Morgan Stanley Select Dimensions Investment Series NCSRS Certified semi-annual shareholder report (management investment company)

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			811-07185

Morgan Stanley Select Dimensions 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)

Ronald E. Robison 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, 2007

Date of reporting period:		June 30, 2007

Item 1 - Report to Shareholders

MORGAN STANLEY
SELECT DIMENSIONS INVESTMENT SERIES

Semi-Annual Report

JUNE 30, 2007

Morgan Stanley Select Dimensions Investment Series

Table of Contents

Letter to the Shareholders					1

Fund Performance					17

Expense Example					19

Investment Advisory Agreement Approval					24

Portfolio of Investments:

Money Market					28

Flexible Income					32

Balanced					52

Utilities					66

Dividend Growth					68

Equally-Weighted S&P 500					72

Growth					85

Focus Growth					88

Capital Opportunities					91

Global Equity					94

Developing Growth					98

Financial Statements

Statements of Assets and Liabilities					102

Statements of Operations					104

Statements of Changes in Net Assets					106

Notes to Financial Statements					114

Financial Highlights					126

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007

Dear Shareholder,

A number of headwinds emerged during the six-month period ended June 30, 2007, sending jitters through the fixed income and equity markets both domestically and abroad. Among the most challenging was the collapsing subprime mortgage market (which makes loans to less creditworthy borrowers), which ruined several hedge funds and loan originators and threatened to spread into the credit market, corporate buyout activity, consumer spending and other areas of the economy. However, equities enjoyed modestly positive gains, with international markets outperforming the domestic market, and most segments of the fixed income market produced flat to slightly positive returns.

Domestic Equity Overview

For the U.S. stock market, the first half of 2007 was an environment in which investors began to catch glimpses of what could be a more challenging environment to come. The first quarter's economic growth rate slowed considerably, oil prices resumed their climb, interest rates rose, the housing market continued to deteriorate, and fears about the health of consumer and business spending heightened. The stock market, as measured by the commonly cited S&P 500^® Index, was up 6.96 percent during the six-month period but volatility levels were also up after several years of near historical lows.

In the final days of February, China's stock market declined precipitously, the subprime mortgage woes came to light and former Federal Open Market Committee (the "Fed") Chairman Alan Greenspan publicly stated his belief that the U.S. economy could enter a recession — all of which led to a sell-off in the U.S. market on concerns of a U.S.-led global recession. The disruption was temporary, persisting through March, after which the markets turned upward. In June, however, volatility rose again as investors anxiously awaited second quarter corporate earnings reports. During the month, several hedge funds collapsed as a result of investments in subprime mortgage-related securities, and investors feared the contagion could become widespread. The Fed remained on hold with regard to monetary policy, further dashing hopes that inflation would be sufficiently contained to begin a cycle of monetary easing some time later this year.

Nonetheless, corporate profits continued to demonstrate resilience in spite of these difficulties. Generally, first quarter corporate earnings were able to exceed the already lowered expectations set by analysts and company managements, which along with the robust merger and acquisition (M&A) and stock buyback activities helped fuel the stock market's advance during the period. Consumer spending was kept aloft, in part, by wage growth and decent employment rates, and other economic data released throughout the months comprising the second quarter seemed to indicate that GDP growth would recover from the first quarter's sluggishness.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

From a sector view (using the S&P 500 Index sectors), the energy sector continued to perform very well given the prolonged period of high commodity prices. The materials sector commanded solid gains as well, benefiting from strong demand on a global scale for metals and mining, paper and forest products, and chemicals, as well as from industry consolidation. Also among the best performing sector groups was telecommunication services. Conversely, the financials sector faced a number of challenges with regard to the subprime fallout and the housing slump. As a result, thrifts, real estate investment trusts (REITs) and commercial banks were among the weakest performing groups during the period. Not surprisingly, consumer-related sectors also took a hit during the period, including homebuilders and specialty retailers within the consumer discretionary sector, and household products within the consumer staples sector. In terms of style, growth stocks edged slightly higher than value stocks, which is historically typical in the later stages of an economic cycle.

Fixed Income Overview

Many of the same factors driving the domestic equity market also played a role in the fixed income market's movements during the period. Increases in business spending and manufacturing in the second quarter, coupled with persistently strong employment data, signaled an acceleration in economic growth from the first quarter's sluggish pace. At the same time, annualized inflation — as measured by core personal consumption expenditure (PCE) — moderated somewhat, falling within the Fed's comfort zone of 1 to 2 percent. Against this backdrop, the Fed held the target federal funds rate steady at 5.25 percent, where it has stood since June 2006, but continued to state that inflation risks remain their predominant policy concern.

Although the improved economic outlook may have been reassuring for the Fed, it did not bode particularly well for the performance of most sectors of the fixed income market as it effectively dispelled the market's expectations of an ease in monetary policy. This change in expectations caused Treasury yields to move sharply higher. Although yields declined in the last weeks of June, when the highly publicized failure of two mortgage-related hedge funds fueled a flight-to-quality Treasury market rally, they finished the overall period higher. Yields on the long end curve rose more than those on the short end, causing the yield curve to steepen.

Early in the year, the lower-rated, higher-yielding sectors of the market outperformed higher-quality bonds, but rising interest rates and increased market volatility over the course of the period caused yield spreads to widen and high-yield performance to wane. Nonetheless, high-yield bonds still outperformed Treasuries for the overall period as spreads remained relatively tight in historical terms and various other factors, including low default rates, strong global demand, and solid corporate earnings provided ongoing support to the sector. With regard to the mortgage sector, lower-coupon mortgage-backed securities initially outperformed higher-coupon mortgage-backed securities but as interest rates rose, mortgage pre-payments

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

slowed. As a result, higher-coupon mortgage-backed securities outperformed their lower-coupon counterparts as well as equal-duration Treasuries for the six-month reporting period. The performance of agency and asset-backed securities lagged as widening spreads in the latter months of the period pushed prices in these sectors lower.

International Equity Overview

International equity markets continued to outperform the U.S. equity market. However, global markets' advance slowed in June, with most markets ending the period either declining or moving sideways. While the condition of the U.S. economy remained a concern, the economies of Europe and Asia provided more positive news in the first half of 2007.

In Europe, much of the Euroland economy produced an ongoing flow of strongly positive data. Labor markets continued to improve and the German economy showed very little drag from the increase in sales tax implemented in January. European manufacturing and service industries, which make up two-thirds of the economy, grew at a rapid pace. Business activity remained robust and unemployment prospects continued to improve. The European Central Bank increased Euroland interest rates by another 25 basis points in early June. The move came amid the strongest expansion in over a decade and as higher oil prices and robust spending continued to stoke inflation. In the U.K., the Bank of England lifted base rates to 5.75 percent, the fifth increase in 12 months.

In Asia, economic data suggested a more solid picture of the Japanese economic recovery than had been seen in 2006. While lending growth continued to slow, other data was mainly positive. Machinery orders rose, a signal that companies are optimistic that both domestic and overseas demand will accelerate. Retail sales also rose for the first time in eight months. The strong data re-enforced widespread expectations that the Bank of Japan would raise rates again in August, though they left them unchanged during the first half of 2007. The People's Bank of China raised one year lending rates for the third time in 11 months in an attempt to curb soaring investment.

Emerging market equities rebounded sharply from the market correction at the end of February, and easily outperformed the developed markets during the six-month period. Within the emerging markets, Latin America was the best performer on a regional basis, led by Peru, which was the best performing market in the MSCI Emerging Markets Index. Asia was up modestly, with good gains from Malaysia, China, and South Korea. Emerging Europe, Middle East and Africa (EMEA) underperformed as a sharp decline in index heavyweight Russia offset strong gains in Turkey, Poland and Morocco.

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 the most recent month-end performance figures,

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

please visit www.morganstanley.com or speak with your Financial Advisor. Investment returns and principal value will fluctuate and portfolio shares, when redeemed, may be worth more or less than their original cost.

Balanced Portfolio

For the six-month period ended June 30, 2007, Balanced Portfolio (formerly Balanced Growth Portfolio) Class X shares produced a total return of 5.56 percent underperforming the Russell 1000^® Value Index¹ which returned 6.23 percent and outperforming the Lehman Brothers U.S. Government/Credit Index² which returned 0.97 percent. For the same period, the Portfolio's Class Y shares returned 5.50 percent. 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.

In the stock portion of the Portfolio, the Portfolio's results relative to the Russell 1000 Value Index were dampened by the technology sector, particularly stock selection in the software and services industry during the period. Here, one of the Portfolio's holdings has continued to stumble in integrating a company it recently acquired, and has faltered in a more competitive environment. The telecommunication services sector was another source of weakness for the Portfolio. The performance of the Portfolio's telecom holdings lagged that of other telecom stocks represented in the Russell 1000 Value Index, and the Portfolio's underweight in the sector also hurt results. Another detractor from the Portfolio's relative performance was an underweight in the energy sector. The sector has continued to perform well, but energy stocks' expensive valuations remain unattractive in our view.

However, other areas of the Portfolio had a positive effect on performance relative to the Russell 1000 Value Index during the period. The Portfolio's financial services holdings were well positioned to capitalize on certain dynamics within the sector. Real estate investment trusts (REITs) and regional banks performed poorly amid a weakening housing market and the problems in the subprime mortgage market, but the Portfolio had no exposure to REITs and limited exposure to regional bank stocks. Stock selection in diversified financials companies added to performance, due to these companies' capital markets and merger and acquisition businesses. The Portfolio's insurance holdings, especially property and casualty stocks, were also standouts. With no major disasters in 2006, the property and casualty industry was able to recover following 2005's catastrophic hurricane season, and investors rewarded the turnaround.

1 The Russell 1000^® Value Index measures the performance of those companies in the Russell 1000^® Index with lower price-to-book ratios and lower forecasted growth values. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

2 The Lehman Brothers 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

Elsewhere, the Portfolio's health care sector contributed positively to returns, given its strong focus on pharmaceutical stocks. The industry experienced a return to favor with investors as earnings improvements and a better outlook for products fueled a rotation into the sector. Finally, stock selection in the consumer staples sector rounded out the Portfolio's top three contributing sectors. A food and beverage company (in which the Portfolio owned a position) announced a spin-off of one of its business units, causing a rally in the share prices of the company and in other companies across the food and beverage industry.

As of the end of the reporting period, the Portfolio held 67 percent in stocks, 30 percent in bonds and 3 percent in short-term investments. With regard to bonds, we continued to keep the Portfolio's overall duration* below that of the Lehman Brothers U.S. Government/Credit Index. This conservative interest-rate posture proved additive to performance as interest rates rose throughout the reporting period. With regard to credit risk, we maintained the Portfolio's below-benchmark sensitivity to credit spreads, also known as "spread duration". This lower spread sensitivity had a positive impact on performance as spreads widened during the period. We continued to modestly favor selected insurance issues and medium-quality credits, and security selection within both the investment grade and below-investment grade sectors was generally additive to performance.

* A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years. Each year of duration represents an expected 1 percent change in the price of a bond for every 1 percent change in interest rates. The longer a bond's duration, the greater the effect of interest-rate movements on its price. Typically, portfolio's with shorter durations perform better in rising interest-rate environments, while portfolio's with longer durations perform better when rates decline.

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 six-month period ended June 30, 2007, Capital Opportunities Portfolio Class X shares produced a total return of 9.42 percent outperforming the Russell 3000^® Growth Index³ which returned 8.22 percent. For the same period, the Portfolio's Class Y shares returned 9.34 percent. Past performance is no guarantee of future results.

3 The Russell 3000^® Growth Index measures the performance of those companies in the Russell 3000^® Index with higher price-to-book ratios and higher forecasted growth values. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

For the period, the sectors that contributed the most to the Portfolio's returns relative to the Russell 3000 Growth Index were health care, utilities and consumer discretionary. The health care sector had the greatest positive impact on relative performance due to both an underweight allocation in the sector and investment in medical and dental instruments and supplies stocks. In the utilities sector, a single wireless holding added to relative returns. Security selection in the consumer discretionary sector, especially in retail, consumer electronics and restaurant stocks, was also advantageous, and this more than offset the negative impact caused by a large overweight allocation within this sector.

In contrast, the sectors that most weakened the Portfolio's performance during the period relative to the Russell 3000 Growth Index were financial services, producer durables and technology. Within the financial services sector, stock selection in the financial information services and financial data processing and services industries hindered returns. Stock selection and an underweight position in the producer durables sector were also disadvantageous to relative performance. Within this sector, the main detractor to relative performance was the Portfolio's avoidance of aerospace stocks as well as construction and handling machinery securities. Finally, an underweight allocation to the technology sector also dampened relative returns.

At the close of the period, consumer discretionary represented the largest sector weight and overweight in the Portfolio, followed by the financial services and the multi-industry sectors. The multi-industry sector was overweight relative to the Russell 3000 Growth Index, while the financial services sector was underweight.

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.

Developing Growth Portfolio

For the six-month period ended June 30, 2007, Developing Growth Portfolio Class X shares produced a total return of 12.40 percent outperforming the Russell Midcap^® Growth Index⁴ which returned 10.97 percent. For the same period, the Portfolio's Class Y shares returned 12.27 percent. Past performance is no guarantee of future results.

4 The Russell Midcap^® Growth Index measures the performance of those Russell Midcap^® Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000^® Growth Index. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

For the period, the sectors that contributed the most to the Portfolio's performance relative to the Russell Midcap Growth Index for the period were technology, utilities and health care. In the technology sector, stock selection and an underweight allocation provided the most favorable impact on performance. Within this sector, investment in computer services software firms was particularly helpful. Within the utilities sector, a holding of a single wireless company added to relative returns. In the health care sector, security selection in medical and dental instruments and supplies companies, as well as investment in health care services companies, benefited the Portfolio's performance. Additionally, an underweight allocation in the health care sector was advantageous to relative returns.

In contrast, the sectors that most weakened the Portfolio's performance relative to the Russell Midcap Growth Index during the period were the "other energy," materials and processing, and multi-industry sectors. In the other energy sector, the Portfolio's avoidance of oil well equipment stocks detracted from relative returns. An underweight allocation in the materials and processing sector also diminished relative performance. In the multi-industry sector, which includes conglomerates, stock selection and an underweight allocation further hampered relative returns.

At the close of the period, consumer discretionary represented the largest sector weight and overweight in the Portfolio, followed by the financial services and health care sectors. The financial services and health care sectors were both underweight relative to the Russell Midcap Growth Index.

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

Dividend Growth Portfolio

For the six-month period ended June 30, 2007, Dividend Growth Portfolio Class X shares produced a total return of 6.57 percent underperforming the S&P 500^® Index⁵ which returned 6.96 percent. For the same period, the Portfolio's Class Y shares returned 6.38 percent. Past performance is no guarantee of future results.

The Portfolio's underperformance relative to the S&P 500 Index during the period was partially attributable to our stock selection in the health care sector, as flat to negative returns among several pharmaceutical holdings and a managed care provider detracted from results. Within the industrials sector, the market

5 The Standard & Poor's 500^® Index (S&P 500^®) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

favored segments of the sector in which the Portfolio didn't own any stocks. In particular, the more "cyclical" companies — those tied strongly to the economic cycle — such as the machinery and the road and rail transportation industries have continued to benefit from a favorable economic backdrop. On the other hand, the Portfolio's positions in industrial conglomerates lagged the returns of sector's stronger performers. An underweight allocation to the materials sector also dampened gains. The S&P 500 Index's materials sector performed well during the period, and the Portfolio's lesser exposure muted the positive effects of the broad sector's advance.

However, other areas within the Portfolio contributed positively to returns relative to the S&P 500 Index. The Portfolio was well positioned within the financials sector to weather the specific challenges faced by the sector during the period. The housing slump, rising interest rates and the subprime mortgage market woes did not bode well for banks and real estate investment trusts (REITs), and the Portfolio was underweighted in both segments. Additionally, strong stock selection in a number of insurance stocks further bolstered the Portfolio's relative performance. Within the energy sector, the Portfolio benefited from favorable stock selection among equipment and services stocks. Finally, the consumer discretionary sector was also additive to the Portfolio's results, primarily due to several multi-line retailers and apparel stocks.

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.

Equally-Weighted S&P 500 Portfolio

For the six-month period ended June 30, 2007, Equally-Weighted S&P Portfolio Class X shares produced a total return of 8.67 underperforming the Standard & Poor's Equal Weight Index⁶ which returned 8.87 percent. For the same period, the Portfolio's Class Y shares returned 8.54 percent. Past performance is no guarantee of future results.

Top 10 sectors in the Portfolio had positive absolute returns during the period. The sectors with the largest gains during the six-month period were energy, industrials and telecommunication services. Energy prices began rising again in 2007, after declining the second half of 2006, which drove strong performance of stocks in the energy sector. Performance in the industrials sector came from the more "cyclical" companies

6 The Standard & Poor's Equal Weight Index (S&P EWI) is the equally-weighted version of the widely regarded S&P 500^®, which measures 500 leading companies in leading U.S. industries. The S&P EWI has the same constituents as the capitalization-weighted S&P 500, but each company in the S&P EWI is allocated a fixed weight, rebalancing quarterly. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

(those that are tied strongly to the economic cycle), as the economy remained on solid footing. In the telecommunication services sector, the positive effects of industry consolidation continued to fuel investors' positive sentiment for the sector.

The sectors with the lowest returns during the period were financials, consumer discretionary and consumer staples. With the housing market showing further deterioration, the subprime mortgage market collapsing and interest rates rising, the outlook turned grim for certain banks, real estate investment trusts (REITs), homebuilders and other housing-related stocks, and companies dependent on consumer spending. As a result, the financials and consumer-related sectors underperformed the broad Standard & Poor's Equal Weight Index.

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

Flexible Income Portfolio

For the six-month period ended June 30, 2007, Flexible Income Portfolio Class X shares produced a total return of 1.75 percent outperforming the Lehman Brothers Intermediate U.S. Government/Credit Index⁷ which returned 1.44 percent. For the same period, the Portfolio's Class Y shares returned 1.63 percent. Past performance is no guarantee of future results.

We continued to keep the Portfolio's overall duration* below that of the Lehman Brothers Intermediate U.S. Government/Credit Index. This conservative interest-rate posture proved additive to performance as interest rates rose throughout the reporting period. In the initial months of the year, the Portfolio was underweighted in the intermediate portion of the yield curve. In early-April, we shifted the bulk of this underweight to the 20-year area of the curve. In our view, any rise in interest-rate volatility should lead to an increase in the term risk premium, which in turn, will tend to force longer yields higher relative to intermediate maturities.

We also maintained the Portfolio's below-benchmark sensitivity to credit spreads, also known as "spread duration". This lower spread sensitivity detracted from performance early in the period when credit spreads narrowed, but had a positive impact on performance later in the period when spreads widened. We

7 The Lehman Brothers Intermediate U.S. Government/Credit Index tracks the performance of U.S. government and corporate obligations, including U.S. government agency and Treasury securities, and corporate and Yankee bonds with maturities of 1 to 10 years. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

also used interest rate swaps to adjust the Portfolio's liquidity profile. Interest-rate swap spreads widened during the period and had a negative impact on relative performance.

We continued to modestly favor selected insurance issues and medium-quality credits, and security selection within both the investment grade and below-investment grade sectors was generally additive to performance.

The Portfolio's underweight versus the Lehman Brothers Intermediate U.S. Government/Credit Index to agency securities added slightly to relative performance as widening spreads dampened the sector's performance. With regard to the mortgage sector, we continued to emphasize higher-coupon mortgages. This defensive mortgage posture benefited performance as higher-coupon issues outperformed their lower coupon counterparts. The Portfolio's non-dollar exposure, however, had a negative impact on 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.

Focus Growth Portfolio

For the six-month period ended June 30, 2007, Focus Growth Portfolio Class X shares produced a total return of 10.90 percent outperforming the Russell 1000^® Growth Index⁸ which returned 8.13 percent. For the same period, the Portfolio's Class Y shares returned 10.75 percent. Past performance is no guarantee of future results.

For the period, the sectors that contributed the most to the Portfolio's returns relative to the Russell 1000 Growth Index were technology, utilities and multi-industry. Stock selection in the technology sector, particularly among communications technology companies, had the most significant positive impact on relative performance. The gains generated by these holdings helped to offset the negative effects of the

8 The Russell 1000^® Growth Index measures the performance of those companies in the Russell 1000^® Index with higher price-to-book ratios and higher forecasted growth values. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

Portfolio's underweight allocation to the technology sector. Investment in a single wireless company and an overweight allocation in the utilities sector added to relative returns. In the multi-industry sector, which includes conglomerates, security selection and an overweight allocation were beneficial to performance.

In contrast, the sectors that weakened the Portfolio's performance relative to the Russell 1000 Growth Index were financial services and producer durables for the period. Within the financial services sector, investments in financial information services stocks and financial data processing and services stocks detracted from relative returns. Additionally, an underweight position in the producer durables sector was disadvantageous to performance.

At the close of the period, consumer discretionary represented the largest sector weight and overweight in the Portfolio, followed by the multi-industry and financial services sectors. The multi-industry sector was overweight, while the financial services sector was slightly underweight relative to the Russell 1000 Growth Index.

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

Global Equity Portfolio

For the six-month period ended June 30, 2007, Global Equity Portfolio Class X shares produced a total return of 10.43 percent outperforming the MSCI World Index⁹ which returned 9.17 percent. For the same period, the Portfolio's Class Y shares returned 10.27 percent. Past performance is no guarantee of future results.

The Portfolio employs a bottom-up investment process that seeks opportunities on a stock by stock basis; therefore, all broad country and sector weightings are a result of these individual bottom-up stock selections and not active top-down allocations. That said, relative to the MSCI World Index, the Portfolio's country weightings contributed positively to performance in the first half of the year. The most beneficial country weighting was the considerable underweight in Japan, which helped to minimize the effect of the country's weak market returns on the Portfolio. Japan was the worst performing market in the MSCI World Index

9 The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The term "free float" represents the portion of shares outstanding that are deemed to be available for purhcase in the public equity markets by investors. The MSCI World Index consists of the following 23 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

during the period. Additionally, overweight allocations to Singapore and Israel, two strong performing markets, added to relative gains. However, the positive influence from these allocations was somewhat offset by the negative effects of the Portfolio's underweight allocations in Canada and France, both of which performed well during the period. The Portfolio also benefited from good stock selection during the period, most notably in the U.S., with stock selections in Singapore and Hong Kong also adding to results. However, stock selection in Germany, Spain and Australia detracted modestly from the Portfolio's performance relative to the MSCI World Index.

