
Futures closed		(1,747	)
Futures, outstanding at end of the period		243
Income Plus
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		767
Futures opened		6,051
Futures closed		(5,954	)
Futures, outstanding at end of the period		864
S&P 500 Index
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		50
Futures opened		268
Futures closed		(285	)
Futures, outstanding at end of the period		33
Strategist
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		129
Futures opened		782
Futures closed		(838	)
Futures, outstanding at end of the period		73

Options For hedging and investment purposes, certain Portfolios may engage in transactions in listed and over-the-counter options. Risks may arise from an imperfect correlation between the change in the market value of the securities held by the Portfolios and the price of options relating to the securities purchased or sold by the Portfolios and from the possible lack of a liquid secondary market for an option.

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Transactions in options for the year ended December 31, 2009, were as follows:

Limited Duration
	NUMBER OF CONTRACTS			COST
Options purchased, outstanding at beginning of period		37		$	33,398
Options purchased		70			54,223
Options closed		(107	)		(87,621	)
Options purchased, outstanding at end of period		—			—
	NUMBER OF CONTRACTS			PREMIUM
Options written, outstanding at beginning of period		37		$	18,402
Options written		107			20,079
Options closed		(144	)		(38,481	)
Options written, outstanding at end of period		—			—
Global Infrastructure
	NUMBER OF CONTRACTS			PREMIUM
Options written, outstanding at beginning of period		—			—
Options written		671		$	34,489
Options closed		(76	)		(4,705	)
Options written, outstanding at end of period		595		$	29,784
Dividend Growth
	NUMBER OF CONTRACTS			PREMIUM
Options written, outstanding at beginning of period		—			—
Options written		1,824		$	369,729
Options expired		(959	)		(230,821	)
Options closed		(807	)		(127,251	)
Options written, outstanding at end of period		58		$	11,657
Strategist
	NUMBER OF CONTRACTS			COST
Options purchased, outstanding at beginning of period		33		$	29,787
Options purchased		66			51,125
Options closed		(99	)		(80,912	)
Options purchased, outstanding at end of period		—			—

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	NUMBER OF CONTRACTS			PREMIUM
Options written, outstanding at beginning of period		33		$	16,413
Options written		101			18,957
Options closed		(134	)		(35,370	)
Options written, outstanding at end of period		—			—

Swaps Certain Portfolios may enter into swaps and may purchase or sell interest rate caps, floors and collars. The Portfolios expect to enter into these transactions primarily to manage interest rate risk, hedge portfolio positions and preserve a return or spread on a particular investment or portion of its portfolio. The Portfolios may also enter into these transactions to protect against any increase in the price of securities a Portfolio anticipates purchasing at a later date. Swap transactions are subject to market risk, risk of default by the other party to the transaction, risk of imperfect correlation and manager risk. Such risks may exceed the related amounts shown in the Statements of Assets and Liabilities.

Certain Portfolios may enter into credit default swaps for hedging purposes, to add leverage to its portfolio or to gain exposure to a credit in which the Portfolio may otherwise invest. Credit default swaps may involve greater risks than if the Portfolio had invested in the issuer directly. Credit default swaps are subject to general market risk, counterparty risk and credit risk. If the Portfolio is a buyer and no credit event occurs, it will lose its investment. In addition, if the Portfolio is a seller and a credit event occurs, the value of the referenced obligation received by the Portfolio coupled with the periodic payments previously received may be less than the maximum payout amount it pays to the buyer, resulting in a loss to the Portfolio.