The Portfolio's sector allocations were somewhat detrimental to performance relative to the MSCI World Index in the period, as the Portfolio held underweight positions in the energy and materials sectors, both of which outperformed the market in the first half of the year. However, the negative effect of the Portfolio's sector allocation was more than offset by positive stock selection. Stocks within the financials, health care and information technology sectors were particularly beneficial to the Portfolio's relative performance.

Other notable factors affecting performance during the period included the Portfolio's exposure to small-capitalization stocks, a segment which outpaced large-cap stocks during this six-month period. In addition, the Portfolio's exposure to the strongly performing emerging markets was additive to relative performance during the period. Finally, after many years of value stock dominance, growth stocks outperformed value stocks during the period under review, providing a tailwind to the Portfolio's more growth-oriented style of investing.

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.

Growth Portfolio

For the six-month period ended June 30, 2007, Growth Portfolio Class X shares produced a total return of 10.00 percent outperforming the Russell 1000^® Growth Index¹⁰ which returned 8.13 percent. For the same period, the Portfolio's Class Y shares returned 9.79 percent. Past performance is no guarantee of future results.

For the period, the sectors that contributed the most to the Portfolio's returns relative to the Russell 1000 Growth Index were technology, utilities and multi-industry. Stock selection, particularly among communications technology companies, in the technology sector had the most significant positive impact on

10 The Russell 1000® Growth Index measures the performance of those companies in the Russell 1000® Index with higher price-to-book ratios and higher forecasted growth values. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

relative performance. The gains generated by these holdings helped to offset the negative effects of the Portfolio's underweight allocation in the technology sector. Investment in a single wireless company and an overweight allocation in the utilities sector added to relative returns. In the multi-industry sector, which includes conglomerates, security selection and an overweight allocation were beneficial to performance.

In contrast, the sectors that most weakened the Portfolio's performance relative to the Russell 1000 Growth Index were financial services, producer durables and "other energy." Within the financial services sector, stock selection in financial information services companies and financial data processing and services companies detracted from relative returns. An underweight position in the producer durables sector was also disadvantageous to relative performance. Finally, in the other energy sector, the Portfolio's avoidance of oil well equipment detracted from 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.

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 June 30, 2007, Money Market Portfolio had net assets of more than $120 million with an average portfolio maturity of 53 days. For the seven-day period ended June 30, 2007, the Portfolio's Class X shares provided an effective annualized yield of 4.91 percent and a current yield of 4.80 percent, while its 30-day moving average yield for June was 4.78 percent. For the six-month period ended June 30, 2007, the Portfolio's Class X shares returned 2.41 percent. Past performance is no guarantee of future results.

For the seven-day period ended June 30, 2007, the Portfolio's Class Y shares provided an effective annualized yield of 4.65 percent and a current yield of 4.55 percent, while its 30-day moving average yield for June was 4.53 percent. For the six-month period ended June 30, 2007, the Portfolio's Class Y shares returned 2.29 percent. Past performance is no guarantee of future results.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

Our strategy in managing the Portfolio remained consistent with its long-term focus on preservation of capital and liquidity. Prior to the start of the reporting period, our primary strategy consisted of focusing our investments in fixed-rate securities that matured or floating-rate notes that reset near upcoming Federal Open Market Committee meeting dates in order to capitalize on higher expected money market interest rates. However, as the months progressed and economic data became more mixed, we further diversified and extended the maturity structure of the Portfolio. During the period of late May through early June, we took advantage of slightly higher yields in the six-month and longer portion of the curve in order to extend the weighted average maturity of the Portfolio. In late May and late June, we also purchased many attractively priced offerings, as dealers were motivated to trim down their balance sheets in advance of semiannual financial statement dates.

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.

Utilities Portfolio

For the six-month period ended June 30, 2007, Utilities Portfolio Class X shares produced a total return of 12.28 percent outperforming the S&P 500^® Utilities Index¹¹ and the S&P 500^® Index¹² which returned 8.87 percent and 6.96 percent, respectively. For the same period, the Portfolio's Class Y shares returned 12.15 percent. Past performance is no guarantee of future results.

The Portfolio's strong relative performance during the period was attributed to a combination of commodity-sensitive electric and natural gas stock positions. Additionally, the Portfolio's investment in global telecommunications stocks having significant wireless assets significantly boosted relative returns.

11 The Standard & Poor's 500^® Utilities Index (S&P 500^® Utilities Index) is an unmanaged, market capitalization weighted Index consisting of utilities companies in the S&P 500^® Index and is designed to measure the performance of the utilities sector. It includes reinvested 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.

12 The Standard & Poor's 500^® Index (S&P 500^®) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. 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.

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

Although all sub-sectors of the utilities sector provided strong returns relative to the broad market, the clear detractor to overall performance for the period was the Portfolio's underweight allocation to those specific electric utilities which yielded above-average total returns over the last six months.

Given the attractive opportunities within the broad utility markets, the Portfolio was fully invested throughout the period and held an average cash balance in the range of 1 to 3 percent. The Portfolio provided shareholders with diversified exposure to the utilities sector, and at the close of the period had a 59 percent allocation to electric utilities, a 20 percent allocation in natural gas/energy, an 18 percent allocation to telecommunications services and a 3 percent allocation in short-term investments. Overall, the Portfolio had a 6 percent allocation outside the United States. We note that the Portfolio's holdings and allocations may be modified at any time, in response to our analysis of broader trends or company specific fundamentals.

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

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

Very truly yours,

Ronald E. Robison
President and Principal Executive Officer

Morgan Stanley Select Dimensions Investment Series

Letter to the Shareholders n June 30, 2007 continued

Proxy Voting Policy and Procedures and Proxy Voting Record

You may obtain a copy of the Portfolios' 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 Securities and Exchange Commission'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 Securities and Exchange Commission's Web site at http://www.sec.gov.

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 20549-0102.

Morgan Stanley Select Dimensions Investment Series

Fund Performance ⁿ June 30, 2007

Average Annual Total Returns—Period Ended June 30, 2007⁽¹⁾
Class X	1 Year			5 Years			10 Years			Since Inception			Date of Inception
Balanced		16.71	%		9.62	%		7.56	%		9.62	%	11/9/1994
Capital Opportunities		15.17			15.89			3.97			4.16		1/21/1997
Developing Growth		19.39			16.77			9.60			12.58		11/9/1994
Dividend Growth		18.73			7.98			6.14			11.02		11/9/1994
Equally-Weighted S&P 500		20.86			13.73			10.70			13.07		11/9/1994
Flexible Income		6.89			7.25			3.64			4.52		11/9/1994
Focus Growth		16.22			7.59			7.70			10.99		11/9/1994
Global Equity		26.77			13.51			7.54			8.95		11/9/1994
Growth		17.97			9.65			5.22			8.06		11/9/1994
Money Market		4.90			2.37			3.49			3.91		11/9/1994
Utilities		29.74			16.55			10.98			12.16		11/9/1994

Past performance is not predictive of future returns. Investment return and principal value will fluctuate. When you sell fund shares, they may be worth less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class X shares will vary from the Performance of Class Y shares due to differences in expenses.

(1) Figure assumes reinvestment of all distributions for the underlying fund based on net asset value (NAV). It does not reflect the deduction of insurance expenses, an annual contract maintenance fee, or surrender charges.

Morgan Stanley Select Dimensions Investment Series

Fund Performance ⁿ June 30, 2007

Average Annual Total Returns—Period Ended June 30, 2007⁽¹⁾
Class Y	1 Year			5 Years			10 Years	Since Inception			Date of Inception
Balanced		16.47	%		9.36	%	N/A		7.65	%	7/24/2000
Capital Opportunities		14.89			15.59		N/A		(8.07	)	7/24/2000
Developing Growth		19.09			16.48		N/A		2.37		7/24/2000
Dividend Growth		18.39			7.72		N/A		5.96		7/24/2000
Equally-Weighted S&P 500		20.57			13.43		N/A		10.08		7/24/2000
Flexible Income		6.67			6.98		N/A		4.04		7/24/2000
Focus Growth		15.89			7.31		N/A		(2.09	)	7/24/2000
Global Equity		26.50			13.21		N/A		4.23		7/24/2000
Growth		17.64			9.36		N/A		(1.81	)	7/24/2000
Money Market		4.65			2.11		N/A		2.50		7/24/2000
Utilities		29.45			16.27		N/A		3.59		7/24/2000

Past performance is not predictive of future returns. Investment return and principal value will fluctuate. When you sell fund shares, they may be worth less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class Y shares will vary from the Performance of Class X shares due to differences in expenses.

Morgan Stanley Select Dimensions Investment Series

Expense Example n June 30, 2007

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 01/01/07–06/30/07.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

Morgan Stanley Select Dimensions Investment Series

Expense Example n June 30, 2007 continued

Money Market

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (2.41% return)	$	1,000.00	$	1,024.10	$	2.93
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.04	$	2.92
Class Y
Actual (2.29% return)	$	1,000.00	$	1,022.90	$	4.19
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.79	$	4.18

* Expenses are equal to the Portfolio's annualized expense ratios of 0.58% and 0.83% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 182**/365 (to reflect the one-half year period).

** Adjusted to reflect non-business days accruals.

Flexible Income

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (1.75% return)	$	1,000.00	$	1,017.50	$	2.95
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.87	$	2.96
Class Y
Actual (1.63% return)	$	1,000.00	$	1,016.30	$	4.20
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.63	$	4.21

* Expenses are equal to the Portfolio's annualized expense ratios of 0.59% and 0.84% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Balanced

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (5.56% return)	$	1,000.00	$	1,055.60	$	3.87
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.03	$	3.81
Class Y
Actual (5.50% return)	$	1,000.00	$	1,055.00	$	5.15
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.79	$	5.06

* Expenses are equal to the Portfolio's annualized expense ratios of 0.76% and 1.01% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Morgan Stanley Select Dimensions Investment Series

Expense Example n June 30, 2007 continued

Utilities

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (12.28% return)	$	1,000.00	$	1,122.80	$	3.95
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.08	$	3.76
Class Y
Actual (12.15% return)	$	1,000.00	$	1,121.50	$	5.26
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.84	$	5.01

* Expenses are equal to the Portfolio's annualized expense ratios of 0.75% and 1.00% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Dividend Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (6.57% return)	$	1,000.00	$	1,065.70	$	3.43
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.47	$	3.36
Class Y
Actual (6.38% return)	$	1,000.00	$	1,063.80	$	4.71
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.23	$	4.61

* Expenses are equal to the Portfolio's annualized expense ratios of 0.67% and 0.92% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Equally-Weighted S&P 500

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (8.67% return)	$	1,000.00	$	1,086.70	$	1.40
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.46	$	1.35
Class Y
Actual (8.54% return)	$	1,000.00	$	1,085.40	$	2.69
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.22	$	2.61

* Expenses are equal to the Portfolio's annualized expense ratios of 0.27% and 0.52% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Morgan Stanley Select Dimensions Investment Series

Expense Example n June 30, 2007 continued

Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (10.00% return)	$	1,000.00	$	1,100.00	$	3.64
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.32	$	3.51
Class Y
Actual (9.79% return)	$	1,000.00	$	1,097.90	$	4.94
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.08	$	4.76

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

Focus Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (10.90% return)	$	1,000.00	$	1,109.00	$	3.66
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.32	$	3.51
Class Y
Actual (10.75% return)	$	1,000.00	$	1,107.50	$	4.96
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.08	$	4.76

Capital Opportunities

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (9.42% return)	$	1,000.00	$	1,094.20	$	4.88
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.13	$	4.71
Class Y
Actual (9.34% return)	$	1,000.00	$	1,093.40	$	6.18
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.89	$	5.96

* 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 181/365 (to reflect the one-half year period).

Morgan Stanley Select Dimensions Investment Series

Expense Example n June 30, 2007 continued

Global Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (10.43% return)	$	1,000.00	$	1,104.30	$	5.11
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.93	$	4.91
Class Y
Actual (10.27% return)	$	1,000.00	$	1,102.70	$	6.41
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.70	$	6.16

* Expenses are equal to the Portfolio's annualized expense ratios of 0.98% and 1.23% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Developing Growth

	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	01/01/07		06/30/07		01/01/07 – 06/30/07
Class X
Actual (12.40% return)	$	1,000.00	$	1,124.00	$	3.53
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.47	$	3.36
Class Y
Actual (12.27% return)	$	1,000.00	$	1,122.70	$	4.84
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.23	$	4.61

Morgan Stanley Select Dimensions Investment Series

Investment Advisory Agreement Approval ⁿ June 30, 2007

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser under the Advisory Agreement, including portfolio management, investment research and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolios' Administrator under the Administration Agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities at the Investment Adviser's expense. (The Investment Adviser and the Administrator together are referred to as the "Adviser" and the Advisory and Administration Agreements together are referred to as the "Management Agreement.") The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers a s reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the advisory and administrative services to the Portfolios. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of each Portfolio. The Board also concluded that the overall quality of the advisory and administrative services was satisfactory.

Performance Relative to Comparable Funds Managed by Other Advisers

On a regular basis, the Board reviews the performance of all funds in the Morgan Stanley Fund Complex, including the Portfolios, compared to their peers, paying specific attention to the underperforming funds. In addition, the Board specifically reviewed each Portfolio's performance for the one-, three- and five-year periods ended November 30, 2006, as shown in reports provided by Lipper (the "Lipper Reports"), compared to the performance of comparable funds selected by Lipper (the "performance peer group") for each Portfolio. The Board also discussed with the Adviser the performance goals and the actual results achieved in managing each Portfolio. When a fund underperforms its performance peer group, the Board discusses with the Adviser the causes of the underperformance and, where necessary, specific changes to the fund's investment strategy or investment personnel.

With respect to the Balanced, Global Equity, Equally-Weighted S&P 500, Capital Opportunities, Developing Growth, Growth, Flexible Income and Money Market Portfolios, the Board concluded that each Portfolio's performance was competitive with that of its performance peer group.

With respect to the Dividend Growth and Utilities Portfolios, the Board noted that the Adviser is evaluating various alternatives to improve performance, including portfolio management changes/additions. The Board concluded that the performance of the Dividend Growth Portfolio was acceptable. The Board concluded that the performance of the Utilities Portfolio was competitive with that of its performance peer group.

Morgan Stanley Select Dimensions Investment Series

Investment Advisory Agreement Approval ⁿ June 30, 2007 continued

With respect to the Focus Growth Portfolio, the Board noted the Portfolio's recently improved performance as of February 28, 2007 and concluded that the Portfolio's performance was competitive with its performance peer group.

Fees Relative to Other Proprietary Funds Managed by the Adviser with Comparable Investment Strategies

The Board reviewed the advisory and administrative fee (together, the "management fee") rate paid by each Portfolio under the Management Agreement.

With respect to the Dividend Growth, Balanced, Utilities, Equally-Weighted S&P 500, Capital Opportunities, Developing Growth and Flexible Income Portfolios, the Board noted that the management fee rates were comparable to the management fee rates charged by the Adviser to other proprietary funds it manages with investment strategies comparable to those of the Portfolios.

With respect to the Money Market Portfolio, the Board noted that the Adviser did not manage any other proprietary funds with investment strategies substantially comparable to those of the Portfolio.

With respect to the Global Equity, Focus Growth and Growth Portfolios, the Board noted that the management fee rates were higher than the management fee rates charged by the Adviser to other proprietary funds it manages with investment strategies comparable to those of the Portfolios. With respect to the Focus Growth and Growth Portfolios, the Board noted that each Portfolio's management fee rate and total expense ratio were lower than the average management fee rate and total expense ratio for funds, selected by Lipper (the "expense peer group"), managed by other advisers with investment strategies comparable to those of the Portfolios, as shown in the Lipper Report. With respect to the Global Equity Portfolio, the Board noted that the management fee rate was higher but the total expense ratio was equal to the expense peer group.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the management fee rate and total expense ratio of each Portfolio as compared to the expense peer group.

With respect to the Dividend Growth, Balanced, Utilities, Equally-Weighted S&P 500, Capital Opportunities, Developing Growth, Focus Growth, Growth and Flexible Income Portfolios, the Board concluded that each Portfolio's management fee rate and total expense ratio were competitive with those of its expense peer group.

With respect to the Global Equity and Money Market Portfolios, the Board concluded that the management fee rate was acceptable as the total expense ratio was competitive with its expense peer group.

Breakpoints and Economies of Scale

The Board reviewed the structure of each Portfolio's management fee schedule under the Management Agreement.

With respect to the Dividend Growth, Balanced, Utilities, Equally-Weighted S&P 500, Capital Opportunities, Developing Growth, Focus Growth, Growth and Money Market Portfolios, the Board noted that each Portfolio's management fee schedule includes one or more breakpoints. The Board also reviewed the level of each Portfolio's

Morgan Stanley Select Dimensions Investment Series

Investment Advisory Agreement Approval ⁿ June 30, 2007 continued

management fee and noted that each fee, as a percentage of the Portfolio's net assets, would decrease as net assets increase because each management fee includes one or more breakpoints. The Board concluded that each Portfolio's management fee would reflect economies of scale as assets increase.

With respect to the Global Equity and Flexible Income Portfolios, the Board noted that the management fee schedules do not include breakpoints. The Board noted that the Portfolios' assets were relatively small. The Board concluded that it would be premature to consider economies of scale as a factor in approving the Management Agreement at the present time.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and affiliates during the last year from their relationship with each Portfolio and during the last two years from their relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser and affiliates. Based on its review of the information it received, the Board concluded that the profits earned by the Adviser and affiliates were not excessive in light of the advisory, administrative and other services provided to the Portfolios.

Fall-Out Benefits

The Board considered so-called "fall-out benefits" derived by the Adviser and affiliates from their relationship with the Portfolio and the Morgan Stanley Fund Complex. The Board considered the "float" benefits derived from handling of checks for purchases and sales of Portfolio shares, through a broker-dealer affiliate of the Adviser. The Board also considered that a broker-dealer affiliate of the Adviser receives from each Portfolio 12b-1 fees for distribution and shareholder services. The Board concluded that the float benefits were relatively small and the 12b-1 fees were competitive with those of other broker-dealers.

With respect to the Dividend Growth, Balanced, Global Equity, Utilities, Equally-Weighted S&P 500, Capital Opportunities, Developing Growth, Focus Growth and Growth Portfolios, the Board considered "soft dollar" benefits (discussed in the next section). The Board also considered that an affiliate of the Adviser sold a joint venture that owned an electronic trading system network ("ECN"), which may be used by the Adviser for trading on behalf of the Portfolios. As part of the sale of the joint venture, the affiliate receives a 10-year payout based on the revenue stream from trading on the ECN. Although the affiliate disgorges the portion of the payout that is comprised of commissions received from trades executed by the Adviser on the ECN to a charitable organization, the Board considered the fact that trades by the Adviser would increase order flow, and, thus, result in a potential fall-out benefit to the affiliate. The Boar d concluded that the affiliate disgorged revenues in connection with the ECN-related revenue and the potential fall-out benefit from increased order flow was relatively small.

Soft Dollar Benefits

The Board considered whether the Adviser realizes any benefits as a result of brokerage transactions executed through "soft dollar" arrangements. Under such arrangements, brokerage commissions paid by the Portfolios

Morgan Stanley Select Dimensions Investment Series

Investment Advisory Agreement Approval ⁿ June 30, 2007 continued

and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Portfolios.

With respect to the Dividend Growth, Balanced, Global Equity, Utilities, Capital Opportunities, Developing Growth, Focus Growth and Growth Portfolios, the Board recognized that the receipt of such research from brokers may reduce the Adviser's costs but concluded that the receipt of such research strengthens the investment management resources of the Adviser, which may ultimately benefit the Portfolios and other funds in the Morgan Stanley Fund Complex.

With respect to the Equally-Weighted S&P 500 Portfolio, the Board recognized that the Portfolio's commissions are used to pay for execution services only.

With respect to the Flexible Income and Money Market Portfolios, the Board noted that the Portfolios invest only in fixed income securities, which do not generate soft dollars.

Adviser Financially Sound and Financially Capable of Meeting the Portfolios' Needs

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement.

Historical Relationship Between the Portfolios and the Adviser

The Board also reviewed and considered the historical relationship between each Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolios' operations and the Board's confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that it is beneficial for each Portfolio to continue its relationship with the Adviser.

Other Factors and Current Trends

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

General Conclusion

On April 25, 2007, after considering and weighing all of the above factors, the Board concluded that it would be in the best interest of each Portfolio and its shareholders to approve renewal of the Management Agreement for another year until April 30, 2008. On June 20, 2007, the Board again considered and weighed all of the above factors and concluded that it would be in the best interest of each Portfolio and its shareholders to approve renewal of the Management Agreement to continue until June 30, 2008.

Money Market

Portfolio of Investments n June 30, 2007 (unaudited)

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY	VALUE
		Commercial Paper (79.0%)
		Asset-Backed - Auto (1.8%)
$	2,126	DaimlerChrysler Revolving Auto Conduit LLC A-1 (Series I)		5.31 - 5.32	%	07/30/07 - 08/02/07	$	2,116,136
		Asset-Backed - Consumer (10.5%)
	515	Barton Capital LLC*		5.42		08/07/07		512,070
	1,500	Gemini Securitization Corp., LLC*		5.31 - 5.33		07/06/07 - 08/17/07		1,495,617
	4,626	Giro Balanced Funding Corp.*		5.34 - 5.35		07/12/07 - 09/20/07		4,580,907
	1,200	Keel Capital, Inc.*		5.35		07/27/07		1,195,212
	656	Mont Blanc Capital Corp.*		5.33 - 5.42		07/23/07 - 08/14/07		652,792
	579	Park Ave Receivables Co., LLC -*		5.34		09/04/07		573,401
	1,722	Ranger Funding Co., LLC*		5.35		07/19/07 - 09/10/07		1,705,816
	1,960	Three Rivers Funding Corp.*		5.40 - 5.43		07/05/07 - 07/06/07		1,958,384
								12,674,199
		Asset-Backed - Corporate (19.0%)
	1,200	Amsterdam Funding Corp*.		5.30		07/02/07		1,199,650
	2,000	Asscher Finance Corp.*		5.36 - 5.37		12/03/07		1,954,712
	5,760	Atlas Capital Funding Corp.*		5.30 - 5.36		07/05/07 - 11/15/07		5,718,720
	1,351	Dorada Finance Inc.*		5.34 - 5.39		08/15/07 - 09/17/07		1,337,222
	500	Eureka Securitization, Inc.*		5.33		08/08/07		497,135
	4,901	Kaiserplatz Funding (Delaware) LLC*		5.32 - 5.34		07/03/07 - 08/08/07		4,889,520
	5,802	Nieuw Amsterdam Receivables Corp.*		5.32 - 5.46		07/03/07 - 08/13/07		5,777,333
	1,500	Simba Funding Corp.*		5.31 - 5.33		07/25/07		1,494,531
								22,868,823
		Asset-Backed - Diversified (2.4%)
	792	Lexington Parker Capital Co. LLC*		5.32 - 5.35		08/17/07 - 09/07/07		785,656
	2,103	Silver Tower US Funding LLC*		5.32 - 5.36		07/02/07 - 08/10/07		2,094,021
								2,879,677
		Asset-Backed - Mortgage (3.4%)
	4,050	Sydney Capital Corp.*		5.32 - 5.36		07/06/07 - 07/16/07		4,044,365
		Asset-Backed - Securities (10.2%)
	1,248	Amstel Funding Corp.*		5.36 - 5.37		09/17/07 - 10/29/07		1,230,477
	1,885	Bavaria TRR Corp.*		5.40		07/12/07		1,881,613
	1,747	Beethoven Funding Corp.*		5.32 - 5.38		08/23/07 - 09/05/07		1,731,091
	450	Cancara Asset Securitisation LLC*		5.36		07/12/07		449,199
	2,075	Classic LLC*		5.38 - 5.40		07/10/07 - 07/17/07		2,070,857
	482	Galleon Capital, LLC*		5.45		07/02/07		481,854
	1,200	Giro Lion (US) Funding LLC*		5.35		09/20/07		1,185,568
	750	North Sea Funding LLC*		5.31 - 5.32		07/19/07 - 08/20/07		746,752

See Notes to Financial Statements
28

Money Market

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY	VALUE
$	300	Polonius Inc.*		5.35	%	09/17/07	$	296,524
	1,164	Scaldis Capital LLC*		5.33 - 5.35		08/01/07 - 09/11/07		1,156,393
	1,075	Solitaire Funding LLC*		5.32 - 5.33		07/23/07		1,071,392
								12,301,720
		Banking (3.3%)
	400	Bank of America Corp.		5.32		07/20/07		398,833
	3,535	Citigroup Funding Inc.		5.34 - 5.36		07/24/07 - 09/21/07		3,513,369
								3,912,202
		Financial Conglomerates (1.8% )
	2,200	General Electric Capital Corp.		5.33 - 5.35		07/30/07 - 08/03/07		2,190,323
		Insurance (1.5%)
	1,800	Irish Life & Permanent PLC*		5.30 - 5.32		07/16/07 - 11/02/07		1,780,182
		International Banks (25.1%)
	1,200	Abbey National North America LLC		5.33 - 5.36		08/07/07 - 08/20/07		1,192,164
	700	Bank of Ireland*		5.36		07/10/07		698,966
	200	Barclays US Funding LLC		5.32		07/11/07		199,678
	310	BNP Paribas		5.35		08/01/07 - 08/24/07		307,964
	600	BNP Paribas Finance, Inc.		5.32		08/01/07		597,200
	825	Calyon North America Inc.		5.28 - 5.31		07/11/07 - 07/23/07		823,000
	2,100	CBA (Delaware) Finance Inc.		5.31 - 5.36		07/06/07 - 09/10/07		2,092,651
	3,610	Commerzbank US Finance Inc.		5.31 - 5.33		08/09/07		3,588,959
	800	Danske Corp.		5.32		07/06/07		799,299
	1,790	DEPFA Bank PLC*		5.31 - 5.34		08/02/07 - 08/24/07		1,778,833
	1,086	DnB NOR Bank ASA		5.32 - 5.35		07/25/07 - 08/01/07		1,081,540
	2,374	HBOS Treasury Services PLC		5.32 - 5.35		07/19/07 - 11/15/07		2,347,909
	370	HBOS Treasury Services PLC (New York)		5.34		07/26/07		368,584
	545	ING (U.S.) Funding LLC		5.31		07/06/07		544,523
	685	Kommunalkredit International Bank*		5.36		10/29/07		672,890
	505	Nordea North America Inc.		5.33 - 5.34		07/13/07 - 07/27/07		503,674
	2,292	Skandinaviska Enskilda Banken AB*		5.33 - 5.35		07/12/07 - 08/21/07		2,280,357
	4,846	Societe General N.A., Inc.		5.33 - 5.36		08/08/07 - 11/26/07		4,793,796
	1,425	Swedbank		5.33 - 5.36		07/26/07 - 08/14/07		1,417,555
	1,395	UBS Finance (Delaware) LLC		5.32 - 5.37		07/09/07 - 09/17/07		1,389,555
	1,600	UniCredit Delaware Inc.		5.34 - 5.35		09/10/07		1,583,108
	1,200	Westpac Banking Corp.*		5.33 - 5.34		07/27/07 - 10/15/07		1,187,125
								30,249,330
		Total Commercial Paper (Cost $95,016,957)						95,016,957

See Notes to Financial Statements
29

Money Market

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY	VALUE
		Floating Rate Notes (6.5%)
		Domestic Banks (2.9%)
$	1,000	American Express Centurion Bank		5.41	† %	07/19/07‡	$	1,000,052
	1,000	SunTrust Banks, Inc.		5.44	†	07/15/07‡		1,000,310
	1,000	Wachovia Corp.		5.41	†	07/20/07‡		1,000,049
	500	World Savings Bank, FSB		5.36	†	07/19/07‡		500,030
								3,500,441
		Insurance (0.6%)
	250	American General Finance Corp.		5.47	†	08/16/07‡		250,042
	460	Berkshire Hathaway Finance Corp.		5.40	†	07/11/07‡		460,169
								710,211
		International Banks (1.8%)
	800	Fortis Bank		5.27	†	07/12/07‡		799,818
	1,350	Royal Bank of Scotland Group PLC*		5.36	†	09/21/07‡		1,350,153
								2,149,971
		Investment Bank/Broker (1.2%)
	1,500	Merrill Lynch & Co. Inc.		5.48	†	07/19/07‡		1,500,698
		Total Floating Rate Notes (Cost $7,861,321)						7,861,321
		Bankers' Acceptance (4.3%)
	5,261	JP Morgan Chase & Co. (Cost $5,203,861)		5.28 - 5.54		07/03/07 - 12/26/07		5,203,861
		Certificate of Deposit (9.9%)
		International Banks (9.0%)
	1,250	Bank of Ireland		5.36		11/09/07		1,249,637
	1,200	Barclays Bank PLC		5.37		06/04/08		1,200,000
	1,000	BNP Paribas		5.34		07/30/07		1,000,002
	800	Canadian Imperial Bank of Commerce		5.32		10/26/07		799,773
	1,500	DEPFA Bank PLC		5.31		11/30/07		1,500,000
	345	HBOS Treasury Services PLC		5.36		10/16/07		344,896
	1,000	Lloyds TSB Bank PLC		5.34		10/09/07		999,567
	3,000	Norinchukin Bank		5.32 - 5.36		07/26/07 - 12/12/07		3,000,000
	750	Westpac Banking Corp.		5.37		10/29/07		749,750
								10,843,625
		Banking (0.9%)
	1,000	Citizens Bank of PA		5.33		09/04/07		1,000,000
		Total Certificate of Deposit (Cost $11,843,625)						11,843,625

See Notes to Financial Statements
30

Money Market

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY			VALUE
		Short-Term Bank Note (0.2%)
$	250	Bank of America, NA (Cost $249,985)		5.30	%	07/24/07			$	249,985
		Total Investments (Cost $120,175,749) (a)					99.9	%		120,175,749
		Other Assets in Excess of Liabilities					0.1			147,673
		Net Assets					100.0	%	$	120,323,422

* Resale is restricted to qualified institutional investors.

† Rate shown is the rate in effect at June 30, 2007.

‡ Date of next interest rate reset.

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

SUMMARY OF INVESTMENTS

PORTFOLIO COMPOSITION	PERCENT OF TOTAL INVESTMENT
Commercial Paper		79.1	%
Certificate of Deposit		9.9
Floating Rate Note		6.5
Banker's Acceptance		4.3
Short-Term Bank Note		0.2
		100.0	%
MATURITY SCHEDULE	PERCENT OF TOTAL INVESTMENT
1-30 Days		41.2	%
31-60 Days		24.0
61-90 Days		20.0
91-120 Days		3.0
121-180 Days		10.8
181-270 Days		0.0
271-365 Days		1.0
		100	%

See Notes to Financial Statements
31

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited)

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Government & Corporate Bonds (96.0%)
		Foreign (13.3%)
		Argentina (0.3%)
		Government Obligations
ARS	682	Republic of Argentina		0.00	**%	12/15/35	$	27,129
	190	Republic of Argentina++++		5.83		12/31/33		84,882
$	15	Republic of Argentina (g)		0.00	**	12/15/35		2,289
	6	Republic of Argentina (c) (g)++++		8.28		12/31/33		5,695
	60	Republic of Argentina (b)		13.97		04/10/49		28,380
		Total Argentina						148,375
		Australia (0.4%)
		Property - Casualty Insurers
	200	Mantis Reef Ltd. - 144A*		4.692		11/14/08		197,733
		Bermuda (0.5%)
		Cable/Satellite TV
	200	Intelsat Bermuda Ltd.		8.872	**	01/15/15		205,250
	45	Intelsat Sub holdings Co. Ltd.		8.625		01/15/15		46,350
		Total Bermuda						251,600
		Brazil (0.9%)
		Government Obligations (0.8%)
	130	Federal Republic of Brazil		14.50		10/15/09		154,375
BRL	550	JP Morgan Chase & Co.		0.00		01/01/12		291,572
								445,947
		Major Banks (0.1%)
	70	Banco ABN AMRO		16.20		02/22/10		41,440
		Total Brazil						487,387
		Canada (1.3%)
		Financial Conglomerates (0.0%)
$	10	Brookfield Asset Management Inc.		5.80		04/25/17		9,678
		Media Conglomerates (0.0%)
	1	Canwest Media Inc.		8.00		09/15/12		597
		Oil & Gas Pipelines (0.5%)
	280	Kinder Morgan Finance Co.		5.70		01/05/16		258,492
		Oil & Gas Production (0.3%)
	170	Husky Oil Ltd.		8.90		08/15/28		176,099
		Other Metals/Minerals (0.2%)
	90	Brascan Corp.		7.125		06/15/12		94,645

See Notes to Financial Statements
32

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Other Transportation (0.3%)
$	140	CHC Helicopter Corp.		7.375	%	05/01/14	$	134,050
		Total Canada						673,561
		Denmark (0.3%)
		Telecommunications
	80	Nordic Telecommunications Holdings - 144A*		8.875		05/01/16		85,200
EUR	60	TDC AS		6.50		04/19/12		83,370
		Total Denmark						168,570
		Equador (0.1%)
		Government Obligations
$	50	Republic of Ecuador - 144A*		10.00		08/15/30		41,125
		France (0.2%)
		Oilfield Services/Equipment (0.0%)
	25	CIE Gener de Geophysique S.A.		7.50		05/15/15		25,125
		Telecommunications (0.2%)
	70	France Telecom S.A.		8.50		03/01/31		88,208
		Total France						113,333
		Indonesia (0.4%)
		Pulp & Paper
	264	Tjiwi Kimia Finance BV - 144A*		0.00	**	04/29/27		36,907
	58	Tjiwi Kimia Finance BV - 144A*		6.00	**	04/29/15		50,937
	213	Tjiwi Kimia Finance BV - 144A*		6.00	**	04/29/18		118,997
		Total Indonesia						206,841
		Israel (0.3%)
		Electrical Products
	155	Ormat Funding Corp.		8.25		12/30/20		159,382
		Japan (3.9%)
		Government Obligations
JPY	165,000	Japan (Government of)		0.30		03/20/08		1,336,473
JPY	90,000	Japan (Government of)		0.30		02/15/08		729,336
		Total Japan						2,065,809
		Luxembourg (0.2%)
		Telecommunications
$	30	Telecom Italia Capital SA		4.00		11/15/08		29,372
	80	Telecom Italia Capital SA		4.00		01/15/10		76,951
		Total Luxembourg						106,323

See Notes to Financial Statements
33

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Mexico (1.5%)
		Government Obligations (0.8%)
$	150	United Mexican States Corp.		8.375	%	01/14/11	$	163,125
MXN	2,630	United Mexican States Corp.		9.50		12/18/14		268,184
								431,309
		Oil & Gas Production (0.5%)
$	80	Pemex Project Funding Master Trust		9.50		09/15/27		107,640
	170	Pemex Project Funding Master Trust - 144A*		6.66	**	06/15/10		174,845
								282,485
		Telecommunications (0.2%)
	66	Axtel SA		11.00		12/15/13		72,930
		Total Mexico						786,724
		Netherlands (0.1%)
		Major Telecommunications
	70	Telefonica Europe BV		8.25		09/15/30		81,586
		Russia (1.6%)
		Government Obligations (1.3%)
	43	Federal Republic of Russia		8.25		03/31/10		44,375
	15	Federal Republic of Russia		7.50		03/31/30		16,418
	201	Federal Republic of Russia		11.00		07/24/18		279,772
	90	Federal Republic of Russia		12.75		06/24/28		158,512
RUB	2,000	JP Morgan Chase		7.00		06/28/17		77,006
$	100	Russian Agricultural Bank - 144A*		7.175		05/16/13		104,400
								680,483
		Oil & Gas Pipelines (0.3%)
	75	Gaz Capital		8.625		04/28/34		93,810
	50	Gaz Capital - 144A*		6.212		11/22/16		48,825
								142,635
		Total Russia						823,118
		Turkey (0.5%)
		Government Obligations
	80	Citigroup, Inc. - 144A*+++		0.00		08/14/08		100,852
	55	Republic of Turkey		11.875		01/15/30		84,563
TRY	144	Republic of Turkey		0.00		08/13/08		90,700
		Total Turkey						276,115

See Notes to Financial Statements
34

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Ukraine (0.1%)
		Government Obligations
$	40	Ukraine Ministry of Finance - 144A*		6.58	%	11/21/16	$	39,750
		United Kingdom (0.1%)
		Cable/Satellite
	40	NTL Cable PLC		8.75		04/15/14		41,400
		Venezuela (0.6%)
		Government Obligations
	70	Republic of Venezuela		8.50		10/08/14		71,050
	165	Republic of Venezuela		9.25		09/15/27		172,425
	80	Republic of Venezuela		10.75		09/19/13		89,040
		Total Venezuela						332,515
		Total Foreign (Cost $7,127,861)						7,001,247
		United States (82.7%)
		Corporate Bonds (31.7%)
		Advertising/Marketing Services (1.1%)
	260	Idearc, Inc.		8.00		11/15/16		263,900
	65	Interpublic Group of Companies, Inc. (The)		6.25		11/15/14		59,962
	240	Valassis Communications Inc. - 144A*		8.25		03/01/15		235,200
								559,062
		Aerospace & Defense (0.5%)
	165	K&F Acquisition Inc.		7.75		11/15/14		175,725
	71	Systems 2001 Asset Trust - 144A*		6.664		09/15/13		73,726
								249,451
		Air Freight/Couriers (0.1%)
	40	FedEx Corp.		7.25		02/15/11		42,093
		Apparel/Footwear (0.4%)
	200	Phillips-Van Heusen Corp.		7.25		02/15/11		204,000
		Auto Parts: O.E.M. (0.7%)
	345	ArvinMeritor, Inc.		8.75		03/01/12		350,175
		Beverages: Alcoholic (0.2%)
	100	FBG Finance Ltd. - 144A*		5.125		06/15/15		93,869
		Broadcasting (0.3%)
	160	Univision Communications, Inc. - 144A*		9.75		03/15/15		158,800
		Cable/Satellite TV (1.2%)
	170	Cablevision Systems Corp. (Series B)		9.82	**	04/01/09		178,500

See Notes to Financial Statements
35

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	101	CCH I LLC/CCH I Cap Co.		11.00	%	10/01/15	$	105,924
	140	Comcast Cable Communications, Inc.		6.75		01/30/11		145,022
	140	EchoStar DBS Corp.		6.375		10/01/11		137,550
	65	Echostar DBS Corp.		6.625		10/01/14		62,237
								629,233
		Casino/Gaming (1.3%)
	840	Aladdin Gaming Holdings/Capital Corp. LLC (Series B) (a) (b) (g)		13.50		03/01/10		0
	200	Isle of Capri Casinos		7.00		03/01/14		190,250
	335	MGM Mirage Inc.		6.00		10/01/09		333,744
	299	Resort At Summerlin LP/Ras Co. (Series B) (a) (b) (g)		13.00	†	12/15/07		0
	165	Station Casinos, Inc.		6.00		04/01/12		155,925
	30	Station Casinos, Inc.		6.875		03/01/16		26,625
								706,544
		Chemicals: Major Diversified (0.1%)
	45	ICI Wilmington Inc.		4.375		12/01/08		44,257
		Chemicals: Specialty (1.0%)
	81	Equistar Chemical Funding		10.125		09/01/08		84,645
	18	Equistar Chemical Funding		10.625		05/01/11		19,035
	280	Innophos, Inc.		8.875	**	08/15/14		291,200
	120	Koppers Holdings, Inc.		9.875	#	11/15/14		103,200
	26	Koppers Industry Inc.		9.875		10/15/13		27,885
								525,965
		Coal (0.1%)
	35	Foundation PA Coal Co.		7.25		08/01/14		34,869
		Containers/Packaging (1.5%)
	345	Berry Plastics Holding Corp.		8.875		09/15/14		351,037
	150	Graphic Packaging International Corp.		9.50		08/15/13		156,562
	260	Owens-Illinois, Inc.		7.50		05/15/10		263,575
								771,174
		Data Processing Services (0.2%)
	105	Sungard Data Systems Inc.		9.125		08/15/13		108,019
		Department Stores (0.2%)
	85	May Department Stores Co.		6.70		07/15/34		79,253
		Drugstore Chains (0.3%)
	50	CVS Caremark Corp.		5.75		06/01/17		48,331
	20	CVS Caremark Corp.		5.75		08/15/11		20,017
	84	CVS Lease Pass-Through - 144A*		6.036		12/10/28		81,860
								150,208

See Notes to Financial Statements
36

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Electric Utilities (2.0%)
$	80	AES Corp. (The)		7.75	%	03/01/14	$	80,600
	11	AES Corp. (The)		8.875		02/15/11		11,646
	16	AES Corp. (The)		9.375		09/15/10		17,100
	60	AES Corp. (The) - 144A*		9.00		05/15/15		63,825
	80	Arizona Public Service Co.		5.80		06/30/14		79,052
	20	CenterPoint Energy Resource		6.25		02/01/37		19,325
	70	Consumers Energy Co. (Series H)		4.80		02/17/09		69,179
	50	Detroit Edison Co. (The)		6.125		10/01/10		50,928
	45	Entergy Gulf States, Inc.		3.60		06/01/08		44,207
	100	Entergy Gulf States, Inc.		5.76	**	12/01/09		100,006
	205	IPALCO Enterprises, Inc.		8.375		11/14/08		210,125
	30	IPALCO Enterprises, Inc.		8.625		11/14/11		32,250
	70	Ohio Power Company - IBC (Series K)		6.00		06/01/16		70,187
	49	PSEG Energy Holdings Inc.		8.625		02/15/08		49,891
	50	Texas Eastern Transmission,LP		7.00		07/15/32		55,017
	55	TXU Energy Co.		7.00		03/15/13		56,798
	35	Wisconsin Electric Power Co.		3.50		12/01/07		34,718
								1,044,854
		Electrical Products (0.2%)
	35	Cooper Industries, Inc.		5.25		07/01/07		35,000
	65	Cooper Industries, Inc.		5.25		11/15/12		63,815
								98,815
		Environmental Services (0.1%)
	42	Allied Waste North America, Inc. (Series B)		9.25		09/01/12		44,152
		Finance/Rental/Leasing (1.6%)
	60	Capmark Financial Group - 144A*		5.875		05/10/12		59,275
	25	Capmark Financial Group - 144A*		6.30		05/10/17		24,646
	30	CIT Group, Inc.		3.65		11/23/07		29,792
	620	Ford Motor Credit Co.		7.25		10/25/11		597,247
	150	Residential Capital Corp.		6.375		06/30/10		148,163
								859,123
		Financial Conglomerates (1.4%)
	120	JP Morgan Chase & Co.		6.00		02/15/09		121,061
	10	JP Morgan Chase & Co.		7.00		11/15/09		10,335
	20	General Electric Capital Corp. (Series A)		4.25		12/01/10		19,312
	615	General Motors Acceptance Corp.		6.875		09/15/11		605,490
								756,198
		Food Retail (0.4%)
	33	CA FM Lease Trust - 144A*		8.50		07/15/17		35,159

See Notes to Financial Statements
37

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	144	Delhaize America, Inc.		9.00	%	04/15/31	$	174,693
								209,852
		Food: Major Diversified (0.3%)
	60	ConAgra Foods, Inc.		7.00		10/01/28		62,677
	10	ConAgra Foods, Inc.		8.25		09/15/30		11,870
	25	General Mills Inc.		3.875		11/30/07		24,847
	60	Sara Lee Corp.		6.125		11/01/32		53,839
								153,233
		Food: Meat/Fish/Dairy (1.8%)
	85	Michael Foods Inc.		8.00		11/15/13		86,275
	505	Pilgrim's Pride Corp.		7.625		05/01/15		506,262
	115	Pilgrim's Pride Corp.		9.625		09/15/11		119,600
	125	Smithfield Foods Inc.		7.00		08/01/11		125,000
	70	Smithfield Foods Inc.		7.625		02/15/08		70,525
	20	Smithfield Foods Inc. (Series B)		8.00		10/15/09		20,700
								928,362
		Gas Distributors (0.2%)
	120	NiSource Finance Corp.		5.93		11/23/09		120,253
		Home Improvement Chains (0.2%)
	100	Home Depot Inc.		5.485		12/16/09		99,901
		Hospital/Nursing Management (1.5%)
	125	Columbia/HCA Healthcare Corp.		7.69		06/15/25		109,349
	210	HCA, Inc.		6.25		02/15/13		190,050
	95	HCA, Inc.		5.75		03/15/14		80,631
	90	HCA, Inc.		6.50		02/15/16		76,613
	135	Sun Healthcare Group, Inc. - 144A*		9.125		04/15/15		141,075
	115	Tenet Healthcare Corp.		7.375		02/01/13		104,506
	70	Tenet Healthcare Corp.		9.875		07/01/14		69,650
								771,874
		Household/Personal Care (0.1%)
	75	Clorox Co. (The)		5.485	**	12/14/07		75,046
		Industrial Machinery (0.1%)
	32	Goodman Global Holding Company, Inc. (Series B)		8.36	**	06/15/12		32,320
		Industrial Specialties (0.3%)
	165	Johnsondiversy, Inc.		9.625		05/15/12		173,044
		Insurance Brokers/Services (0.7%)
	200	Catlin Insurance Co., Ltd. - 144A*		7.249		12/31/49		190,622
	190	Farmers Exchange Capital - 144A*		7.05		07/15/28		193,003
								383,625