Transactions in swap contracts for the year ended December 31, 2009, were as follows:

Limited Duration
	NOTIONAL AMOUNT (000'S)			NOTIONAL AMOUNT (000'S)
Swaps, outstanding at beginning of period	EUR	15,314		$	107,808
Swaps opened		—			72,503
Swaps closed		(15,314	)		(155,628	)
Swaps, outstanding at end of period		—		$	24,683

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Income Plus
	NOTIONAL AMOUNT (000'S)			NOTIONAL AMOUNT (000'S)
Swaps, outstanding at beginning of period	EUR	133,580		$	492,370
Swaps opened		—			102,925
Swaps closed		(133,580	)		(589,630	)
Swaps, outstanding at end of period		—		$	5,665
Strategist
	NOTIONAL AMOUNT (000'S)			NOTIONAL AMOUNT (000'S)
Swaps, outstanding at beginning of period	EUR	23,086		$	71,762
Swaps opened		6,772			50,633
Swaps closed		(29,858	)		(103,513	)
Swaps, outstanding at end of period		—		$	18,882

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

PORTFOLIO	PRIMARY RISK EXPOSURE	ASSET DERIVATIVE BALANCE SHEET LOCATION	FAIR VALUE			LIABILITIES DERIVATIVE BALANCE SHEET LOCATION	FAIR VALUE
Limited Duration	Interest Rate	Variation margin	$	227,437	†	Variation margin	$	(113,958	)†
	Risk	Unrealized appreciation on open swap contracts		144,026		Unrealized depreciation on open swap contracts		(406,080	)
			$	371,463			$	(520,038	)
Income Plus	Interest Rate	Variation margin	$	1,814,839	†	Variation margin	$	(590,857	)†
	Risk
	Credit Risk	Unrealized appreciation on open swap contracts		14,669		Unrealized depreciation on open swap contracts		(305,128	)
			$	1,829,508			$	(895,985	)

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PORTFOLIO	PRIMARY RISK EXPOSURE	ASSET DERIVATIVE BALANCE SHEET LOCATION	FAIR VALUE			LIABILITIES DERIVATIVE BALANCE SHEET LOCATION	FAIR VALUE
Global Infrastructure	Foreign Currency Risk	Unrealized appreciation on open forward foreign currency contracts	$	128,977		Unrealized depreciation on open forward foreign currency contracts	$	(73,883	)
	Equity Risk	Options purchased, Investments, at value		—		Written options outstanding, at value		(53,326	)
			$	128,977			$	(127,209	)
Dividend Growth	Equity Risk	Options purchased, Investments, at value		—		Written options outstanding, at value	$	(3,422	)
Global Dividend Growth	Foreign Currency Risk	Unrealized appreciation on open forward foreign currency contracts	$	482,066		Unrealized depreciation on open forward foreign currency contracts	$	(60,621	)
Strategist	Interest Rate	Variation Margin	$	116,142	†	Variation Margin	$	(56,445	)†
	Risk	Unrealized appreciation on open swap contracts		64,227		Unrealized depreciation on open swap contracts		(205,751	)
	Credit Risk	Unrealized appreciation on open swap contracts		—		Unrealized depreciation on open swap contracts		(23,798	)
			$	180,369			$	(285,994	)
S&P 500 Index	Equity Risk	Variation margin	$	20,244	†	Variation margin		—

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

The following tables set forth by primary risk exposure the Fund's realized gains (losses) and change in unrealized gains (losses) by type of derivative contract for the year ended December 31, 2009.

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS			OPTIONS WRITTEN			OPTIONS PURCHASED††		FORWARD FOREIGN CURRENCY
Limited Duration	Interest Rate Risk	$	(770,199	)	$	2,485,576		$	(30,688	)	$	10,670		—
	Credit Risk		—			(29,125	)		—			—		—
		$	(770,199	)	$	2,456,451		$	(30,688	)	$	10,670		—

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AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS		OPTIONS WRITTEN			OPTIONS PURCHASED††		FORWARD FOREIGN CURRENCY
Income Plus	Interest Rate Risk	$	(4,200,425	)	$	10,872,354		—			—		—
	Credit Risk		—			13,680		—			—		—
	Total	$	(4,200,425	)	$	10,886,034		—			—		—
High Yield	Foreign Currency Risk		—			—		—			—	$	35
Global Infrastructure	Equity Risk		—			—	$	3,363			—
	Foreign Currency Risk		—			—		—			—	$	(587,377	)
	Total		—			—	$	3,363			—	$	(587,377	)
Income Builder	Foreign Currency Risk		—			—		—			—	$	(628	)
Dividend Growth	Equity Risk		—			—	$	218,965			—		—
Global Dividend Growth	Foreign Currency Risk		—			—		—			—	$	(1,359,983	)
European Equity	Foreign Currency Risk		—			—		—			—	$	(11,316	)
Capital Opportunities	Foreign Currency Risk		—			—		—			—	$	(3,460	)
S&P 500 Index	Equity Risk	$	244,431			—		—			—		—
Aggressive Equity	Foreign Currency Risk		—			—		—			—	$	(96	)
Strategist	Interest Rate Risk	$	95,696		$	1,686,850	$	(26,773	)	$	6,850		—
	Credit Risk		—			75,351		—			—		—
	Foreign Currency Risk		—			—		—			—	$	104
	Total	$	95,696		$	1,762,201	$	(26,773	)	$	6,850	$	104

CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES		SWAPS			OPTIONS WRITTEN			OPTIONS PURCHASED††			FORWARD FOREIGN CURRENCY
Limited Duration	Credit Risk		—	$	87,715			—			—			—
	Interest Rate Risk	$	615,755		(1,468,280	)	$	35,017		$	(52,627	)		—
	Total	$	615,755	$	(1,380,565	)	$	35,017		$	(52,627	)		—
Income Plus	Interest Rate Risk	$	5,076,776	$	(9,743,202	)		—			—			—
	Credit Risk		—		319,162			—			—			—
	Total	$	5,076,776	$	(9,424,040	)		—			—			—
Global Infrastructure	Foreign Currency Risk		—		—			—			—		$	8,043
	Equity Risk		—		—		$	(23,542	)		—			—
	Total		—		—		$	(23,542	)		—		$	8,043

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CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS			OPTIONS WRITTEN		OPTIONS PURCHASED††			FORWARD FOREIGN CURRENCY
Dividend Growth	Equity Risk		—			—		$	8,235		—			—
Global Dividend Growth	Foreign Currency Risk		—			—			—		—		$	865,473
S&P 500 Index	Equity Risk	$	(50,810	)		—			—		—			—
Strategist	Interest Rate Risk	$	(154,585	)	$	(1,101,193	)	$	31,231	$	(46,938	)		—
	Credit Risk		—			(40,049	)		—		—			—
	Total	$	(154,585	)	$	(1,141,242	)	$	31,231	$	(46,938	)		—

††  Amounts are included in Investments in the Statements of Operations.

4. Investment Advisory/Administration and Sub-Advisory Agreements

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

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

Limited Duration — 0.30%.

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

High Yield — 0.42% to the portion of the daily net assets not exceeding $500 million; 0.345% to the portion of the daily net assets exceeding $500 million but not exceeding $750 million; 0.295% to the portion of the daily net assets exceeding $750 million but not exceeding $1 billion; 0.27% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 bil lion; 0.245% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion and 0.22% to the portion of the daily net assets in excess of $3 billion.

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

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

Income Builder — 0.67% to the portion of the daily net assets not exceeding $500 million and 0.645% to the portion of the daily net assets in excess of $500 million.

Dividend Growth — 0.545% to the portion of the daily net assets not exceeding $250 million; 0.42% to the portion of the daily net assets exceeding $250 million but not exceeding $1 billion; 0.395% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion and 0.37% to the portion of the daily net assets in excess of $2 billion.

Global Dividend Growth — 0.67% to the portion of the daily net assets not exceeding $1 billion; 0.645% to the portion of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.62% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2.5 billion; 0.595% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3.5 billion; 0.57% to the portion of the daily net assets exceeding $3.5 billion but not exceeding $4.5 billion and 0.545% to the portion of the daily net assets in excess of $4.5 billion.

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

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

S&P 500 Index — 0.12% to the portion of the daily net assets not exceeding $2 billion and 0.10% to the portion of the daily net assets in excess of $2 billion.

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

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

Under the Sub-Advisory Agreement between the Investment Adviser and the Sub-Adviser, the Sub-Adviser provides Income Plus (effective February 24, 2009), Global Infrastructure, Global Dividend Growth and European Equity with investment advisory services, subject to the overall supervision of the Investment Adviser and the Fund's Officers and Trustees. The Investment Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Investment Adviser receives from each Portfolio. Effective September 24, 2009, the Sub-Advisory Agreement was terminated and services previously provided by the Sub-Adviser are now being provided by the Investment Adviser for Income Plus.

The Investment Adviser has voluntarily agreed to cap European Equity and S&P 500 Index's operating expenses (except for brokerage and 12b-1 fees) by assuming the Portfolio's "other expenses" and/or waiving the Portfolio's advisory fees, and Morgan Stanley Services Company Inc. (the "Administrator") has agreed to waive the Portfolio's administrative fees, to the extent such operating expenses exceed 1.00% and 0.40%, respectively, of the average daily net assets of the Portfolio on an annualized basis.< /font>

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

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

5. Plan of Distribution

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

The Distributor, Investment Adviser and Administrator have voluntarily agreed to waive all or a portion of the Money Market Portfolio's distribution fee, investment advisory fee and administration fee, respectively, to the extent that total expenses exceed total income of the Money Market Portfolio on a daily basis. For the year ended December 31, 2009, the Distributor waived $229,767 and the Investment Adviser waived $385,514. This waiver may be terminated at any time.

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6. Security Transactions and Transactions with Affiliates

Each Portfolio (except Money Market) may invest in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, an open-end management investment company managed by an affiliate of the Investment Adviser, both directly, and as a portion of the securities held as collateral on loaned securities. Investment Advisory fees paid by the Portfolios are reduced by an amount equal to the advisory and administrative services fees paid by Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class with respect to assets invested by the Portfolios in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. For the year ended December 31, 2009, the tables below identify, for each Portfolio that invested in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, that a mount by which that Portfolio's advisory fees were reduced in relation to that Portfolio's investment in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class.

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

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

PORTFOLIO	INCOME DISTRIBUTION EARNED		ADVISORY FEE REDUCTION
Limited Duration	$	6,308	$	2,429
Income Plus		11,007		4,828
High Yield		4,949		2,156
Global Infrastructure		1,749		888
Income Builder		3,896		1,836
Dividend Growth		9,232		4,041
Global Dividend Growth		4,041		1,775
European Equity		2,699		1,185
Capital Opportunities		13,991		8,241
S&P 500 Index		3,806		1,546
Aggressive Equity		3,093		1,357
Strategist		103,166		47,722

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During the year ended December 31, 2009, each Portfolio's cost of purchases and proceeds from sales of investments in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class were as follows:

PORTFOLIO	PURCHASES		SALES
Limited Duration	$	70,071,727	$	70,486,115
Income Plus		119,001,732		118,033,360
High Yield		14,647,614		14,626,379
Global Infrastructure		46,496,933		46,218,013
Income Builder		11,798,314		12,907,952
Dividend Growth		44,598,674		44,289,875
Global Dividend Growth		33,881,539		34,232,100
European Equity		17,057,891		16,468,452
Capital Opportunities		64,850,239		61,767,601
S&P 500 Index		14,570,575		16,193,622
Aggressive Equity		7,190,410		8,021,709
Strategist		82,472,309		84,924,483

Purchases and sales/prepayments/maturities of portfolio securities, excluding short-term investments (except Money Market), for the year ended December 31, 2009 were as follows:

	U.S. GOVERNMENT SECURITIES				OTHER
	PURCHASES		SALES/PREPAYMENTS MATURITIES		PURCHASES		SALES/PREPAYMENTS MATURITIES
Money Market		—		—	$	22,775,509,134	$	22,837,111,854
Limited Duration	$	37,925,251	$	30,871,036		56,134,126		42,958,321
Income Plus		1,880,559		1,343,273		180,839,507		193,253,478
High Yield		—		—		21,428,113		22,605,423
Global Infrastructure		—		—		224,177,409		236,610,263
Income Builder		—		—		13,843,901		17,347,034
Dividend Growth		—		—		101,507,590		128,233,312
Global Dividend Growth		—		—		66,622,109		78,341,398
European Equity		—		—		18,278,978		29,540,158
Capital Opportunities		—		—		50,130,141		90,572,500
S&P 500 Index		—		—		5,787,796		12,433,303
Aggressive Equity		—		—		6,125,534		9,641,891
Strategist		49,599,014		47,060,178		97,752,955		121,087,898