See Notes to Financial Statements
38

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Investment Banks/Brokers (0.2%)
$	105	Goldman Sachs Capital Trust II		5.793	%	12/29/49	$	102,582
		Major Banks (1.0%)
	125	MBNA Corp. (Series MTNF)		5.786	**	05/05/08		125,498
	150	USB Capital IX		6.189	**	***		151,233
	270	Wachovia Capital Trust III		5.80	**	***		269,044
								545,775
		Major Telecommunications (0.4%)
	75	AT&T Corp.		8.00		11/15/31		89,405
	60	SBC Communications, Inc.		6.15		09/15/34		57,714
	55	Sprint Capital Corp.		8.75		03/15/32		61,939
								209,058
		Media Conglomerates (0.4%)
	150	Time Warner, Inc.		5.59	**	11/13/09		150,227
	85	Viacom,Inc.		6.875		04/30/36		82,372
								232,599
		Medical Specialties (0.3%)
	110	Hospira, Inc.		5.84	**	03/30/10		110,346
	40	Invacare Corp. - 144A*		9.75		02/15/15		40,500
								150,846
		Medical/Nursing Services (0.4%)
	181	Fresenius Medical Care Capital Trust		7.875		06/15/11		188,240
	25	Fresenius Medical Care Capital Trust II		7.875		02/01/08		25,188
								213,428
		Miscellaneous Commercial Services (0.4%)
	55	Iron Mountain Inc.		7.75		01/15/15		53,900
	140	Iron Mountain Inc.		8.625		04/01/13		141,050
								194,950
		Miscellaneous Manufacturing (0.3%)
	195	Propex Fabrics Inc.		10.00		12/01/12		175,500
		Motor Vehicles (0.1%)
	55	DaimlerChrysler North American Holdings Co.		8.50		01/18/31		69,703
		Multi-Line Insurance (0.4%)
	160	AIG SunAmerica Global Financing VI - 144A*		6.30		05/10/11		164,006
	30	American General Finance Corp. (Series H)		4.625		09/01/10		29,223
	35	Equitable Co.		6.50		04/01/08		35,252
								228,481

See Notes to Financial Statements
39

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Oil & Gas Pipelines (0.9%)
$	85	Colorado Interstate Gas Co.		6.80	%	11/15/15	$	87,840
	95	Pacific Energy Partners/Finance		7.125		06/15/14		98,391
	70	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		70,305
	175	Williams Companies, Inc. (The)		7.875		09/01/21		189,000
								445,536
		Oil & Gas Production (2.4%)
	110	Chaparral Energy Inc. - 144A*		8.875		02/01/17		109,175
	375	Chesapeake Energy Corp.		7.50		09/15/13		383,438
	350	Hilcorp Energy/Finance - 144A*		7.75		11/01/15		341,250
	270	Pogo Producing Co.		6.875		10/01/17		269,325
	170	Sandridge Energy		8.625		04/01/15		174,250
								1,277,438
		Oilfield Services/Equipment (0.3%)
	50	Hanover Compressor Co.		9.00		06/01/14		53,125
	62	Hanover Equipment Trust 2001 A (Series A)		8.50		09/01/08		62,000
	60	Hanover Equipment Trust 2001 B (Series B)		8.75		09/01/11		61,950
								177,075
		Property - Casualty Insurers (0.2%)
	85	St. Paul Travelers Companies, Inc. (The)		5.01		08/16/07		84,966
		Publishing: Books/Magazines (0.2%)
	95	Dex Media West/Finance		9.875		08/15/13		102,125
		Pulp & Paper (0.1%)
	35	Glatfelter P.H.		7.125		05/01/16		35,438
		Railroads (0.1%)
	30	Union Pacific Corp. (Series MTNE)		6.79		11/09/07		30,112
		Restaurants (0.3%)
	30	Aramark Corp. - 144A*		8.50		02/01/15		30,675
	15	Aramark Corp. - 144A*		8.86	**	02/01/15		15,300
	105	Aramark Services Inc.		5.00		06/01/12		92,925
	15	Tricon Global Restaurants, Inc.		8.875		04/15/11		16,517
								155,417
		Savings Banks (0.2%)
	25	Household Finance Corp.		4.125		12/15/08		24,559
	100	Washington Mutual Preferred Funding II		6.665		12/31/49		95,628
								120,187
		Semiconductors (0.5%)
	260	Freescale Semiconductor - 144A*		8.875		12/15/14		249,600

See Notes to Financial Statements
40

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Specialty Stores (0.7%)
$	365	Sonic Automotive, Inc.		8.625	%	08/15/13	$	377,775
		Specialty Telecommunications (0.5%)
	85	American Tower Corp.		7.125		10/15/12		87,338
	90	American Tower Corp.		7.50		05/01/12		92,925
	84	Qwest Communications International		8.86	**	02/15/09		85,260
	20	U.S. West Communications Corp.		5.625		11/15/08		20,025
								285,548
		Telecommunications (0.0%)
	181	Exodus Communications, Inc. (a) (b) (g)		11.625		07/15/10		0
	433	Rhythms Netconnections, Inc. (a) (b) (g)		12.75		04/15/09		0
								0
		Tobacco (0.1%)
	75	Reynolds American, Inc.		6.50		07/15/10		76,619
		Trucks/Construction/Farm Machinery (0.6%)
	175	Caterpillar Financial Services Corp. (Series MTNF)		5.43	**	08/20/07		175,026
	122	Manitowoc Inc. (The)		10.50		08/01/12		128,710
								303,736
		Water Utilities (0.2%)
	100	Nalco Co.		7.75		11/15/11		101,250
		Wireless Telecommunications (0.4%)
	180	Wind Acquisition Finance SA - 144A*		10.75		12/01/15		207,450
		Total Corporate Bonds (Cost $18,188,212)						16,610,818
		Asset-Backed Securities (2.8%)**
		Finance/Rental/Leasing
	62	Bear Stearns Asset Backed 2005-AQ1 2A1		5.54		03/25/35		61,925
	425	Capital Auto Receivables Asset Trust 2006-2 A3B		5.38		05/15/11		425,205
	18	Carrington Mortgage Loan Trust 2005-NC4 A1		5.47		09/25/35		18,429
	147	Countrywide Asset-Backed Certificates 2005-16 2AF1		5.47		05/25/36		147,419
	600	MBNA Master Credit Card Trust		5.46		02/16/10		600,584
	101	RAAC Series 2006-SP1 A1		5.42		09/25/45		101,429
	20	Specialty Underwriting & Residential Finance 2004-BC2 A2		5.59		05/25/35		19,549
	7	Structured Asset Investment Loan Trust 2003-BC13 3A		5.66		11/25/33		7,140
	84	Structured Asset Securities Corp. 2005-GEL1 A		5.67		12/25/34		84,152
	31	Structured Asset Securities Corp. 2005-S2 A2		5.52		06/25/35		31,462
		Total Asset-Backed Securities (Cost $1,498,161)						1,497,294

See Notes to Financial Statements
41

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		U.S. Government Obligations (13.6%)
		U. S. Treasury Bonds (8.6%)
$	2,050			6.125	%	08/15/29	$	2,300,166
	565			6.375		08/15/27		646,042
	460			8.75		05/15/17		589,519
	705			8.75		08/15/20		941,726
								4,477,453
		U. S. Treasury Notes (1.4%)
	600			4.00		02/15/15		562,031
	200			4.250		11/15/14		190,891
								752,922
		U. S. Treasury Strips (3.6%)
	1,900			0.00		08/15/22		862,801
	1,750			0.00		08/15/17		1,045,060
								1,907,861
		Total U.S. Government Obligations (Cost $7,345,914)						7,138,236
		Collateralized Mortgage Obligations (24.5%)
		U.S Government Agencies (0.7%)
	263	Freddie Mac Whole Loan 2005-S001-2A2 (0.5%)		5.47	**	09/25/45		262,460
		Federal National Mortgage Assoc.(0.2%)
	147	IO		6.50		03/01/20		19,630
	131	IO		7.00		03/01/35		27,468
	129	IO		7.00		03/01/20		18,433
	200	IO		8.00		03/01/35		37,296
								102,827
		Total U.S. Government Agencies						365,287
		Private Issues (23.8%)
		American Home Mortgage Investment Trust
	425	2007-6 A4		5.52	**	08/25/47		425,000
	406	2005-2 1A1		5.62	**	09/25/45		407,428
	468	2007-1 GA1C		5.51	**	05/25/47		467,768
		Bear Stearns Mortgage Funding Trust
	296	2006-AR5		5.48	**	12/25/36		295,950
	378	2006-AR1 1A2		5.57	**	07/25/36		377,409
	335	2006-AR4 1A		5.53	**	12/25/36		334,399
	3,148	2007-N2 12C (IO)		1.844	**	01/27/37		133,919
	4,430	2007-N2 13C (IO)		1.542	**	01/27/37		168,340

See Notes to Financial Statements
42

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	6,005	2007-N2 14C (IO)		1.429	**%	01/27/37	$	221,572
	4,623	2007-N3 10C (IO)		2.57	**	06/26/36		179,847
	4,548	2007-N5 5C (IO)		0.588	**	04/25/37		192,045
		Countrywide Alternative Loan Trust
	425	2007-0A8 2A2		5.52	**	06/25/47		424,867
	143	2006-OA6 1A4B		5.48	**	07/25/46		143,323
	208	2005-56 2A2		5.928	**	11/25/35		211,729
	271	2005-76 2A2		6.729	**	02/25/36		272,564
	352	2006-0A16 A3		5.57	**	10/25/46		352,332
	3,224	2006-0A22 (IO)		0.00	**	02/25/47		164,332
	4,904	2005-41 1X (IO)		0.983	**	09/25/35		101,914
	2,395	2006-0A21 (IO)		1.53	**	03/20/47		127,621
	1,509	2007-0A7 (IO)		1.823	**	05/25/47		79,896
	4,600	2006-OA17 (IO)		1.276	**	12/20/46		210,042
	1,382	2006-0A12X (IO)		1.04	**	03/20/46		58,378
	1,974	2005-58R A (IO)		1.557	**	12/20/35		86,663
	1,686	2005-59R A (IO)		1.439	**	12/20/35		43,146
	1,449	2005-81 X1 (IO)		0.956	**	02/25/37		70,658
		Countrywide Home Loans
	1,106	2004-20 X (IO)		1.148	**	10/25/34		21,435
	245	2006 0A5 1A2		5.62	**	04/25/46		245,355
		DSLA Mortgage Loan Trust
	338	2006-AR2		5.52	**	11/19/37		338,490
	290	2006-AR1 2A1A		5.97	**	04/19/47		290,486
		Greenpoint Mortgage Funding Trust
	268	2006-AR2 3A2		5.64	**	03/25/36		268,238
	735	2005-AR3 (IO)		1.207	**	08/25/45		21,844
	1,019	2005-AR4 X4 (IO)		1.991	**	10/25/45		30,263
		GS Mortgage Securities Corp.
	669	2006-0A1R A (IO)		1.71	**	08/25/35		24,162
		Harborview Mortgage Loan Trust
	304	2006-7 2A1B		5.57	**	10/19/37		305,250
	337	2006-9 2AB2		5.60	**	11/19/36		339,216
	369	2006-10 2A1A		5.50	**	11/19/36		367,994
	219	2006-1 2A1A		5.56	**	03/19/37		219,834
	312	2006-8 2A1B		5.57	**	08/21/36		312,440
	224	2006-9 N1M 144A*		0.00		12/15/36		130,052
	1,558	2005-2 X (IO)		1.464	**	05/19/35		35,778
	1,057	2005-3 X2 (IO)		0.321	**	06/19/35		23,950
	1,327	2006-1 X1 (IO)		0.414	**	03/19/37		57,026
	716	2006-1 PO1 (PO)		0.00		03/19/37		539

See Notes to Financial Statements
43

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Indymac Index Mortgage Loan Trust
$	245	2005-AR4 2A1A		5.60	**%	03/25/35	$	245,478
	954	2005-AR12 AX2 (IO)		1.057	**	07/25/35		29,815
		Luminent Mortgage Trust
	194	2006-1 A1		5.56	**	04/25/36		194,886
		Residential Accredit Loans, Inc.
	95	2006-Q01 2A1		5.59	**	02/25/46		95,069
	293	2005-Q03 A2		5.72	**	10/25/45		294,373
	550	2007-Q04 A1		5.52	**	05/25/47		550,086
	102	2006-Q01 1A1		5.58	**	02/25/46		102,066
	346	2006-Q06 A2		5.55	**	06/25/46		345,300
	3,000	2007-Q04 CP (IO)		2.89	**	05/25/47		173,436
	1,677	2007 Q03 SB (IO)		1.157	**	03/25/47		92,208
		Structured Asset Mortgage Investments, Inc.
	131	2006-AR3 3A1		5.51	**	02/25/36		131,062
	404	2006-AR7 A2A		5.55	**	08/25/36		405,725
	366	2006-AR8 A1A		5.52	**	10/25/36		367,034
		Washington Mutual
	400	2007-0A6 CA1B		5.55	**	07/25/47		400,328
	90	2005-AR15 A1B1		5.57	**	11/25/45		90,016
	79	2005-AR17 A1B1		5.57	**	12/25/45		78,753
	46	2005-AR19 A1B1		5.57	**	12/25/45		46,109
		Wmalt Mortgage Pass-Through
	242	2006-AR2 A1A		5.969	**	04/25/46		242,679
		Total Private Issues						12,467,917
		Total Collateralized Mortgage Obligations (Cost $13,255,610)						12,833,204
		U.S. Government Agencies-Mortgage-Backed Securities (10.1%)
		Federal Home Loan Mortgage Corp. (Gold) (0.4%)
	180			7.50		12/01/31 - 06/01/32		187,214
		Federal Home Loan Mortgage Corp. (ARM) (0.5%)
	241			5.664		03/01/37		240,891
		Federal National Mortgage Assoc. (4.9%)
	458			6.50		07/01/29 - 11/01/33		466,521
	1,076			7.00		04/01/31 - 09/01/34		1,115,019
	477			7.469		05/01/36		488,296
	129			7.50		02/01/31 - 03/01/32		134,027
	257			8.00		02/01/12 - 06/01/31		269,777
	111			8.50		06/01/30		118,742
								2,592,382

See Notes to Financial Statements
44

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Federal National Mortgage Assoc. (ARM) (4.1%)
$	236			5.005	%	09/01/35	$	232,542
	256			5.104		11/01/35		251,249
	257			5.127		06/01/35		256,379
	243			5.246		03/01/37		241,828
	345			7.481		07/01/36		354,715
	309			7.495		08/01/36		317,310
	505			7.498		07/01/36		517,553
								2,171,576
		Government National Mortgage Assoc. (0.2%)
	65			7.50		04/15/26 - 08/15/29		67,946
	25			8.00		06/15/26		26,268
								94,214
		Total U.S. Government Agencies-Mortgage-Backed Securities (Cost $5,334,603)						5,286,277
		Total United States (Cost $45,622,500)						43,365,829
		Total Government & Corporate Bonds (Cost $52,750,361)						50,367,076
		Convertible Bond (0.2%)
		Telecommunication Equipment
	105	Nortel Networks Corp. (Canada) (Cost $103,407)		4.25		09/01/08		104,081

NUMBER OF SHARES
		Common Stocks (0.0%)
		Casino/Gaming (0.0%)
	787	Fitzgeralds Gaming Corp.+ (d) (g)	0
		Electric Utilities (0.0%)
	13	PNM Resources Inc. (c)	361
		Food: Specialty/Candy (c)(d)(g) (0.0%)
	18	SFAC New Holdings Inc.	0
	100	SFAC New Holdings Inc.++	0
			0
		Restaurants (0.0%)
	10,137	Catalina Restaurant Group (Escrow) (c) (d) (g)	101

See Notes to Financial Statements
45

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Specialty Telecommunications (c)(d)(0.0%)
$	1,171	Birch Telecom Inc.## (g)	$	12
	16,679	PFB Telecom NV (Series B) (g)		0
	109	XO Holdings, Inc.		486
				498
		Telecommunications
	352	Viatel Holdings Bermuda Ltd. (ADR) (Bermuda) (c) (d)		4
		Textiles (0.0%)
	11,192	U.S. Leather, Inc. (c) (d) (g)		0
		Wireless Telecommunications (0.0%)
	46	USA Mobility, Inc.		1,231
	4,516	Vast Solutions, Inc. (Class B1) (d) (g)		0
	4,516	Vast Solutions, Inc. (Class B2) (d) (g)		0
	4,516	Vast Solutions, Inc. (Class B3) (d) (g)		0
				1,231
		Total Common Stocks (Cost $1,904,757)		2,195

NUMBER OF WARRANTS			EXPIRATION DATE
		Warrants (d) (0.0%)
		Casino/Gaming (g) (0.0%)
	9,000	Aladdin Gaming Enterprises, Inc. - 144A*	03/01/10	0
	250	Resort At Summerlin LP - 144A*	12/15/07	0
				0
		Foreign Government Obligation (0.0%)
	100	United Mexican States Corp.	09/24/07	8,500
		Specialty Telecommunications (c) (0.0%)
	219	XO Holdings, Inc. (Series A)	01/16/10	162
	164	XO Holdings, Inc. (Series B)	01/16/10	64
	164	XO Holdings, Inc. (Series C)	01/16/10	26
				252
		Total Warrants (Cost $6,351)		8,752

See Notes to Financial Statements
46

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF CONTRACTS			VALUE
		Put Options Purchased (0.4%)
	131	90 day Euro $ September/2007 @ $94.75	$	34,388
	157	90 day Euro $ December/2007 @ $94.75		54,950
	43	90 day Euro $ March/2008 @ $94.75		17,738
	392,500	BRL January/2008 @ $2.25		12,660
	2,000,000	CHF March/2008 @ $1.18		65,200
	186,000	TRY July/2007 @ $1.35		18,490
		Total Put Options Purchased (Cost $173,655)		203,426
PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investment (h) (5.0%)
		Investment Company
$	2,611	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $2,610,916)		2,610,916

Total Investments (Cost $57,549,447) (g) (i)	101.6	%		53,296,446
Total Written Options Outstanding	(0.0	)		(23,965	)
Liabilities in Excess of Other Assets	(1.6	)		(839,633	)
Net Assets	100.0	%	$	52,432,848

IO Interest Only security.

PO Principal Only security.

ARM Adjustable Rate Mortgage. Interest rate in effect as of June 30, 2007.

* Resale is restricted to qualified institutional investors.

** Floating rate security. Rate shown is the rate in effect at June 30, 2007.

*** Securities represent beneficial interest in trusts. The corresponding assets of the trusts are Junior Subordinated Notes due 2042 and a stock purchase contract to purchase preferred stock on or about March 18, 2011 for Wachovia Capital Trust III and on or about April 15, 2011 for USB Capital IX. Securities have a perpetual maturity and the trusts will redeem them only to the extent the preferred stock is redeemed.

† Payment-in-kind security.

# Currently a zero coupon bond and will pay interest at the rate shown at a future date.

## Resale is restricted; aquired (between 06/18/98 and 08/15/99) at a cost basis of $573,998.

+ Resale is restricted acquired (12/22/98) at a cost basis of $3,549.

++ Resale is restricted acquired (06/10/99) at a cost basis of $1.

+++ Turkish currency index credit linked unsecured note.

++++ Capital appreciation bond.

(a) Issuer in bankruptcy.

See Notes to Financial Statements
47

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

(b) Non-income producing security, bond in default.

(c) Acquired through exchange offer.

(d) Non-income producing securities.

(e) Resale is restricted. No transaction activity during the year.

(f) Securities have been designated as collateral in amount equal to $26,594,664 in connection with securities purchased on a forward commitment basis, forward foreign currency contracts and open futures contracts.

(g) Securities with a total market value equal to $8,097 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.

(h) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(i) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $599,173 and the aggregate gross unrealized depreciation is $4,852,174, resulting in net unrealized depreciation of $4,253,001.

Currency Abbreviations:

ARS Argentina Peso.

BRL Brazilian Real.

EUR Euro.

JPY Japanese Yen.

MXN Mexican New Peso.

RUB Russian Ruble.

TRY Turkish Lira.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JUNE 30, 2007

CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
TRY	117,970	$	88,900	06/18/07	$	927
EUR	1,725,000		2,334,218	09/06/07		(5,796	)
Net Unrealized Depreciation					$	(4,869	)

See Notes to Financial Statements
48

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

FUTURES CONTRACTS OPEN AT JUNE 30, 2007:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	33	Long	US Treasury Note 2 Year September 2007	$	6,724,782		$	(13,247	)
	58	Long	US Treasury Note 10 Year September 2007		6,130,782			(57,348	)
	20	Long	US Treasury Note 5 Year September 2007		2,081,563			(14,510	)
	101	Short	US Treasury Bond 20 Year September 2007		(10,882,750	)		139,636
Net Unrealized Appreciation							$	54,531

PUT OPTIONS WRITTEN AT JUNE 30, 2007

CURRENCY AMOUNT		DESCRIPTION	STRIKE PRICE		EXPIRATION DATE	VALUE
TRY	372,000	Call Options on Turkish Currency (Premiums received $18,358)	$	1.5215	5/26/08	$	(15,743	)
BRL	676,000	Call Options on Brazilian Currency (Premiums received $10,985)		2.25	5/27/08		(8,222	)
Total Put Options						$	(23,965	)

See Notes to Financial Statements
49

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

CREDIT DEFAULT SWAP CONTRACTS OPEN AT JUNE 30, 2007:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000'S)		PAY/RECEIVE FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Goldman Sachs International DJ CDX NA HVOL	Buy	$	1,100		0.75	%	December 20, 2011	$	6,331
Goldman Sachs International Hartford Life Inc.	Buy		280		0.12		December 20, 2011		0
Goldman Sachs International Motorola, Inc.	Buy		90		0.15		December 20, 2011		468
Goldman Sachs International Motorola, Inc.	Buy		190		0.157		December 20, 2011		950
Goldman Sachs International SLM Corporation	Sell		135		0.737		December 20, 2011		(9,936	)
Goldman Sachs International Southwest Airline	Buy		230		0.22		December 20, 2011		1,242
Goldman Sachs International Union Pacific Corporation	Buy		135		0.20		December 20, 2011		257
Goldman Sachs International Chubb Corporation	Buy		270		0.10		March 20, 2012		297
Goldman Sachs International Dell Inc.	Buy		135		0.22		March 20, 2012		(94	)
Goldman Sachs International Gap Inc.	Buy		160		1.19		March 20, 2012		(1,696	)
Citigroup Global Markets, Inc. Tyco International Ltd	Buy		480		0.43		March 20, 2012		0
J.P. Morgan Securities, Inc. Belo Corporation	Buy		50		1.18		June 20, 2014		395
J.P. Morgan Securities, Inc. Belo Corporation	Buy		130		1.30		June 20, 2014		156
Goldman Sachs International Residential Capital	Sell		135		2.00		March 20, 2017		(5,076	)
Net Unrealized Depreciation								$	(6,706	)

See Notes to Financial Statements
50

Flexible Income

Portfolio of Investments n June 30, 2007 (unaudited) continued

INTEREST RATE SWAP CONTRACT OPEN AT JUNE 30, 2007:

COUNTERPARTY

NOTIONAL
AMOUNT(000)

PAYMENTS
MADE BY
PORTFOLIO

PAYMENTS
RECEIVED BY
PORTFOLIO

TERMINATION
DATE

UNREALIZED
DEPRECIATION

Deutsche Bank

7,100

Fixed Rate 5.349%

Floating Rate 5.36%

May 24, 2017

(170,897

)

SUMMARY OF INVESTMENTS

PORTFOLIO COMPOSITION*	PERCENT OF TOTAL INVESTMENT
U.S. Government Agencies, Obligations & CMOs		47.4	%
U.S. Corporate Bonds		31.2
Foreign Government and Corporate Bonds		13.1
Short-Term Investments		4.9
Other Securities		3.4
		100.0	%
LONG-TERM CREDIT ANALYSIS*	PERCENT OF TOTAL LONG-TERM INVESTMENT
AAA		51.5	%
AA		4.8
A		4.4
BBB		8.2
BB		9.3
B		17.6
NR		4.2
		100.0	%

* Does not include open long futures contracts with underlying face amount of $14,937,127 and unrealized depreciation of $85,105 and open short futures contracts with underlying face amount of $10,882,750 and unrealized appreciation of $139,636, open forward currency contracts with unrealized depreciation of $4,869 and open swap contracts with net unrealized depreciation of $177,603.

See Notes to Financial Statements
51

Balanced

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (66.5%)
		Aerospace & Defense (0.8%)
	12,060	Raytheon Co.	$	649,913
		Beverages: Non-Alcoholic (1.2%)
	18,540	Coca-Cola Co. (The)		969,827
		Cable/Satellite TV (0.9%)
	26,382	Comcast Corp. (Class A)*		741,862
		Chemicals: Major Diversified (2.8%)
	23,360	Bayer AG (ADR) (Germany)		1,759,008
	9,290	Du Pont (E.I.) de Nemours & Co.		472,304
				2,231,312
		Computer Communications (0.4%)
	10,600	Cisco Systems, Inc.*		295,210
		Computer Processing Hardware (0.3%)
	4,660	Hewlett-Packard Co.		207,929
		Discount Stores (1.4%)
	22,940	Wal-Mart Stores, Inc.		1,103,643
		Drugstore Chains (0.1%)
	16,750	Rite Aid Corp.*		106,865
		Electric Utilities (3.2%)
	19,350	American Electric Power Co., Inc.		871,524
	9,860	Entergy Corp.		1,058,471
	10,200	FirstEnergy Corp.		660,246
				2,590,241
		Finance/Rental/Leasing (1.4%)
	18,000	Freddie Mac		1,092,600
		Financial Conglomerates (4.2%)
	30,590	Citigroup, Inc.		1,568,961
	37,046	JPMorgan Chase & Co.		1,794,879
				3,363,840
		Food: Major Diversified (2.2%)
	11,400	ConAgra Foods Inc.		306,204
	18,470	Kraft Foods Inc. (Class A)		651,068
	26,570	Unilever N.V. (NY Registered Shares) (Netherlands)		824,201
				1,781,473
		Food: Specialty/Candy (0.9%)
	13,900	Cadbury Schweppes PLC (ADR) (United Kingdom)		754,770
		Home Improvement Chains (0.7%)
	14,760	Home Depot, Inc. (The)		580,806

See Notes to Financial Statements
52

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Household/Personal Care (1.3%)
	6,030	Estee Lauder Companies, Inc. (The) (Class A)	$	274,425
	3,800	Kimberly-Clark Corp.		254,182
	8,870	Procter & Gamble Co. (The)		542,755
				1,071,362
		Industrial Conglomerates (4.5%)
	35,940	General Electric Co.		1,375,783
	7,950	Siemens AG (ADR) (Germany)		1,137,327
	31,610	Tyco International Ltd. (Bermuda)		1,068,102
				3,581,212
		Insurance Brokers/Services (1.5%)
	39,860	Marsh & McLennan Companies, Inc.		1,230,877
		Integrated Oil (3.3%)
	13,300	ConocoPhillips		1,044,050
	6,830	Exxon Mobil Corp.		572,900
	12,160	Royal Dutch Shell PLC (ADR) (Class A) (United Kingdom)		987,392
				2,604,342
		Internet Retail (0.7%)
	7,730	Amazon.com, Inc.*		528,809
		Internet Software/Services (0.8%)
	23,462	Yahoo!, Inc.*		636,524
		Investment Banks/Brokers (2.2%)
	11,360	Merrill Lynch & Co., Inc.		949,469
	40,130	Schwab (Charles) Corp. (The)		823,468
				1,772,937
		Life/Health Insurance (0.3%)
	12,800	Aegon N.V. (NY Registered Shares) (Netherlands)		251,520
		Major Banks (1.4%)
	12,117	Bank of America Corp.		592,400
	6,990	PNC Financial Services Group		500,344
				1,092,744
		Major Telecommunications (3.6%)
	5,157	Embarq Corp.		326,799
	14,930	France Telecom S.A. (ADR) (France)		410,276
	38,248	Sprint Nextel Corp.		792,116
	32,118	Verizon Communications, Inc.		1,322,298
				2,851,489
		Managed Health Care (0.6%)
	9,470	CIGNA Corp.		494,523

See Notes to Financial Statements
53

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Media Conglomerates (3.1%)
	67,800	Time Warner, Inc.	$	1,426,512
	25,963	Viacom, Inc. (Class B)*		1,080,840
				2,507,352
		Medical Specialties (0.7%)
	6,990	Applera Corp. - Applied Biosystems Group		213,475
	24,380	Boston Scientific Corp.*		373,989
				587,464
		Motor Vehicles (0.5%)
	10,690	Honda Motor Co., Ltd. (ADR) (Japan)		387,940
		Multi-Line Insurance (0.7%)
	5,740	Hartford Financial Services Group, Inc. (The)		565,447
		Oil & Gas Pipelines (0.4%)
	9,290	Williams Companies, Inc. (The)		293,750
		Oil & Gas Production (1.1%)
	3,100	Devon Energy Corp.		242,699
	10,720	Occidental Petroleum Corp.		620,474
				863,173
		Oil Refining/Marketing (0.5%)
	6,260	Marathon Oil Corp.		375,350
		Oilfield Services/Equipment (0.9%)
	8,410	Schlumberger Ltd. (Netherlands Antilles)		714,345
		Packaged Software (0.9%)
	34,800	Symantec Corp.*		702,960
		Pharmaceuticals: Major (9.6%)
	23,390	Abbott Laboratories		1,252,535
	37,160	Bristol-Myers Squibb Co.		1,172,770
	6,540	GlaxoSmithKline PLC (ADR) (United Kingdom)		342,500
	20,000	Lilly (Eli) & Co.		1,117,600
	17,060	Pfizer, Inc.		436,224
	6,990	Roche Holdings Ltd. (ADR) (Switzerland)		621,236
	4,590	Sanofi-Aventis (ADR) (France)		184,839
	52,940	Schering-Plough Corp.		1,611,494
	16,640	Wyeth		954,138
				7,693,336
		Precious Metals (0.7%)
	13,770	Newmont Mining Corp.		537,856
		Property - Casualty Insurers (2.9%)
	14,600	Chubb Corp. (The)		790,444

See Notes to Financial Statements
54

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
	18,036	St. Paul Travelers Companies, Inc. (The)	$	964,926
	6,520	XL Capital Ltd. (Class A) (Cayman Islands)		549,571
				2,304,941
		Regional Banks (0.6%)
	11,370	Fifth Third Bancorp		452,185
		Restaurants (0.4%)
	6,530	McDonald's Corp.		331,463
		Semiconductors (0.9%)
	17,239	Intel Corp.		409,599
	27,070	Micron Technology, Inc.*		339,187
				748,786
		Specialty Stores (0.3%)
	8,142	Office Depot, Inc.*		246,703
		Telecommunication Equipment (0.8%)
	43,150	Alcatel-Lucent (ADR) (France)*		604,100
		Tobacco (0.8%)
	9,590	Altria Group, Inc.		672,643
Total Common Stocks (Cost $40,645,734)				53,176,424

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE
		Corporate Bonds (6.9%)
		Aerospace & Defense (0.1%)
$	82	Systems 2001 Asset Trust - 144A** (Cayman Islands)		6.664	%	09/15/13	$	85,523
		Airlines (0.1%)
	98	America West Airlines, Inc. (Series 01-1)		7.10		04/02/21		103,814
		Beverages: Alcoholic (0.2%)
	70	FBG Finance Ltd. - 144A** (Australia)		5.125		06/15/15		65,709
	70	Miller Brewing Co. - 144A**		4.25		08/15/08		68,961
								134,670
		Cable/Satellite TV (0.1%)
	10	Comcast Cable Communications, Inc.		6.75		01/30/11		10,359
	25	Comcast Cable Communications, Inc.		7.125		06/15/13		26,529
	10	Comcast Corp.		7.625		02/15/08		10,117
								47,005

See Notes to Financial Statements
55

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Chemicals: Major Diversified (0.0%)
$	40	ICI Wilmington Inc.		4.375	%	12/01/08	$	39,339
		Department Stores (0.1%)
	65	May Department Stores Co.		6.70		07/15/34		60,605
		Drugstore Chains (0.1%)
	35	CVS Caremark Corp.		5.75		06/01/17		33,831
	20	CVS Corp.		5.75		08/15/11		20,017
	55	CVS Lease Pass Through - 144A**		6.036		12/10/28		52,968
								106,816
		Electric Utilities (0.7%)
	60	Arizona Public Service Co.		5.80		06/30/14		59,289
	70	Carolina Power & Light Co.		5.125		09/15/13		67,882
	20	CenterPoint Energy Resource		6.25		02/01/37		19,325
	25	Consolidated Natural Gas Co. (Series C)		6.25		11/01/11		25,561
	45	Consumers Energy Co.		4.80		02/17/09		44,472
	40	Detroit Edison Co. (The)		6.125		10/01/10		40,743
	30	Entergy Gulf States, Inc.		3.60		06/01/08		29,471
	45	Entergy Gulf States, Inc.		5.76		12/01/09		45,003
	65	Ohio Power Company - IBC (Series K)		6.00		06/01/16		65,173
	45	Public Service Electric & Gas Co. (Series MTN B)		5.00		01/01/13		43,564
	35	Texas Eastern Transmission,LP		7.00		07/15/32		38,512
	55	Wisconsin Electric Power Co.		3.50		12/01/07		54,556
								533,551
		Electrical Products (0.2%)
	70	Cooper Industries, Inc.		5.25		07/01/07		70,000
	65	Cooper Industries, Inc.		5.25		11/15/12		63,815
								133,815
		Electronics/Appliances (0.0%)
	45	LG Electronics Inc. - 144A** (South Korea)		5.00		06/17/10		43,994
		Finance/Rental/Leasing (0.6%)
	50	Capmark Financial Group - 144A**		5.875		05/10/12		49,396
	25	Capmark Financial Group - 144A**		6.30		05/10/17		24,646
	95	Countrywide Home Loans, Inc. (Series MTN L)		3.25		05/21/08		93,128
	85	Nationwide Building Society - 144A** (United Kingdom)		4.25		02/01/10		82,483
	125	Residential Capital Corp.		6.375		06/30/10		123,469
	75	Residential Capital LLC		5.86		06/09/08		74,257
	70	SLM Corp.		4.00		01/15/10		65,182
								512,561

See Notes to Financial Statements
56

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Financial Conglomerates (0.2%)
$	105	Bank One Corp. (Series A)		6.00	%	02/17/09	$	105,931
	20	Brookfield Asset Management Inc.		5.80		04/25/17		19,357
	30	General Electric Capital Corp. (Series A)		4.25		12/01/10		28,969
	10	General Electric Capital Corp. (Series MTNA)		5.875		02/15/12		10,127
								164,384
		Food Retail (0.1%)
	55	Fred Meyer, Inc.		7.45		03/01/08		55,695
		Food: Major Diversified (0.1%)
	30	ConAgra Foods, Inc.		7.00		10/01/28		31,339
	20	ConAgra Foods, Inc.		8.25		09/15/30		23,740
	45	Sara Lee Corp.		6.125		11/01/32		40,379
								95,458
		Gas Distributors (0.1%)
	45	NiSource Finance Corp.		5.93		11/23/09		45,095
		Home Improvement Chains (0.1%)
	90	Home Depot Inc.		5.485		12/16/09		89,911
		Household/Personal Care (0.1%)
	85	Clorox Co. (The)		5.485		12/14/07		85,052
		Industrial Conglomerates (0.1%)
	50	Textron Financial Corp.		4.125		03/03/08		49,603
	55	Textron Financial Corp. (Series MTN)		5.125		02/03/11		54,474
								104,077
		Insurance Brokers/Services (0.3%)
	200	Farmers Exchange Capital - 144A**		7.05		07/15/28		203,161
		Major Banks (0.3%)
	30	Bank of New York Co., Inc. (The)		5.20		07/01/07		30,000
	55	HSBC Finance Corp.		6.75		05/15/11		57,140
	45	Popular North America, Inc. (Series F)		5.65		04/15/09		44,990
	130	Unicredit Luxembourg Finance S.A. - 144A**		5.405		10/24/08		130,077
								262,207
		Major Telecommunications (0.5%)
	65	France Telecom S.A. (France)		8.50		03/01/31		81,907
	45	SBC Communications, Inc.		6.15		09/15/34		43,285
	15	Sprint Capital Corp.		8.75		03/15/32		16,893
	35	Telecom Italia Capital SA (Luxembourg)		4.00		11/15/08		34,267
	60	Telecom Italia Capital SA (Luxembourg)		4.00		01/15/10		57,714
	65	Telefonica Europe BV (Netherlands)		8.25		09/15/30		75,758
	60	Verizon New England Inc.		6.50		09/15/11		61,638
								371,462

See Notes to Financial Statements
57

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS				COUPON RATE			MATURITY DATE	VALUE
			Managed Health Care (0.1%)
$	`	40	United Healthcare Group Inc.		5.44	%	03/02/09	$	40,023
	35		UnitedHealth Group Inc.		4.125		08/15/09		34,168
	5		WellPoint Inc.		3.75		12/14/07		4,961
									79,152
			Media Conglomerates (0.2%)
	110		Time Warner, Inc.		5.59		11/13/09		110,166
	65		Viacom,Inc.		6.875		04/30/36		62,990
									173,156
			Motor Vehicles (0.0%)
	35		DaimlerChrysler North American Holdings Co.		8.50		01/18/31		44,356
			Multi-Line Insurance (0.4%)
	180		AIG SunAmerica Global Financing VI - 144A**		6.30		05/10/11		184,507
	65		American General Finance Corp. (Series MTNH)		4.625		09/01/10		63,317
	35		Equitable Income Co., Inc.		6.50		04/01/08		35,252
	30		International Lease Finance Corp.		3.75		08/01/07		29,964
									313,040
			Oil & Gas Pipelines (0.1%)
	65		Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		65,283
			Oil Refining/Marketing (0.1%)
	45		Valero Energy Corp.		3.50		04/01/09		43,650
			Other Metals/Minerals (0.1%)
	70		Brascan Corp. (Canada)		7.125		06/15/12		73,613
			Property - Casualty Insurers (0.6%)
	200		Mantis Reef Ltd. - 144A** (Australia)		4.692		11/14/08		197,733
	30		Platinum Underwriters Finance Inc. (Series B)		7.50		06/01/17		30,937
	55		Platinum Underwriters Holdings, Ltd. (Series B) (Bermuda)		6.371		11/16/07		54,842
	70		St. Paul Travelers Companies, Inc. (The)		5.01		08/16/07		69,972
	100		XLLIAC Global Funding - 144A**		4.80		08/10/10		97,871
									451,355
			Railroads (0.1%)
	35		Burlington North Santa Fe Railway Co.		6.125		03/15/09		35,384
	35		Union Pacific Corp.		6.625		02/01/08		35,229
	25		Union Pacific Corp. (Series E)		6.79		11/09/07		25,093
									95,706
			Real Estate Development (0.2%)
	139		World Financial Properties - 144A**		6.91		09/01/13		143,678

See Notes to Financial Statements
58

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Real Estate Investment Trusts (0.1%)
$	90	iStar Financial Inc.		5.71	%	03/09/10	$	90,158
		Regional Banks (0.1%)
	110	Marshall & Ilsley Bank (Series BKNT)		3.80		02/08/08		109,004
		Restaurants (0.1%)
	40	Tricon Global Restaurants, Inc.		8.875		04/15/11		44,044
		Savings Banks (0.4%)
	40	Household Finance Corp.		4.125		12/15/08		39,294
	20	Household Finance Corp.		5.875		02/01/09		20,144
	25	Household Finance Corp.		6.375		10/15/11		25,712
	55	Household Finance Corp.		6.40		06/17/08		55,492
	110	Sovereign BanCorp Inc.		5.59		03/23/10		110,101
	55	Washington Mutual Bank		5.50		01/15/13		53,812
	45	Washington Mutual Inc.		8.25		04/01/10		47,912
								352,467
		Trucks/Construction/Farm Machinery (0.1%)
	20	Caterpillar Financial Services Corp. (Series F)		3.625		11/15/07		19,872
	80	Caterpillar Financial Services Corp. (Series MTNF)		5.43		08/20/07		80,012
								99,884
		Wireless Telecommunications (0.1%)
	70	Vodafone Group PLC (United Kingdom)		5.45		12/28/07		70,038
		Total Corporate Bonds (Cost $5,528,708)						5,526,779
		U.S. Government Obligations (9.1%)
		U.S. Treasury Bonds
	25			6.125		08/15/29		28,051
	410			6.375		08/15/27		468,810
	1,540			7.625		02/15/25		1,961,576
	200			8.125		08/15/19		252,969
	590			8.125		08/15/21		760,593
	200			8.50		02/15/20		261,094
	425			8.75		08/15/20		567,707
		U.S. Treasury Notes
	2,560	††		4.25		08/15/13		2,473,423
	125			4.25		11/15/13		120,381
	310			4.50		02/28/11		305,883
		Total U.S. Government Obligations (Cost $7,235,670)						7,200,487

See Notes to Financial Statements
59

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Mortgage-Backed Securities (6.9%)
		Federal Home Loan Mortgage Corp. Gold
$	161			7.50	%	09/01/25 - 06/01/32	$	167,257
		Federal Home Loan Mortgage Corp.
	119			6.50		03/01/33		120,702
	1			7.50		08/01/30		1,211
								121,913
		Federal Home Loan Mortgage Corp. (ARM)
	119			5.64		04/01/37		118,819
	166			5.758		01/01/37		166,321
								285,140
		Federal National Mortgage Assoc.
	232			6.50		01/01/32		235,754
	169			6.99		03/01/36		173,928
	513			7.00		05/01/31 - 11/01/34		530,312
	437			7.013		01/01/36		448,084
	188			7.037		03/01/36		193,214
	212			7.457		05/01/36		218,088
	207			7.469		05/01/36		212,303
	210			7.50		08/01/29 - 09/01/35		219,919
	169			8.00		12/01/28 - 08/01/31		178,312
								2,409,914
		Federal National Mortgage Assoc. (ARM)
	46			6.539		04/01/37		46,906
	119			6.08		04/01/37		119,520
	235			6.945		10/01/35		242,627
	240			6.948		11/01/35		248,462
	240			6.977		12/01/35		248,607
	401			7.025		01/01/36		410,979
	161			7.481		07/01/36		165,534
	296			7.495		04/01/36		304,689
	230			7.498		07/01/36		235,251
	411			7.509		04/01/36		427,454
								2,450,029
		Government National Mortgage Assoc.
	51			7.50		08/15/23 - 08/15/29		53,267
		Total Mortgage-Backed Securities (Cost $5,506,617)						5,487,520