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

PORTFOLIO	ISSUER	PURCHASES		SALES/ MATURITIES		NET REALIZED GAINS(LOSS)			INCOME		VALUE
Limited Duration	MetLife Global	$	542,846	$	767,337	$	5,183		$	29,091	$	541,475
Income Plus	Allstate Corp. (The)		853,005		—		—			38,003		977,622
	MetLife, Inc.		1,588,753		613,392		1,256			119,224		2,209,289
Dividend Growth	Allstate Corp. (The)		—		3,961,190		(2,450,660	)		57,728		—
	MetLife, Inc.*		918,094		—		865	*		64,865		4,059,177	*
S&P 500 Index	Allstate Corp. (The)		—		24,005		(3,959	)		5,898		203,791
	MetLife, Inc.		8,923		25,068		(1,259	)		8,199		366,650
	Morgan Stanley		88,960		28,700		(5,375	)		6,878		516,490
Strategist	Allstate Corp. (The)		1,227,570		1,860,531		(344,854	)		10,393		58,192
	MetLife, Inc.		90,679		—		—			7,744		179,539

*  Includes realized gain of $865 and a value of $3,422 for call options written issued by MetLife, Inc. See the "Options Written" section of the Portfolio of Investments for details.

The following Portfolio had transactions with Mitsubishi UFJ Financial Group, Inc., an affiliate of the Investment Adviser, Distributor, Sub-Adviser and Administrator:

PORTFOLIO	PURCHASES		SALES		NET REALIZED LOSS			INCOME		VALUE
Income Builder		—	$	36,351	$	(18,449	)	$	274		—

For the period June 1, 2009 through December 31, 2009 the following Portfolios had transactions with Citigroup, Inc. an affiliate of the Investment Adviser, Distributor, Sub-Adviser and Administrator:

PORTFOLIO	PURCHASES		SALES		NET REALIZED GAIN(LOSS)			INCOME		VALUE
Limited Duration	$	599,430		—		—		$	44,678	$	3,195,386
Income Plus		4,240,694	$	1,908,560	$	77,394			279,020		7,892,255
Income Builder		195,214		—		—			—		153,915
S&P 500 Index**		698,548		23,612		(154,828	)		770		845,983
Strategist		1,333,320		444,680		(20,179	)		27,224		2,247,831

**  Citigroup has been an affiliate of variable S&P 500 Index for the full year.

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The following Portfolios had transactions with other Morgan Stanley funds during the period ended December 31, 2009:

PORTFOLIO	PURCHASES		SALES		NET REALIZED GAIN (LOSS)
Global Infrastructure	$	3,674,823	$	5,053,586	$	435,067
Capital Opportunities		1,252,908		10,914,552		(445,874	)
Aggressive Equity		150,790		2,061,292		(84,055	)

For the year ended December 31, 2009, the following Portfolios incurred brokerage commissions with Morgan Stanley & Co., Inc. an affiliate of the Investment Adviser, Distributor, Sub-Adviser and Administrator for portfolio transactions executed on behalf of each Portfolio:

GLOBAL INFRASTRUCTURE		INCOME BUILDER		DIVIDEND GROWTH		GLOBAL DIVIDEND		CAPITAL OPPORTUNITIES		AGGRESSIVE EQUITY		STRATEGIST
$	8,733	$	1,186	$	2,060	$	6,630	$	16,169	$	1,587	$	43,321

For the period June 1, 2009 (the date on which Citigroup, Inc. became an affiliate of the Investment Adviser, Distributor, Sub-Adviser and Administrator) through December 31, 2009, the following Portfolios incurred brokerage commissions with Citigroup, Inc. for portfolio transactions executed on behalf of the Portfolio.

GLOBAL INFRASTRUCTURE		INCOME BUILDER		DIVIDEND GROWTH		GLOBAL DIVIDEND		EUROPEAN EQUITY		STRATEGIST
$	58	$	20	$	529	$	2,805	$	372	$	5,140

Morgan Stanley Trust, an affiliate of the Investment Adviser, Distributor, Sub-Adviser and Administrator is the Fund's transfer agent.