See Notes to Financial Statements
60

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Asset-Backed Securities (5.0%)
		Finance/Rental/Leasing
$	149	Alliance Bancorp Trust 2007-0A1A1		5.42	%	07/25/37	$	149,401
	112	Banc of America Securities Auto Trust 2005-WF1 A3		3.99		08/18/09		111,799
	114	Capital Auto Receivables Asset Trust 2005-1 A4		4.05		07/15/09		113,456
	175	Capital Auto Receivables Asset Trust 2006-2 A3A		4.98		05/15/11		174,331
	150	Capital Auto Receivables Asset Trust 2006-SN1A A3		5.31		10/20/09		149,937
	175	Capital Auto Receivables Assets Trust 2007-SN1 A3B		5.38		07/15/10		175,046
	100	Capital One Auto Finance Trust 2006-C A3A		5.07		07/15/11		99,712
	54	Caterpillar Financial Asset Trust 2005-A A3		3.90		02/25/09		53,491
	175	Caterpillar Financial Asset Trust 2006-A A3		5.57		05/25/10		175,569
	13	CIT Equipment Collateral 2004-EF1 A3		3.50		09/20/08		13,398
	125	CIT Equipment Collateral 2006-VT2 A3		5.07		02/20/10		124,608
	150	Citibank Credit Card Issuance Trust 2007 - A1		5.345		03/22/12		150,091
	41	CNH Equipment Trust 2005-A A3		4.02		04/15/09		40,991
	186	CNH Equipment Trust 2005-B A3		4.27		01/15/10		182,978
	64	DaimlerChrysler Auto Trust 2005-B A3		4.04		09/08/09		63,363
	37	Ford Credit Auto Owner Trust 2005-B A3		4.02		01/15/09		37,362
	100	Ford Credit Auto Owner Trust 2006-A A3		5.05		03/15/10		99,817
	167	GE Equipment Small Ticket LLC 2005-2A A3 - 144A**		4.88		10/22/09		166,813
	175	GS Auto Loan Trust 2006-1 A3		5.37		12/15/10		175,096
	200	Harley-Davidson Motorcycle Trust 2005-1 A2		3.76		12/17/12		195,811
	125	Harley-Davidson Motorcycle Trust 2005-2 A2		4.07		02/15/12		123,332
	100	Hertz Vehicle Financing LLC 2005-2A A2 - 144A**		4.93		02/25/10		99,363
	40	Honda Auto Receivables Owner Trust 2005-2 A3		3.93		01/15/09		40,265
	86	Honda Auto Receivables Owner Trust 2005-3 A3		3.87		04/20/09		85,285
	125	Honda Auto Receivables Owner Trust 2005-6 A3		4.85		10/19/09		124,738
	74	Hyundai Auto Receivables Trust 2005-A A3		3.98		11/16/09		73,673
	100	MBNA Master Credit Card Trust 1999-B A		5.90		08/15/11		101,090
	122	Merrill Auto Trust Securitization 2005-1 A3		4.10		08/25/09		121,286
	88	National City Auto Receivables Trust 2004-A A4		2.88		05/15/11		86,626
	98	Nissan Auto Receivables Owner Trust 2005-B A3		3.99		07/15/09		97,743
	50	TXU Electric Delivery Transition Bond Co. LLC 2004-1 A2		4.81		11/17/14		48,995
	155	USAA Auto Owner Trust 2004-2 A-4		3.58		02/15/11		154,341
	23	USAA Auto Owner Trust 2004-3 A3		3.16		02/17/09		23,220
	47	USAA Auto Owner Trust 2005-1 A3		3.90		07/15/09		46,771
	17	Volkswagen Auto Lease Trust 2005-A A3		3.82		05/20/08		17,377
	130	Volkswagen Auto Loan Enhanced Trust 2005-1 A3		4.80		07/20/09		128,742
	10	Wachovia Auto Owner Trust 2004-B A3		2.91		04/20/09		9,900
	42	Wachovia Auto Owner Trust 2005-A A3		4.06		09/21/09		42,050
	125	Wachovia Auto Owner Trust 2005-B A3		4.79		04/20/10		124,720
		Total Asset-Backed Securities (Cost $4,014,935)						4,002,587

See Notes to Financial Statements
61

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Collateralized Mortgage Obligations (2.6%)
$	172	American Home Mortgage Investment Trust - 2007-1 GA1C		5.51	%	05/25/47	$	172,336
	123	Bear Stearns Mortgage Funding Trust 2006-AR5 1A1		5.48		12/25/36		123,313
	120	Bear Stearns Mortgage Funding Trust 2006-AR4 A1		5.53		12/25/36		119,428
	200	Countrywide Alternative Loan Trust		5.52		06/25/47		199,937
	117	Federal Home Loan Mortgage Corp. Whole Loan 2005-S001 2A2		5.47	†	09/25/45		116,649
	357	Federal National Mortgage Assoc. 2005-68 XI (IO)		6.00		08/25/35		145,642
	225	Federal National Mortgage Assoc. 2006-118 A2		5.38	†	12/25/36		224,074
	168	Federal National Mortgage Assoc. 2006-28 1A1		5.43	†	03/25/36		168,154
	2,058	Federal National Mortgage Assoc. 2006-28 1P (IO)		1.519	†	03/25/36		42,434
	168	Harborview Mortgage Loan Trust 2006-14 2A1A		5.47		03/19/38		167,876
	100	Resdential Accredit Loans, Inc. 2007-Q04 A1		5.52		05/25/47		100,016
	99	Resdential Accredit Loans, Inc. 2007-Q04 A2		5.58		05/25/47		99,492
	99	Resdential Accredit Loans, Inc. 2007-Q04 A3		5.62		05/25/47		99,477
	123	Residential Accredit Loans, Inc. 2007-Q03 A3		5.58		03/25/47		123,009
	200	Wamu Mortgage Pass-Through Certificates 2007-OA6 CA1B		5.55		07/25/47		200,164
		Total Collateralized Mortgage Obligations (Cost $2,026,534)						2,102,001

NUMBER OF CONTRACTS
		Put Options Purchased (0.0%)
	7	December/2007 @ 94.75 (Cost $1,227)	2,450

PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investments (3.0%)
		U.S. Government Agencies & Obligations (a) (2.4%)
$	1,800	Federal Home Loan Mortgage Corp.	5.14	07/18/07	1,795,374
	100	U.S. Treasury Bill***	4.915	07/12/07	99,836
		Total U.S. Government Agencies & Obligations (Cost $1,895,481)			1,895,210
		Investment Company (b) (0.6%)
	514	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $492,670)			492,670
		Total Short-Term Investments (Cost $2,388,151)			2,387,880

See Notes to Financial Statements
62

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

			VALUE
Total Investments (Cost $67,347,576) (c) (d)	100.0	%	$	79,886,128
Other Assets in Excess of Liabilities	0.0			37,814
Net Assets	100.0	%	$	79,923,942

ADR American Depositary Receipt.

ARM Adjustable Rate Mortgage.

IO Interest Only security.

* Non-income producing security.

** Resale is restricted to qualified institutional investors.

*** A portion of this security has been physically segregated in connection with open futures contracts in an amount equal to $16,792.

† Floating rate security, rate shown is the rate in effect at June 30, 2007.

†† Security purchased on a forward commitment basis.

††† Security purchased on a forward commitment basis with approximate principal amount and no definite maturity date; the actual principal amount and maturity date will be determined upon settlement.

(a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield.

(b) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(c) Securities have been designated as collateral in an amount equal to $15,360,886. in connection with securities purchased on a forward commitment basis, open futures contracts and open credit default and interest rate swap contracts.

(d) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $13,456,964 and the aggregate gross unrealized depreciation is $918,412, resulting in net unrealized appreciation of $12,538,552.

FUTURES CONTRACTS OPEN AT JUNE 30, 2007:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	25	Long	U.S. Treasury Note 2 Year, September 2007	$	5,094,531		$	(4,646	)
	36	Long	U.S. Treasury Note 5 Year, September 2007		3,746,813			(30,692	)
	8	Short	U.S. Treasury Note 10 Year, September 2007		(845,625	)		3,040
	28	Short	U.S. Treasury Bond 20 Year, September 2007		(3,017,000	)		27,935
	Net Unrealized Depreciation						$	(4,363	)

See Notes to Financial Statements
63

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

CREDIT DEFAULT SWAP CONTRACTS OPEN AT JUNE 30, 2007:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000's)		PAY/RECEIVE FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Goldman Sachs International The Hartford Financial Services Group Inc.	Buy	$	130		0.120	%	December 20, 2011	$	0
Goldman Sachs International Motorola, Inc.	Buy		50		0.150		December 20, 2011		260
Goldman Sachs International Motorola, Inc.	Buy		90		0.157		December 20, 2011		450
Goldman Sachs International Southwest Airlines Co.	Buy		700		0.220		December 20, 2011		702
Goldman Sachs International Union Pacific Corporation	Buy		60		0.200		December 20, 2011		114
Goldman Sachs International Chubb Corp.	Buy		120		0.100		March 20, 2012		132
Goldman Sachs International Dell International	Buy		60		0.220		March 20, 2012		(42	)
Citibank, NA, New York Tyco international Ltd	Buy		150		0.430		March 20, 2012		0
Citibank, NA, New York Tyco International Ltd	Buy		75		0.430		March 20, 2012		0
Goldman Sachs International SLM Corp.	Sell		95		0.737		June 20, 2012		(6,992	)
J. P. Morgan Securities, Inc Belo Corp.	Buy		25		1.180		June 20, 2014		198
J. P. Morgan Securities, Inc Belo Corp.	Buy		60		1.300		June 20, 2014		72
Goldman Sachs International Residential Capital LLC	Sell		100		2.000		March 20, 2017		(3,760	)
Net Unrealized Depreciation								$	(8,866	)

See Notes to Financial Statements
64

Balanced

Portfolio of Investments n June 30, 2007 (unaudited) continued

INTEREST RATE SWAP CONTRACTS OPEN AT JUNE 30, 2007:

CONTERPARTY	NOTIONAL AMOUNT(000)		PAYMENTS MADE BY PORTFOLIO	PAYMENTS RECEIVED BY PORTFOLIO	TERMINATION DATE	UNREALIZED DEPRECIATION
Citibank N. A.	$	1,600	Fixed Rate 5.36%	Floating Rate 5.34%	May 24, 2017	$	(39,904	)
Deutsche Bank		675	Fixed Rate 5.36	Floating Rate 5.39%	May 25, 2017		(14,236	)
JPMorgan Chase & Co.		1,600	Fixed Rate 5.36	Floating Rate 5.34%	May 24, 2017		(39,600	)
JPMorgan Chase & Co.		850	Fixed Rate 5.36	Floating Rate 5.45%	May 29, 2017		(14,161	)
Total Unrealized Depreciation						$	(107,901	)

SUMMARY OF INVESTMENTS

TYPE OF INVESTMENT	VALUE			PERCENT OF TOTAL INVESTMENTS
Common Stocks	$	53,176,424			66.6	%
U.S. Government Obligations		7,200,487			9.0
Corporate Bonds		5,526,779			6.9
Mortgage-Backed Securities		5,487,520			6.9
Asset-Backed Securities		4,002,587			5.0
Short-Term Investments		2,387,880			3.0
Collateralized Mortgage Obligations		2,102,001			2.6
Put Option Purchased		2,450			0.0
	$	79,886,128	*		100.0	%

* Does not include open long futures contracts with an underlying face amount of $8,841,344 with unrealized depreciation of $35,338, open short futures contracts with an underlying face amount of $3,862,625 with unrealized appreciation of $30,975 and open swap contracts with net unrealized depreciation of $116,767.

See Notes to Financial Statements
65

Utilities

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (97.4%)
		Electric Utilities (58.8%)
	83,000	AES Corp. (The)*	$	1,816,040
	31,000	Allegheny Energy, Inc.*		1,603,940
	18,000	Ameren Corp.		882,180
	38,000	American Electric Power Co., Inc.		1,711,520
	14,000	Cleco Corp.		343,000
	20,000	Consolidated Edison, Inc.		902,400
	20,000	Constellation Energy Group, Inc.		1,743,400
	12,000	Covanta Holding Corp.		295,800
	23,000	Dominion Resources, Inc.		1,985,130
	28,000	DPL, Inc.		793,520
	14,000	DTE Energy Co.		675,080
	63,710	Duke Energy Corp.		1,165,893
	39,000	Edison International		2,188,680
	19,500	Entergy Corp.		2,093,325
	33,000	Exelon Corp.		2,395,800
	32,000	FirstEnergy Corp.		2,071,360
	37,000	FPL Group, Inc.		2,099,380
	23,000	Mirant Corp.*		980,950
	26,000	NSTAR		843,700
	42,000	PG&E Corp.		1,902,600
	12,400	Pinnacle West Capital Corp.		494,140
	25,000	PNM Resources Inc.		694,750
	50,000	PPL Corp.		2,339,500
	26,000	Public Service Enterprise Group		2,282,280
	29,000	Reliant Energy, Inc.*		781,550
	33,000	SCANA Corp.		1,263,570
	43,000	Southern Co. (The)		1,474,470
	30,000	TXU Corp.		2,019,000
	28,000	Wisconsin Energy Corp.		1,238,440
				41,081,398
		Energy (20.4%)
	36,000	AGL Resources, Inc.		1,457,280
	49,620	Dynegy, Inc. (Class A)		468,413
	26,000	Equitable Resources, Inc.		1,288,560
	44,750	MDU Resources Group, Inc.		1,254,790

NUMBER OF SHARES			VALUE
	19,000	New Jersey Resources Corp.	$	969,380
	53,000	NRG Energy, Inc.*		2,203,210
	9,000	Peabody Energy Corp.		435,420
	29,000	Questar Corp.		1,532,650
	35,000	Sempra Energy		2,073,050
	31,355	Spectra Energy Corp.		813,976
	56,000	Williams Companies, Inc. (The)		1,770,720
				14,267,449
		Telecommunications (18.2%)
	20,160	ALLTEL Corp.		1,361,808
	16,000	America Movil SAB de C.V. (Series L) (ADR) (Mexico)*		990,880
	26,000	American Tower Corp. (Class A)*		1,092,000
	61,309	AT&T Inc.		2,544,323
	19,000	Citizens Communications Co.		290,130
	4,000	NII Holdings Inc.*		322,960
	36,000	Qwest Communications International, Inc.*		349,200
	28,000	Rogers Communications, Inc. (Class B)		1,189,720
	15,400	Telefonica de Espana S.A. (ADR) (Spain)		1,028,104
	32,000	Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)		1,212,480
	38,394	Verizon Communications, Inc.		1,580,681
	47,979	Windstream Corp.		708,170
				12,670,456
		Total Common Stocks (Cost $33,883,665)		68,019,303

See Notes to Financial Statements
66

Utilities

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (2.5%)
		Investment Company
$	1,721		Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $1,721,365)		$	1,721,365
Total Investments (Cost $35,605,030) (b)			99.9	%		69,740,668
Other Assets in Excess of Liabilities			0.1			70,917
Net Assets			100.0	%	$	69,811,585

ADR American Depositary Receipt.

* Non-income producing security.

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $34,227,951 and the aggregate gross unrealized depreciation is $92,313, resulting in net unrealized appreciation of $34,135,638.

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Electric Utilities	$	41,081,398		58.9	%
Energy		14,267,449		20.4
Telecommunications		12,670,456		18.2
Investment Company		1,721,365		2.5
	$	69,740,668		100.0	%

See Notes to Financial Statements
67

Dividend Growth

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (98.1%)
		Aerospace & Defense (3.5%)
	43,934	Boeing Co. (The)	$	4,224,693
	50,808	Northrop Grumman Corp.		3,956,419
				8,181,112
		Aluminum (0.7%)
	38,000	Alcoa, Inc.		1,540,140
		Apparel/Footwear (1.3%)
	34,349	V.F. Corp.		3,145,681
		Beverages: Alcoholic (0.9%)
	27,836	Diageo PLC (ADR) (United Kingdom)		2,319,017
		Beverages: Non-Alcoholic (3.3%)
	117,883	PepsiCo, Inc.		7,644,713
		Cable/Satellite TV (0.5%)
	42,100	Comcast Corp. (Class A)*		1,183,852
		Chemicals: Agricultural (0.8%)
	26,613	Monsanto Co.		1,797,442
		Chemicals: Major Diversified (0.5%)
	22,900	E.I. du Pont de Nemours & Co.		1,164,236
		Computer Communications (2.3%)
	194,929	Cisco Systems, Inc.*		5,428,773
		Computer Peripherals (2.0%)
	255,931	EMC Corp.*		4,632,351
		Computer Processing Hardware (1.1%)
	91,011	Dell Inc.*		2,598,364
		Contract Drilling (1.0%)
	69,900	Nabors Industries, Ltd. (Bermuda)*		2,333,262
		Data Processing Services (2.1%)
	102,957	Automatic Data Processing, Inc.		4,990,326
		Department Stores (0.9%)
	52,276	Macy's, Inc.		2,079,539

NUMBER OF SHARES			VALUE
		Discount Stores (1.7%)
	61,186	Target Corp.	$	3,891,430
		Drugstore Chains (1.5%)
	76,863	CVS Caremark Corp.		2,801,656
	96,200	Rite Aid Corp.*		613,756
				3,415,412
		Electric Utilities (1.4%)
	46,409	Exelon Corp.		3,369,293
		Electronic Production Equipment (0.5%)
	59,000	Applied Materials, Inc.		1,172,330
		Financial Conglomerates (11.1%)
	83,050	American Express Co.		5,080,999
	155,327	Citigroup, Inc.		7,966,722
	126,159	JPMorgan Chase & Co.		6,112,404
	47,494	Prudential Financial, Inc.		4,617,842
	38,544	UBS AG (Switzerland)		2,313,025
				26,090,992
		Food: Major Diversified (0.4%)
	29,714	Kraft Foods Inc. (Class A)		1,047,418
		Home Improvement Chains (0.5%)
	31,400	Home Depot, Inc. (The)		1,235,590
		Hotels/Resorts/ Cruiselines (0.6%)
	21,828	Starwood Hotels & Resorts Worldwide, Inc.		1,464,004
		Household/Personal Care (3.1%)
	117,062	Procter & Gamble Co. (The)		7,163,024
		Industrial Conglomerates (7.4%)
	23,200	3M Co.		2,013,528
	181,099	General Electric Co.		6,932,470
	118,899	United Technologies Corp.		8,433,506
				17,379,504

See Notes to Financial Statements
68

Dividend Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Information Technology Services (1.7%)
	95,377	Accenture Ltd. (Class A) (Bermuda)	$	4,090,720
		Integrated Oil (3.5%)
	98,521	Exxon Mobil Corp.		8,263,941
		Internet Software/ Services (0.5%)
	2,094	Google, Inc. (Class A)*		1,095,958
		Investment Banks/ Brokers (2.1%)
	8,533	Goldman Sachs Group, Inc. (The)		1,849,528
	36,301	Merrill Lynch & Co., Inc.		3,034,038
				4,883,566
		Investment Managers (2.0%)
	106,605	Mellon Financial Corp.		4,690,620
		Life/Health Insurance (1.2%)
	19,698	Lincoln National Corp.		1,397,573
	22,332	MetLife, Inc.		1,439,967
				2,837,540
		Major Banks (0.6%)
	28,478	Wachovia Corp.		1,459,497
		Major Telecommunications (3.2%)
	84,736	AT&T Inc.		3,516,544
	128,500	Sprint Nextel Corp.		2,661,235
	34,500	Verizon Communications, Inc.		1,420,365
				7,598,144
		Managed Health Care (1.3%)
	61,050	UnitedHealth Group Inc.		3,122,097
		Media Conglomerates (2.7%)
	242,860	Time Warner, Inc.		5,109,774
	31,092	Viacom Inc. (Class B)*		1,294,360
				6,404,134
		Medical Specialties (1.6%)
	8,767	Alcon, Inc. (Switzerland)		1,182,756
	22,900	Medtronic, Inc.		1,187,594

NUMBER OF SHARES			VALUE
	27,058	Thermo Fisher Scientific, Inc.*	$	1,399,440
				3,769,790
		Multi-Line Insurance (1.7%)
	55,358	American International Group, Inc.		3,876,721
		Office Equipment/Supplies (1.2%)
	62,048	Pitney Bowes Inc.		2,905,087
		Oil & Gas Production (1.0%)
	39,342	XTO Energy, Inc.		2,364,454
		Oilfield Services/Equipment (3.6%)
	31,816	Cameron International Corp.*		2,273,890
	45,975	Schlumberger Ltd. (Netherlands Antilles)		3,905,116
	39,349	Weatherford International Ltd. (Bermuda)*		2,173,639
				8,352,645
		Other Consumer Services (1.0%)
	71,685	eBay, Inc.*		2,306,823
		Packaged Software (3.2%)
	195,323	Microsoft Corp.		5,756,169
	85,200	Oracle Corp.*		1,679,292
				7,435,461
		Pharmaceuticals: Major (8.1%)
	46,677	Abbott Laboratories		2,499,553
	84,719	Johnson & Johnson		5,220,385
	171,784	Pfizer, Inc.		4,392,517
	117,599	Wyeth		6,743,127
				18,855,582
		Property - Casualty Insurers (1.5%)
	41,310	XL Capital Ltd. (Class A) (Cayman Islands)		3,482,020

See Notes to Financial Statements
69

Dividend Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Publishing: Newspapers (0.5%)
	20,400	Gannett Co., Inc.	$	1,120,980
		Pulp & Paper (1.2%)
	70,476	International Paper Co.		2,752,088
		Regional Banks (0.5%)
	28,400	Fifth Third Bancorp		1,129,468
		Semiconductors (1.9%)
	186,056	Intel Corp.		4,420,691
		Specialty Stores (0.7%)
	64,687	Staples, Inc.		1,535,022
		Tobacco (2.5%)
	82,779	Altria Group, Inc.		5,806,119
		Total Common Stocks (Cost $194,471,439)		229,826,973

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (2.1%)
		Investment Company
$	4,880	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class. Portfolio (Cost $4,879,672)			$	4,879,672
Total Investments (Cost $199,351,111) (b)			100.2	%		234,706,645
Liabilities in Excess of Other Assets			(0.2	)		(491,362	)
Net Assets			100.0	%	$	234,215,283

ADR American Depositary Receipt.

* Non-income producing security.

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $36,672,572 and the aggregate gross unrealized depreciation is $1,317,038, resulting in net unrealized appreciation of $35,355,534.

See Notes to Financial Statements
70

Dividend Growth

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Financial Conglomerates	$	26,090,992		11.1	%
Pharmaceuticals: Major		18,855,582		8.0
Industrial Conglomerates		17,379,504		7.4
Oilfield Services/Equipment		8,352,645		3.6
Integrated Oil		8,263,941		3.5
Aerospace & Defense		8,181,112		3.5
Beverages: Non-Alcoholic		7,644,713		3.3
Major Telecommunications		7,598,144		3.2
Packaged Software		7,435,461		3.2
Household/Personal Care		7,163,024		3.1
Media Conglomerates		6,404,134		2.7
Tobacco		5,806,119		2.5
Computer Communications		5,428,773		2.3
Data Processing Services		4,990,326		2.1
Investment Banks/Brokers		4,883,566		2.1
Investment Company		4,879,672		2.1
Investment Managers		4,690,620		2.0
Computer Peripherals		4,632,351		2.0
Semiconductors		4,420,691		1.9
Information Technology Services		4,090,720		1.7
Discount Stores		3,891,430		1.7
Multi-Line Insurance		3,876,721		1.7
Medical Specialties		3,769,790		1.6
Property - Casualty Insurers		3,482,020		1.5
Drugstore Chains		3,415,412		1.5
Electric Utilities		3,369,293		1.4
Apparel/Footwear		3,145,681		1.3

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Managed Health Care	$	3,122,097		1.3	%
Office Equipment/Supplies		2,905,087		1.2
Life/Health Insurance		2,837,540		1.2
Pulp & Paper		2,752,088		1.2
Computer Processing Hardware		2,598,364		1.1
Oil & Gas Production		2,364,454		1.0
Contract Drilling		2,333,262		1.0
Beverages: Alcoholic		2,319,017		1.0
Other Consumer Services		2,306,823		1.0
Department Stores		2,079,539		0.9
Chemicals: Agricultural		1,797,442		0.8
Aluminum		1,540,140		0.7
Specialty Stores		1,535,022		0.7
Hotels/Resorts/Cruiselines		1,464,004		0.6
Major Banks		1,459,497		0.6
Home Improvement Chains		1,235,590		0.5
Cable/Satellite TV		1,183,852		0.5
Electronic Production Equipment		1,172,330		0.5
Chemicals: Major Diversified		1,164,236		0.5
Regional Banks		1,129,468		0.5
Publishing: Newspapers		1,120,980		0.4
Internet Software/Services		1,095,958		0.4
Food: Major Diversified		1,047,418		0.4
	$	234,706,645		100.0	%

See Notes to Financial Statements
71

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (97.3%)
		Advertising/Marketing Services (0.4%)
	35,065	Interpublic Group of Companies, Inc. (The)*	$	399,741
	7,828	Omnicom Group, Inc.		414,258
				813,999
		Aerospace & Defense (1.8%)
	4,357	Boeing Co.		418,969
	5,221	General Dynamics Corp.		408,387
	7,361	Goodrich Corp.		438,421
	4,339	L-3 Communications Holdings, Inc.		422,575
	4,238	Lockheed Martin Corp.		398,923
	5,525	Northrop Grumman Corp.		430,232
	3,403	Precision Castparts Corp.		412,988
	7,563	Raytheon Co.		407,570
	5,931	Rockwell Collins, Inc.		418,966
				3,757,031
		Agricultural Commodities/ Milling (0.2%)
	12,084	Archer-Daniels-Midland Co.		399,859
		Air Freight/Couriers (0.6%)
	7,809	C.H. Robinson Worldwide, Inc.		410,129
	3,652	FedEx Corp.		405,262
	5,561	United Parcel Service, Inc. (Class B)		405,953
				1,221,344
		Airlines (0.2%)
	27,975	Southwest Airlines Co.		417,107
		Aluminum (0.2%)
	10,279	Alcoa, Inc.		416,608
		Apparel/Footwear (1.2%)
	8,354	Coach, Inc.*		395,896
	14,021	Jones Apparel Group, Inc.		396,093
	10,978	Liz Claiborne, Inc.		409,479

NUMBER OF SHARES			VALUE
	7,614	Nike, Inc. (Class B)	$	443,820
	4,511	Polo Ralph Lauren Corp.		442,574
	4,569	V.F. Corp.		418,429
				2,506,291
		Apparel/Footwear Retail (1.0%)
	5,231	Abercrombie & Fitch Co. (Class A)		381,758
	22,011	Gap, Inc. (The)		420,410
	15,507	Limited Brands, Inc.		425,667
	7,946	Nordstrom, Inc.		406,200
	14,759	TJX Companies, Inc. (The)		405,873
				2,039,908
		Auto Parts: O.E.M. (0.4%)
	4,543	Eaton Corp.		422,499
	3,769	Johnson Controls, Inc.		436,337
				858,836
		Automotive Aftermarket (0.2%)
	12,107	Goodyear Tire & Rubber Co. (The)*		420,839
		Beverages: Alcoholic (0.8%)
	8,085	Anheuser-Busch Companies, Inc.		421,714
	5,888	Brown-Forman Corp. (Class B)		430,295
	17,810	Constellation Brands Inc. (Class A)*		432,427
	4,559	Molson Coors Brewing Co. (Class B)		421,525
				1,705,961
		Beverages: Non-Alcoholic (0.8%)
	8,291	Coca-Cola Co. (The)		433,702
	18,471	Coca-Cola Enterprises Inc.		443,304
	12,503	Pepsi Bottling Group, Inc. (The)		421,101
	6,454	PepsiCo, Inc.		418,542
				1,716,649

See Notes to Financial Statements
72

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Biotechnology (1.2%)
	6,891	Amgen Inc.*	$	381,003
	8,331	Biogen Idec Inc.*		445,708
	6,828	Celgene Corp.*		391,449
	6,392	Genzyme Corp.*		411,645
	10,580	Gilead Sciences, Inc.*		410,187
	5,587	Millipore Corp.*		419,528
				2,459,520
		Broadcasting (0.2%)
	11,153	Clear Channel Communications, Inc.		421,806
		Building Products (0.4%)
	7,139	American Standard Companies, Inc.		421,058
	14,326	Masco Corp.		407,861
				828,919
		Cable/Satellite TV (0.4%)
	15,142	Comcast Corp. (Class A)*		425,793
	17,477	DIRECTV Group, Inc. (The)*		403,893
				829,686
		Casino/Gaming (0.4%)
	4,845	Harrah's Entertainment, Inc.		413,085
	10,382	International Game Technology		412,165
				825,250
		Chemicals: Agricultural (0.2%)
	6,593	Monsanto Co.		445,291
		Chemicals: Major Diversified (1.0%)
	8,949	Dow Chemical Co. (The)		395,725
	8,106	Du Pont (E.I.) de Nemours & Co.		412,109
	6,614	Eastman Chemical Co.		425,479
	21,032	Hercules Inc.*		413,279
	7,818	Rohm & Haas Co.		427,488
				2,074,080
		Chemicals: Specialty (0.8%)
	5,234	Air Products & Chemicals, Inc.		420,656
	6,518	Ashland Inc.		416,826

NUMBER OF SHARES			VALUE
	5,942	Praxair, Inc.	$	427,765
	10,019	Sigma-Aldrich Corp.		427,511
				1,692,758
		Coal (0.4%)
	8,918	CONSOL Energy, Inc.		411,209
	8,178	Peabody Energy Corp.		395,652
				806,861
		Commercial Printing/ Forms (0.2%)
	9,794	Donnelley (R.R.) & Sons Co.		426,137
		Computer Communications (0.8%)
	24,934	Avaya Inc.*		419,888
	15,169	Cisco Systems, Inc.*		422,457
	16,762	Juniper Networks, Inc.*		421,900
	23,759	QLogic Corp.*		395,587
				1,659,832
		Computer Peripherals (0.6%)
	24,646	EMC Corp.*		446,093
	7,875	Lexmark International, Inc. (Class A)*		388,316
	12,755	Network Appliance, Inc.*		372,446
	5,600	Seagate Technology Inc. (Escrow) (a)*		0
				1,206,855
		Computer Processing Hardware (1.0%)
	3,549	Apple Inc.*		433,120
	15,376	Dell Inc.*		438,985
	9,366	Hewlett-Packard Co.		417,911
	8,122	NCR Corp.*		426,730
	80,545	Sun Microsystems, Inc.*		423,667
				2,140,413
		Construction Materials (0.2%)
	3,521	Vulcan Materials Co.		403,295

See Notes to Financial Statements
73

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Containers/Packaging (1.0%)
	7,817	Ball Corp.	$	415,630
	12,211	Bemis Company, Inc.		405,161
	12,496	Pactiv Corp.*		398,497
	13,045	Sealed Air Corp.		404,656
	6,854	Temple-Inland Inc.		421,727
				2,045,671
		Contract Drilling (1.0%)
	6,814	ENSCO International Inc.		415,722
	12,125	Nabors Industries, Ltd. (Bermuda)*		404,733
	4,484	Noble Corp. (Cayman Islands)		437,280
	10,486	Rowan Companies, Inc.		429,716
	4,158	Transocean Inc. (Cayman Islands)*		440,665
				2,128,116
		Data Processing Services (1.7%)
	7,257	Affiliated Computer Services, Inc. (Class A)*		411,617
	8,367	Automatic Data Processing, Inc.		405,548
	7,606	Computer Sciences Corp.*		449,895
	16,474	Convergys Corp.*		399,330
	7,917	Fidelity National Information Services, Inc.		429,735
	13,161	First Data Corp.		429,970
	7,310	Fiserv, Inc.*		415,208
	10,190	Paychex, Inc.		398,633
	18,243	Western Union Co.		380,002
				3,719,938
		Department Stores (0.8%)
	11,933	Dillard's, Inc. (Class A)		428,753
	5,694	Kohl's Corp.*		404,445
	10,443	MACY*S Inc.		415,423
	5,375	Penney (J.C.) Co., Inc.		389,043
				1,637,664
		Discount Stores (1.4%)
	13,460	Big Lots, Inc.*		395,993
	7,553	Costco Wholesale Corp.		442,002

NUMBER OF SHARES			VALUE
	19,192	Dollar General Corp.	$	420,689
	12,197	Family Dollar Stores, Inc.		418,601
	2,318	Sears Holdings Corp.*		392,901
	6,703	Target Corp.		426,311
	8,737	Wal-Mart Stores, Inc.		420,337
				2,916,834
		Drugstore Chains (0.4%)
	11,364	CVS Corp.		414,218
	9,190	Walgreen Co.		400,133
				814,351
		Electric Utilities (5.0%)
	18,817	AES Corp. (The)*		411,716
	8,119	Allegheny Energy, Inc.*		420,077
	8,066	Ameren Corp.		395,315
	8,809	American Electric Power Co., Inc.		396,757
	23,193	CenterPoint Energy, Inc.		403,558
	23,779	CMS Energy Corp.		408,999
	8,587	Consolidated Edison, Inc.		387,445
	4,750	Constellation Energy Group, Inc.		414,058
	4,766	Dominion Resources, Inc.		411,353
	8,328	DTE Energy Co.		401,576
	21,430	Duke Energy Corp.		392,169
	7,605	Edison International		426,793
	3,806	Entergy Corp.		408,574
	5,741	Exelon Corp.		416,797
	6,416	FirstEnergy Corp.		415,308
	6,794	FPL Group, Inc.		385,492
	7,634	Integrys Energy Group, Inc.		387,273
	8,632	PG&E Corp.		391,030
	9,242	Pinnacle West Capital Corp.		368,294
	9,157	PPL Corp.		428,456
	8,515	Progress Energy, Inc.		388,199
	4,814	Public Service Enterprise Group		422,573
	11,422	Southern Co. (The)		391,660
	23,703	TECO Energy, Inc.		407,218
	6,301	TXU Corp.		424,057
	18,616	Xcel Energy, Inc.		381,070
				10,485,817

See Notes to Financial Statements
74

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Electrical Products (0.6%)
	7,495	Cooper Industries Ltd. (Class A) (Bermuda)	$	427,890
	8,780	Emerson Electric Co.		410,904
	13,464	Molex Inc.		404,055
				1,242,849
		Electronic Components (0.9%)
	19,764	Jabil Circuit, Inc.		436,191
	6,936	MEMC Electronic Materials, Inc.*		423,928
	9,216	SanDisk Corp.*		451,031
	63,614	Sanmina-SCI Corp.*		199,112
	112,826	Solectron Corp.*		415,200
				1,925,462
		Electronic Equipment/ Instruments (1.0%)
	11,044	Agilent Technologies, Inc.*		424,531
	29,305	JDS Uniphase Corp.*		393,566
	6,124	Rockwell Automation, Inc.		425,251
	13,342	Tektronix, Inc.		450,159
	22,637	Xerox Corp.*		418,332
				2,111,839
		Electronic Production Equipment (0.8%)
	21,542	Applied Materials, Inc.		428,039
	7,620	KLA-Tencor Corp.		418,719
	13,437	Novellus Systems, Inc.*		381,208
	24,234	Teradyne, Inc.*		426,034
				1,654,000
		Electronics/Appliance Stores (0.5%)
	8,515	Best Buy Co., Inc.		397,395
	24,356	Circuit City Stores - Circuit City Group		367,288
	12,459	RadioShack Corp.		412,891
				1,177,574
		Electronics/Appliances (0.6%)
	14,589	Eastman Kodak Co.		406,012

NUMBER OF SHARES			VALUE
	3,665	Harman International Industries, Inc.	$	428,072
	3,728	Whirlpool Corp.		414,554
				1,248,638
		Engineering & Construction (0.2%)
	3,899	Fluor Corp.		434,232
		Environmental Services (0.4%)
	30,741	Allied Waste Industries, Inc.*		413,774
	10,834	Waste Management, Inc.		423,068
				836,842
		Finance/Rental/Leasing (1.3%)
	5,299	Capital One Financial Corp.		415,653
	7,362	CIT Group, Inc.		403,658
	11,018	Countrywide Financial Corp.		400,504
	6,220	Fannie Mae		406,353
	6,472	Freddie Mac		392,850
	7,899	Ryder System, Inc.		424,966
	7,498	SLM Corp.		431,735
				2,875,719
		Financial Conglomerates (0.9%)
	6,705	American Express Co.		410,212
	7,777	Citigroup, Inc.		398,882
	8,400	JPMorgan Chase & Co.		406,980
	6,860	Principal Financial Group, Inc.		399,869
	4,209	Prudential Financial, Inc.		409,241
				2,025,184
		Financial Publishing/ Services (0.6%)
	9,668	Equifax, Inc.		429,453
	6,023	McGraw-Hill Companies, Inc. (The)		410,046
	6,095	Moody's Corp.		379,109
				1,218,608
		Food Distributors (0.2%)
	12,185	SYSCO Corp.		401,983

See Notes to Financial Statements
75

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Food Retail (0.7%)
	13,951	Kroger Co. (The)	$	392,442
	11,859	Safeway Inc.		403,562
	9,027	SUPERVALU, Inc.		418,131
	10,256	Whole Foods Market, Inc.		392,805
				1,606,940
		Food: Major Diversified (1.4%)
	10,329	Campbell Soup Co.		400,868
	16,191	ConAgra Foods Inc.		434,890
	7,039	General Mills, Inc.		411,218
	8,720	Heinz (H.J.) Co.		413,938
	8,022	Kellogg Co.		415,459
	11,519	Kraft Foods Inc. (Class A)		406,045
	23,889	Sara Lee Corp.		415,669
				2,898,087
		Food: Meat/Fish/Dairy (0.4%)
	13,024	Dean Foods Co.*		415,075
	18,980	Tyson Foods, Inc. (Class A)		437,299
				852,374
		Food: Specialty/Candy (0.6%)
	7,965	Hershey Co. (The)		403,188
	10,812	McCormick & Co., Inc. (Non-Voting)		412,802
	7,560	Wrigley (Wm.) Jr. Co.		418,144
				1,234,134
		Forest Products (0.2%)
	5,114	Weyerhaeuser Co.		403,648
		Gas Distributors (1.3%)
	43,862	Dynegy, Inc. (Class A)*		414,057
	9,830	KeySpan Corp.		412,663
	8,928	Nicor Inc.		383,190
	18,919	NiSource, Inc.		391,812
	7,716	Questar Corp.		407,791
	6,802	Sempra Energy		402,882
	16,063	Spectra Energy Corp.		416,995
				2,829,390

NUMBER OF SHARES			VALUE
		Home Building (0.9%)
	9,289	Centex Corp.	$	372,489
	19,043	D.R. Horton, Inc.		379,527
	9,314	KB Home		366,692
	9,740	Lennar Corp. (Class A)		356,094
	16,342	Pulte Homes, Inc.		366,878
				1,841,680
		Home Furnishings (0.4%)
	17,178	Leggett & Platt, Inc.		378,775
	13,878	Newell Rubbermaid, Inc.		408,430
				787,205
		Home Improvement Chains (0.6%)
	10,718	Home Depot, Inc. (The)		421,753
	12,928	Lowe's Companies, Inc.		396,760
	6,162	Sherwin-Williams Co.		409,588
				1,228,101
		Hospital/Nursing Management (0.4%)
	6,566	Manor Care, Inc.		428,694
	60,661	Tenet Healthcare Corp.*		394,903
				823,597
		Hotels/Resorts/Cruiselines (0.9%)
	8,511	Carnival Corp. (Panama)†		415,081
	11,681	Hilton Hotels Corp.		390,963
	8,738	Marriott International, Inc. (Class A)		377,831
	5,967	Starwood Hotels & Resorts Worldwide, Inc.		400,207
	11,418	Wyndham Worldwide Corp.*		414,017
				1,998,099

See Notes to Financial Statements
76

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Household/Personal Care (1.3%)
	10,782	Avon Products, Inc.	$	396,238
	6,368	Clorox Co. (The)		395,453
	6,210	Colgate-Palmolive Co.		402,719
	8,829	Estee Lauder Companies, Inc. (The) (Class A)		401,808
	8,260	International Flavors & Fragrances, Inc.		430,676
	6,037	Kimberly-Clark Corp.		403,815
	6,501	Procter & Gamble Co. (The)		397,796
				2,828,505
		Industrial Conglomerates (1.8%)
	4,877	3M Co.		423,275
	5,651	Danaher Corp.		426,651
	11,211	General Electric Co.**		429,157
	7,264	Honeywell International, Inc.		408,818
	8,167	Ingersoll-Rand Co. Ltd. (Class A) (Bermuda)		447,715
	6,164	ITT Corp.		420,878
	3,896	Textron, Inc.		428,989
	12,459	Tyco International Ltd. (Bermuda)		420,990
	5,938	United Technologies Corp.		421,182
				3,827,655
		Industrial Machinery (0.4%)
	7,724	Illinois Tool Works Inc.		418,564
	4,274	Parker Hannifin Corp.		418,467
				837,031
		Industrial Specialties (0.4%)
	9,323	Ecolab Inc.		398,092
	5,703	PPG Industries, Inc.		434,055
				832,147

NUMBER OF SHARES			VALUE
		Information Technology Services (1.0%)
	12,470	Citrix Systems, Inc.*	$	419,865
	5,147	Cognizant Technology Solutions Corp. (Class A)*		386,488
	14,728	Electronic Data Systems Corp.		408,407
	4,069	International Business Machines Corp.		428,262
	48,966	Unisys Corp.*		447,549
				2,090,571
		Insurance Brokers/ Services (0.4%)
	10,076	AON Corp.		429,338
	13,352	Marsh & McLennan Companies, Inc.		412,310
				841,648
		Integrated Oil (1.0%)
	5,141	Chevron Corp.		433,078
	5,311	ConocoPhillips		416,914
	4,976	Exxon Mobil Corp.		417,387
	7,010	Hess Corp.		413,310
	7,142	Murphy Oil Corp.		424,520
				2,105,209
		Internet Retail (0.4%)
	5,906	Amazon.com, Inc.*		404,029
	11,841	IAC/InterActiveCorp*		409,817
				813,846
		Internet Software/ Services (0.6%)
	845	Google, Inc. (Class A)*		442,256
	14,584	VeriSign, Inc.*		462,750
	14,894	Yahoo!, Inc.*		404,074
				1,309,080

See Notes to Financial Statements
77

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Investment Banks/ Brokers (1.7%)
	6,472	Ameriprise Financial, Inc.	$	411,425
	2,710	Bear Stearns Companies, Inc. (The)		379,400
	779	Chicago Mercantile Exchange Holdings Inc.		416,266
	17,684	ETRADE Group, Inc.		390,640
	1,870	Goldman Sachs Group, Inc. (The)		405,323
	5,411	Lehman Brothers Holdings Inc.		403,228
	4,739	Merrill Lynch & Co., Inc.		396,086
	4,833	Morgan Stanley (Note 4)		405,392
	19,615	Schwab (Charles) Corp. (The)		402,500
				3,610,260
		Investment Managers (1.4%)
	10,864	Federated Investors, Inc. (Class B)		416,417
	3,233	Franklin Resources, Inc.		428,276
	15,201	Janus Capital Group, Inc.*		423,196
	4,224	Legg Mason, Inc.		415,557
	9,555	Mellon Financial Corp.		420,420
	8,003	Price (T.) Rowe Group, Inc.		415,276
	6,089	State Street Corp.		416,488
				2,935,630
		Life/Health Insurance (1.2%)
	8,154	AFLAC Inc.		419,116
	11,851	Genworth Financial Inc. (Class A)		407,674
	5,919	Lincoln National Corp.		419,953
	6,406	MetLife, Inc.		413,059
	6,202	Torchmark Corp.		415,534
	16,240	UnumProvident Corp.		424,026
				2,499,362
		Major Banks (2.4%)
	8,122	Bank of America Corp.		397,084
	10,147	Bank of New York Co., Inc. (The)		420,492
	9,745	BB&T Corp.		396,427
	6,843	Comerica, Inc.		406,953
	18,150	Huntington Bancshares, Inc.		412,731

NUMBER OF SHARES			VALUE
	11,280	KeyCorp	$	387,242
	11,946	National City Corp.		398,041
	5,517	PNC Financial Services Group		394,907
	11,790	Regions Financial Corp.		390,249
	4,734	SunTrust Banks, Inc.		405,893
	11,921	U.S. Bancorp		392,797
	7,525	Wachovia Corp.		385,656
	11,386	Wells Fargo & Co.		400,446
				5,188,918
		Major Telecommunications (1.0%)
	6,314	ALLTEL Corp.		426,511
	10,616	AT&T Inc.		440,564
	6,754	Embarq Corp.		428,001
	19,378	Sprint Nextel Corp.		401,318
	9,947	Verizon Communications, Inc.		409,518
				2,105,912
		Managed Health Care (1.2%)
	8,513	Aetna, Inc.		420,542
	7,881	CIGNA Corp.		411,546
	7,074	Coventry Health Care, Inc.*		407,816
	6,955	Humana, Inc.*		423,629
	7,689	UnitedHealth Group Inc.		393,215
	5,139	WellPoint Inc.*		410,246
				2,466,994
		Media Conglomerates (1.0%)
	12,751	CBS Corp. (Class B)		424,863
	11,831	Disney (Walt) Co. (The)		403,910
	18,281	News Corp. (Class A)		387,740
	19,774	Time Warner, Inc.		416,045
	9,821	Viacom, Inc. (Class B)*		408,848
				2,041,406
		Medical Distributors (0.8%)
	8,056	AmerisourceBergen Corp.		398,530
	5,815	Cardinal Health, Inc.		410,772
	6,754	McKesson Corp.		402,809
	11,609	Patterson Companies, Inc.*		432,667
				1,644,778