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

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Aggregate pension costs for the year ended December 31, 2009, included in "trustees' fees and expenses" in the Statements of Operations and the accrued pension liability included in "accrued expenses and other payables" in the Statements of Assets and Liabilities are as follows:

AGGREGATE PENSION COSTS

MONEY MARKET		LIMITED DURATION		INCOME PLUS		HIGH YIELD		GLOBAL INFRASTRUCTURE		INCOME BUILDER		DIVIDEND GROWTH		GLOBAL DIVIDEND GROWTH
$	0	$	2,885	$	2,696	$	2,713	$	0	$	411	$	0	$	2,110
EUROPEAN EQUITY		CAPITAL OPPORTUNITIES		S&P 500 INDEX		AGGRESSIVE EQUITY		STRATEGIST
$	1,315	$	1,290	$	4,813	$	253	$	0

AGGREGATE PENSION LIABILITY

MONEY MARKET		LIMITED DURATION		INCOME PLUS		HIGH YIELD		GLOBAL INFRASTRUCTURE		INCOME BUILDER		DIVIDEND GROWTH		GLOBAL DIVIDEND GROWTH
$	6,083	$	2,763	$	9,308	$	1,178	$	3,020	$	1,185	$	8,957	$	3,177
EUROPEAN EQUITY		CAPITAL OPPORTUNITIES		S&P 500 INDEX		AGGRESSIVE EQUITY		STRATEGIST
$	2,835	$	7,840	$	4,575	$	1,117	$	6,939

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan") which allows each independent Trustee to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund.

7. Purposes of and Risks Relating to Certain Financial Instruments

Certain Portfolios may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Risks in securities lending transactions are that a borrower may not provide additional

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collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

Certain Portfolios may invest in mortgage securities, including securities issued by Federal National Mortgage Assoc. ("FNMA") and Federal Home Loan Mortgage Corp. ("FHLMC"). These are fixed income securities that derive their value from or represent interests in a pool of mortgages or mortgage securities. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage backed security and could result in losses to the Portfolio. The risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages. Subprime mortgages refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their mortgages. The securities held by the Portfolios are not backed by sub-prime borrowers.

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

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

At December 31, 2009, European Equity's investments in securities of issuers in the United Kingdom and Germany represented 39.2% and 15.7%, respectively of the Portfolio's net assets. Global Dividend Growth's investments in securities of issuers in the United Kingdom represented 16.0% of the Portfolio's net assets. These investments, as well as other non-U.S. investments, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developmen ts in these countries.

8. Federal Income Tax Status

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

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The tax character of distributions paid for the years ended December 31, 2008 and December 31, 2009 for all Portfolios was the same as the book character shown on the Statements of Changes in Net Assets except as follows:

	FOR THE YEAR ENDED DECEMBER 31, 2008
	GLOBAL INFRASTRUCTURE		INCOME BUILDER		GLOBAL DIVIDEND GROWTH		EUROPEAN EQUITY
Ordinary income	$	2,244,933	$	942,655	$	6,775,077	$	9,991,642
Long-term capital gains		23,386,105		6,921,833		26,895,525		14,958,326
Total distributions	$	25,631,038	$	7,864,488	$	33,670,602	$	24,949,968

As of December 31, 2009, the tax-basis components of accumulated earnings (losses) were as follows:

	MONEY MARKET			LIMITED DURATION			INCOME PLUS			HIGH YIELD			GLOBAL INFRASTRUCTURE
Undistributed ordinary income	$	10,719		$	2,459,571		$	14,616,577		$	2,648,766		$	5,452,354
Undistributed long-term gains		—			—			—			—			3,194,733
Net accumulated earnings		10,719			2,459,571			14,616,577			2,648,766			8,647,087
Foreign tax credit pass-through		—			—			—			—			69,968
Capital loss carryforward*		—			(36,561,425	)		(39,609,608	)		(203,201,950	)		—
Post-October losses		—			(9,937	)		—			(162,816	)		(462,366	)
Temporary differences		(7,103	)		(3,139	)		(12,498	)		(272,114	)		(73,406	)
Net unrealized appreciation (depreciation)		—			484,433			14,244,700			(50,583,503	)		10,030,950
Total accumulated earnings (losses)	$	3,616		$	(33,630,497	)	$	(10,760,829	)	$	(251,571,617	)	$	18,212,233
	INCOME BUILDER			DIVIDEND GROWTH			GLOBAL DIVIDEND GROWTH			EUROPEAN EQUITY			CAPITAL OPPORTUNITIES
Undistributed ordinary income	$	750,036		$	4,059,676		$	1,522,003		$	1,837,265		$	728,423
Undistributed long-term gains		—			—			—			—			—
Net accumulated earnings		750,036			4,059,676			1,522,003			1,837,265			728,423
Foreign tax credit pass-through		—			—			29,606			58,704			—
Capital loss carryforward*		(4,529,599	)		(211,469,197	)		(20,043,760	)		(11,892,933	)		(158,894,649	)
Post-October losses		(99,064	)		(1,431,307	)		—			(21,039	)		(786	)
Temporary differences		(1,870	)		(10,092	)		(33,204	)		(61,874	)		(8,839	)
Net unrealized appreciation (depreciation)		1,624,450			7,562,807			13,652,580			5,603,132			46,532,988
Total accumulated losses	$	(2,256,047	)	$	(201,288,113	)	$	(4,872,775	)	$	(4,476,745	)	$	(111,642,863	)

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	S&P 500 INDEX			AGGRESSIVE EQUITY			STRATEGIST
Undistributed ordinary income	$	2,194,404			—		$	4,239,369
Undistributed long-term gains		—			—			—
Net accumulated earnings		2,194,404			—			4,239,369
Foreign tax credit pass-through		—			—			—
Capital loss carryforward*		(28,979,560	)	$	(15,109,400	)		(157,642	)
Post-October losses		—			(88	)		(11,462	)
Temporary differences		(5,111	)		(1,239	)		(8,754	)
Net unrealized appreciation (depreciation)		22,397,344			6,074,053			23,543,994
Total accumulated earnings (losses)	$	(4,392,923	)	$	(9,036,674	)	$	27,605,505

*  As of December 31, 2009, the following Portfolios had a net capital loss carryforward which may be used to offset future capital gains to the extent provided by regulations.

	(AMOUNTS IN THOUSANDS)
AVAILABLE THROUGH DECEMBER 31,	2010		2011		2012		2013		2014		2015		2016		2017		TOTAL
Limited Duration	$	328	$	1,546	$	4,026	$	1,267	$	2,232	$	1,063	$	17,119	$	8,980	$	36,561
Income Plus		15,205		—		—		—		—		5,172		19,232		—		39,609
High Yield		63,495		81,458		24,098		15,737		6,219		—		1,794		10,401		203,202
Income Builder		—		—		—		—		—		—		—		4,530		4,530
Dividend Growth		106,916		48,222		—		—		—		—		19,117		37,214		211,469
Global Dividend Growth		—		—		—		—		—		—		3,068		16,976		20,044
European Equity		—		—		—		—		—		—		—		11,893		11,893
Capital Opportunities		130,806		—		—		—		—		—		20,502		7,587		158,895
S & P 500 Index		9,169		—		3,450		9,726		5,449		—		—		1,185		28,979
Aggressive Equity		13,085		—		—		—		—		—		1,612		412		15,109
Strategist		—		—		—		—		—		—		158		—		158

During the year ended December 31, 2009, the following Portfolios utilized net capital loss carryforwards: Income Plus — $1,658,505; Strategist — $2,984,722.

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At December 31, 2009, the primary reason(s) for significant temporary/permanent book/tax differences were as follows:

TEMPORARY DIFFERENCES		PERMANENT DIFFERENCES
POST- OCTOBER LOSSES	LOSS DEFERRALS FROM WASH SALES	FOREIGN CURRENCY GAINS/LOSSES	GAINS/ LOSSES ON