See Notes to Financial Statements
78

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Medical Specialties (3.3%)
	13,997	Applera Corp. - Applied Biosystems Group	$	427,468
	4,862	Bard (C.R.), Inc.		401,747
	6,195	Bausch & Lomb, Inc.		430,181
	7,388	Baxter International, Inc.		416,240
	5,443	Becton, Dickinson & Co.		405,503
	9,390	Biomet, Inc.		429,311
	25,974	Boston Scientific Corp.*		398,441
	10,360	Hospira, Inc.*		404,454
	7,882	Medtronic, Inc.		408,761
	9,098	Pall Corp.		418,417
	15,938	PerkinElmer, Inc.		415,344
	9,721	St. Jude Medical, Inc.*		403,324
	6,209	Stryker Corp.		391,726
	7,944	Thermo Fisher Scientific, Inc.*		410,864
	9,928	Varian Medical Systems, Inc.*		422,039
	7,007	Waters Corp.*		415,936
	4,738	Zimmer Holdings, Inc.*		402,209
				7,001,965
		Miscellaneous Commercial Services (0.2%)
	10,078	Cintas Corp.		397,375
		Miscellaneous Manufacturing (0.2%)
	8,014	Dover Corp.		409,916
		Motor Vehicles (0.6%)
	47,938	Ford Motor Co.*		451,576
	12,337	General Motors Corp.		466,339
	6,689	Harley-Davidson, Inc.		398,731
				1,316,646
		Multi-Line Insurance (0.8%)
	5,761	American International Group, Inc.		403,443
	4,187	Hartford Financial Services Group, Inc. (The) (Note 4)		412,461
	8,091	Loews Corp.		412,479
	6,513	SAFECO Corp.		405,499
				1,633,882

NUMBER OF SHARES			VALUE
		Office Equipment/ Supplies (0.4%)
	6,160	Avery Dennison Corp.	$	409,517
	8,844	Pitney Bowes, Inc.		414,076
				823,593
		Oil & Gas Pipelines (0.4%)
	25,036	El Paso Corp.		431,370
	13,455	Williams Companies, Inc. (The)		425,447
				856,817
		Oil & Gas Production (1.3%)
	7,941	Anadarko Petroleum Corp.		412,852
	4,898	Apache Corp.		399,628
	11,458	Chesapeake Energy Corp.		396,447
	5,192	Devon Energy Corp.		406,482
	5,313	EOG Resources, Inc.		388,168
	7,210	Occidental Petroleum Corp.		417,315
	6,731	XTO Energy Inc.		404,533
				2,825,425
		Oil Refining/Marketing (0.6%)
	6,454	Marathon Oil Corp.		386,982
	5,035	Sunoco, Inc.		401,189
	5,590	Valero Energy Corp.		412,877
				1,201,048
		Oilfield Services/ Equipment (1.4%)
	4,859	Baker Hughes Inc.		408,788
	14,272	BJ Services Co.		405,896
	11,641	Halliburton Co.		401,615
	3,994	National Oilwell-Varco, Inc.*		416,335
	5,054	Schlumberger Ltd. (Netherlands Antilles)		429,287
	7,097	Smith International, Inc.		416,168
	7,401	Weatherford International Ltd. (Bermuda)*		408,831
				2,886,920

See Notes to Financial Statements
79

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Other Consumer Services (0.6%)
	8,707	Apollo Group, Inc. (Class A)*	$	508,750
	18,448	Block (H&R), Inc.		431,130
	12,695	eBay, Inc.*		408,525
				1,348,405
		Other Consumer Specialties (0.2%)
	5,054	Fortune Brands, Inc.		416,298
		Packaged Software (2.0%)
	9,834	Adobe Systems, Inc.*		394,835
	9,498	Autodesk, Inc.*		447,166
	12,727	BMC Software, Inc.*		385,628
	16,057	CA Inc.		414,752
	36,207	Compuware Corp.*		429,415
	13,722	Intuit Inc.*		412,758
	14,094	Microsoft Corp. **		415,350
	53,855	Novell, Inc.*		419,530
	21,531	Oracle Corp.*		424,376
	21,706	Symantec Corp.*		438,461
				4,182,271
		Personnel Services (0.4%)
	9,047	Monster Worldwide, Inc.*		371,832
	11,455	Robert Half International, Inc.		418,108
				789,940
		Pharmaceuticals: Generic Drugs (0.6%)
	8,162	Barr Pharmaceuticals Inc.*		409,977
	21,927	Mylan Laboratories, Inc.		398,852
	13,392	Watson Pharmaceuticals, Inc.*		435,642
				1,244,471
		Pharmaceuticals: Major (1.6%)
	7,658	Abbott Laboratories		410,086
	13,901	Bristol-Myers Squibb Co.		438,715
	6,480	Johnson & Johnson		399,298
	7,438	Lilly (Eli) & Co.		415,635
	8,429	Merck & Co., Inc.		419,764

NUMBER OF SHARES			VALUE
	15,824	Pfizer, Inc.	$	404,620
	13,798	Schering-Plough Corp.		420,011
	7,355	Wyeth		421,736
				3,329,865
		Pharmaceuticals: Other (0.6%)
	6,958	Allergan, Inc.		401,059
	8,467	Forest Laboratories, Inc.*		386,519
	19,777	King Pharmaceuticals, Inc.*		404,637
				1,192,215
		Precious Metals (0.4%)
	5,065	Freeport-McMoRan Copper & Gold, Inc. (Class B)		419,483
	10,061	Newmont Mining Corp.		392,983
				812,466
		Property - Casualty Insurers (1.4%)
	6,685	ACE Ltd. (Cayman Islands)		417,946
	6,627	Allstate Corp. (The)		407,627
	7,767	Chubb Corp. (The)		420,505
	9,029	Cincinnati Financial Corp.		391,859
	17,967	Progressive Corp. (The)		429,950
	7,578	St. Paul Travelers Companies, Inc. (The)		405,423
	5,126	XL Capital Ltd. (Class A) (Cayman Islands)		432,071
				2,905,381
		Publishing: Books/ Magazines (0.2%)
	6,907	Meredith Corp.		425,471
		Publishing: Newspapers (0.9%)
	7,246	Dow Jones & Co., Inc.		416,283
	7,070	Gannett Co., Inc.		388,497
	16,510	New York Times Co. (The) (Class A)		419,354
	9,044	Scripps (E.W.) Co. (Class A)		413,220
	13,566	Tribune Co.		398,840
				2,036,194

See Notes to Financial Statements
80

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Pulp & Paper (0.4%)
	11,156	International Paper Co.	$	435,642
	12,056	MeadWestvaco Corp.		425,818
				861,460
		Railroads (0.8%)
	4,679	Burlington Northern Santa Fe Corp.		398,370
	9,490	CSX Corp.		427,809
	7,652	Norfolk Southern Corp.		402,266
	3,556	Union Pacific Corp.		409,473
				1,637,918
		Real Estate Development (0.2%)
	10,853	CB Richard Ellis Group, Inc. (Class A)*		396,134
		Real Estate Investment Trusts (2.4%)
	7,898	Apartment Investment & Management Co. (Class A)		398,217
	7,160	Archstone-Smith Trust		423,228
	3,141	AvalonBay Communities, Inc.		373,402
	3,717	Boston Properties, Inc.		379,617
	7,186	Developers Diversified Realty Corp.		378,774
	8,634	Equity Residential		393,969
	17,005	Host Hotels & Resorts Inc.		393,156
	9,557	Kimco Realty Corp.		363,835
	9,982	Plum Creek Timber Co., Inc.		415,850
	6,598	ProLogis		375,426
	4,898	Public Storage, Inc.		376,264
	4,103	Simon Property Group, Inc.		381,743
	3,490	Vornado Realty Trust		383,342
				5,036,823
		Recreational Products (0.8%)
	12,569	Brunswick Corp.		410,126
	8,056	Electronic Arts Inc.*		381,210
	13,601	Hasbro, Inc.		427,207
	15,735	Mattel, Inc.		397,938
				1,616,481

NUMBER OF SHARES			VALUE
		Regional Banks (1.7%)
	12,204	Commerce Bancorp, Inc.	$	451,426
	6,025	Compass Bancshares, Inc.		415,605
	9,929	Fifth Third Bancorp		394,876
	10,470	First Horizon National Corp.		408,330
	3,740	M&T Bank Corp.		399,806
	8,490	Marshall & Ilsley Corp.		404,379
	6,541	Northern Trust Corp.		420,194
	12,739	Synovus Financial Corp.		391,087
	5,058	Zions Bancorporation		389,011
				3,674,714
		Restaurants (0.9%)
	9,125	Darden Restaurants, Inc.		401,409
	8,196	McDonald's Corp.		416,029
	14,647	Starbucks Corp.*		384,337
	10,763	Wendy's International, Inc.		395,540
	12,536	Yum! Brands, Inc.		410,178
				2,007,493
		Savings Banks (0.6%)
	31,902	Hudson City Bancorp, Inc.		389,842
	17,966	Sovereign Bancorp, Inc.		379,801
	9,659	Washington Mutual, Inc.		411,860
				1,181,503
		Semiconductors (2.7%)
	29,842	Advanced Micro Devices, Inc.*		426,741
	18,624	Altera Corp.		412,149
	11,357	Analog Devices, Inc.		427,477
	12,970	Broadcom Corp. (Class A)*		379,372
	17,641	Intel Corp.		419,150
	11,715	Linear Technology Corp.		423,849
	49,303	LSI Logic Corp.*		370,266
	12,694	Maxim Integrated Products, Inc.		424,107
	33,671	Micron Technology, Inc.*		421,898
	14,993	National Semiconductor Corp.		423,852
	10,812	NVIDIA Corp.*		446,644
	33,015	PMC - Sierra, Inc.*		255,206
	11,601	Texas Instruments Inc.		436,546
	15,538	Xilinx, Inc.		415,952
				5,683,209

See Notes to Financial Statements
81

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Services to the Health Industry (1.0%)
	8,454	Express Scripts, Inc.*	$	422,785
	13,065	IMS Health Inc.		419,778
	5,350	Laboratory Corp. of America Holdings*		418,691
	5,319	Medco Health Solutions, Inc.*		414,829
	8,051	Quest Diagnostics Inc.		415,834
				2,091,917
		Specialty Insurance (0.7%)
	4,596	Ambac Financial Group, Inc.		400,725
	6,888	Assurant, Inc.		405,841
	6,290	MBIA Inc.		391,364
	6,744	MGIC Investment Corp.		383,464
				1,581,394
		Specialty Stores (1.3%)
	18,963	AutoNation, Inc.*		425,530
	3,112	AutoZone, Inc.*		425,161
	10,715	Bed Bath & Beyond Inc.*		385,633
	11,712	Office Depot, Inc.*		354,874
	9,708	OfficeMax Inc.		381,524
	16,277	Staples, Inc.		386,253
	8,674	Tiffany & Co.		460,242
				2,819,217
		Specialty Telecommunications (0.8%)
	8,714	CenturyTel, Inc.		427,422
	28,365	Citizens Communications Co.		433,133
	43,477	Qwest Communications International, Inc.*		421,727
	28,102	Windstream Corp.		414,786
				1,697,068
		Steel (0.6%)
	3,880	Allegheny Technologies, Inc.		406,934
	6,568	Nucor Corp.		385,213
	3,682	United States Steel Corp.		400,418
				1,192,565

NUMBER OF SHARES			VALUE
		Telecommunication Equipment (1.0%)
	6,294	ADC Telecommunications, Inc.*	$	115,369
	12,445	Ciena Corp.*		449,638
	16,234	Corning, Inc.*		414,779
	22,166	Motorola, Inc.		392,338
	9,541	QUALCOMM, Inc.		413,984
	38,674	Tellabs, Inc.*		416,132
				2,202,240
		Tobacco (0.6%)
	5,756	Altria Group, Inc.		403,726
	6,489	Reynolds American, Inc.		423,083
	7,657	UST, Inc.		411,257
				1,238,066
		Tools/Hardware (0.6%)
	4,599	Black & Decker Corp.		406,138
	8,051	Snap-On, Inc.		406,656
	6,947	Stanley Works (The)		421,683
				1,234,477
		Trucks/Construction/Farm Machinery (1.0%)
	5,272	Caterpillar Inc.		412,798
	4,386	Cummins Inc.		443,907
	3,512	Deere & Co.		424,039
	4,717	PACCAR, Inc.		410,568
	5,037	Terex Corp.*		409,508
				2,100,820
		Wholesale Distributors (0.4%)
	8,364	Genuine Parts Co.		414,854
	4,766	Grainger (W.W.), Inc.		443,476
				858,330
		Total Common Stocks (Cost $107,782,532)		205,027,056

See Notes to Financial Statements
82

Equally-Weighted S&P 500

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF WARRANTS					VALUE
		WARRANT (0.0%)
		Aerospace & Defense
	111	Raython Co. (06/16/11) (Cost $1,354)*			$	2,047
PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investment (b) (2.5%)
		Investment Company
$	5,317	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $5,317,286)				5,317,286
Total Investments (Cost $113,101,172) (c) (d)			99.8	%		210,346,389
Other Assets in Excess of Liabilities			0.2			470,809
Net Assets			100.0	%	$	210,817,198

* Non-income producing security.

** A portion of this security is physically segregated in connection with open futures contracts in the amount of $201,000.

† Consists of one or more class of securities traded together as a unit. Stocks with attached paired trust shares.

(a) A security with total market value equal to $0 has been valued at its fair value as determind in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(b) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(c) Securities have been designated as collateral in an amount equal to $5,528,687 in connection with open futures contracts.

(d) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $99,043,291, and the aggregate gross unrealized depreciation is $1,798,074, resulting in net unrealized appreciation of $97,245,217.

FUTURES CONTRACTS OPEN AT JUNE 30, 2007:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE		UNREALIZED DEPRECIATION
	5	Long	S&P 500 Index, September 2007	$	1,894,250	$	(8,954	)
	4	Long	S&P Midcap 400 Index, September 2007		1,808,400		(9,813	)
	20	Long	S&P 500 Mini Index, September 2007		1,515,400		(32,213	)
	5	Long	S&P Midcap 400 Mini Index, September 2007		452,100		(8,637	)
Total Unrealized Depreciation						$(59,617)

See Notes to Financial Statements
83

Equally-Weighted S&P 500

Summary of Investments n June 30, 2007 (unaudited)

SECTOR	VALUE		PERCENT OF TOTAL INVESTMENTS
Finance	$	36,386,552		17.3	%
Electronic Technology		22,342,928		10.6
Health Technology		15,228,036		7.2
Retail Trade		15,054,435		7.2
Consumer Non-Durables		14,980,067		7.1
Utilities		13,315,207		6.3
Consumer Services		11,933,810		5.7
Technology Services		11,301,860		5.4
Producer Manufacturing		10,929,619		5.2
Consumer Durables		8,882,264		4.2
Process Industries		8,351,266		4.0
Industrial Services		7,142,927		3.4
Energy Minerals		6,938,543		3.3

SECTOR	VALUE			PERCENT OF TOTAL INVESTMENTS
Health Services	$	5,382,508			2.6	%
Investment Company		5,317,286			2.5
Communications		3,802,980			1.8
Commercial Services		3,646,059			1.7
Transportation		3,276,369			1.6
Non-Energy Minerals		3,228,582			1.5
Distribution Services		2,905,091			1.4
	$	210,346,389	*		100.0	%

* Does not include open futures contracts with an underlying face amount of $5,670,150 with total unrealized depreciation of $59,617.

See Notes to Financial Statements
84

Growth

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (98.2%)
		Air Freight/Couriers (3.6%)
	20,057	C.H. Robinson Worldwide, Inc.	$	1,053,394
	17,720	Expeditors International of Washington, Inc.		731,836
				1,785,230
		Apparel/Footwear (1.5%)
	12,797	Nike, Inc. (Class B)		745,937
		Apparel/Footwear Retail (1.7%)
	11,975	Abercrombie & Fitch Co. (Class A)		873,935
		Biotechnology (1.5%)
	9,889	Genentech, Inc.*		748,202
		Broadcasting (2.9%)
	53,291	Grupo Televisa S.A. (ADR) (Mexico)		1,471,364
		Casino/Gaming (2.5%)
	14,025	Wynn Resorts, Ltd.*		1,257,902
		Chemicals: Agricultural (6.0%)
	44,546	Monsanto Co.		3,008,637
		Computer Peripherals (0.0%)
	20,100	Seagate Technology Inc. (Escrow) (a)		0
		Computer Processing Hardware (2.6%)
	10,763	Apple Inc.*		1,313,517
		Construction Materials (1.5%)
	19,885	Cemex SAB de C.V. (ADR) (Mexico)*		733,756
		Discount Stores (7.6%)
	24,904	Costco Wholesale Corp.		1,457,382
	13,779	Sears Holdings Corp.*		2,335,540
				3,792,922

NUMBER OF SHARES			VALUE
		Financial Conglomerates (10.3%)
	35,198	American Express Co.	$	2,153,414
	75,304	Brookfield Asset Management Inc. (Class A) (Canada)		3,004,630
				5,158,044
		Financial Publishing/ Services (3.9%)
	7,722	McGraw-Hill Companies, Inc. (The)		525,714
	22,641	Moody's Corp.		1,408,270
				1,933,984
		Food Retail (1.5%)
	29,535	Tesco PLC (ADR) (United Kingdom)		743,975
		Hotels/Resorts/Cruiselines (2.9%)
	8,187	Accor S.A. (France)		728,143
	16,474	Marriott International, Inc. (Class A)		712,336
				1,440,479
		Internet Retail (4.7%)
	34,652	Amazon.com, Inc.*		2,370,543
		Internet Software/Services (9.1%)
	6,291	Google Inc. (Class A)*		3,292,584
	45,754	Yahoo! Inc.*		1,241,306
				4,533,890
		Investment Banks/Brokers (1.5%)
	1,384	Chicago Mercantile Exchange Holdings Inc.		739,554
		Investment Managers (0.1%)
	2,000	Fortress Investment Group LLC (Class A)		47,640
		Major Telecommunications (1.0%)
	23,099	Sprint Nextel Corp.		478,380
		Medical Specialties (1.6%)
	14,787	Dade Behring Holdings, Inc.		785,485
		Miscellaneous Commercial Services (1.8%)
	13,969	Corporate Executive Board Co. (The)		906,728

See Notes to Financial Statements
85

Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Multi-Line Insurance (1.5%)
	14,946	Loews Corp.	$	761,947
		Oil & Gas Production (3.7%)
	33,079	Ultra Petroleum Corp. (Canada)*		1,827,284
		Other Consumer Services (4.7%)
	73,087	eBay Inc.*		2,351,940
		Personnel Services (1.4%)
	16,650	Monster Worldwide Inc.*		684,315
		Property - Casualty Insurers (2.8%)
	382	Berkshire Hathaway Inc. (Class B)*		1,377,110
		Restaurants (3.0%)
	14,922	McDonald's Corp.		757,441
	28,276	Starbucks Corp.*		741,962
				1,499,403
		Steel (2.2%)
	18,607	Nucor Corp.		1,091,301
		Telecommunication Equipment (2.3%)
	5,878	Research In Motion Ltd. (Canada)*		1,175,541
		Water Utilities (0.9%)
	5,845	Veolia Environnement (ADR) (France)		457,722
		Wholesale Distributors (1.3%)
	180,000	Li & Fung Ltd. (Hong Kong)		648,028
		Wireless Telecommunications (4.6%)
	27,703	America Movil SAB de C.V. (Series L) (ADR) (Mexico)*		1,715,647
	10,548	China Mobile Ltd. (ADR) (Hong Kong)		568,537
				2,284,184
		Total Common Stocks (Cost $37,991,684)		49,028,879

NUMBER OF RIGHTS					VALUE
		Rights (0.0%)
		Water Utilities
	5,845	Veolia Environnement (France) (Cost $0)			$	6,085
PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investment (b) (1.8%)
		Investment Company
$	893	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $893,185)				893,185
Total Investments (Cost $38,884,869) (c)			100.0	%		49,928,149
Other Assets in Excess of Liabilities			0.0			10,084
Net Assets			100.0	%	$	49,938,233

ADR American Depositary Receipt.

* Non-income producing security.

(a) A security with total market value equal to $0 has been valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(b) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $12,277,101 and the aggregate gross unrealized depreciation is $1,233,821, resulting in net unrealized appreciation of $11,043,280.

See Notes to Financial Statements
86

Growth

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Financial Conglomerates	$	5,158,044		10.3	%
Internet Software/Services		4,533,890		9.1
Discount Stores		3,792,922		7.6
Chemicals: Agricultural		3,008,637		6.0
Internet Retail		2,370,543		4.7
Other Consumer Services		2,351,940		4.7
Wireless Telecommunications		2,284,184		4.6
Financial Publishing/ Services		1,933,984		3.9
Oil & Gas Production		1,827,284		3.7
Air Freight/Couriers		1,785,230		3.6
Restaurants		1,499,403		3.0
Broadcasting		1,471,364		2.9
Hotels/Resorts/ Cruiselines		1,440,479		2.9
Property - Casualty Insurers		1,377,110		2.8
Computer Processing Hardware		1,313,517		2.6
Casino/Gaming		1,257,902		2.5

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Telecommunication Equipment	$	1,175,541		2.3	%
Steel		1,091,301		2.2
Miscellaneous Commercial Services		906,728		1.8
Investment Company		893,185		1.8
Apparel/Footwear Retail		873,935		1.7
Medical Specialties		785,485		1.6
Multi-Line Insurance		761,947		1.5
Biotechnology		748,202		1.5
Apparel/Footwear		745,937		1.5
Food Retail		743,975		1.5
Investment Banks/Brokers		739,554		1.5
Construction Materials		733,756		1.5
Personnel Services		684,315		1.4
Wholesale Distributors		648,028		1.3
Major Telecommunications		478,380		1.0
Water Utilities		463,807		0.9
Investment Managers		47,640		0.1
	$	49,928,149		100.0	%

See Notes to Financial Statements
87

Focus Growth

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (97.8%)
		Air Freight/Couriers (5.4%)
	99,425	C.H. Robinson Worldwide, Inc.	$	5,221,801
	91,278	Expeditors International of Washington, Inc.		3,769,781
				8,991,582
		Apparel/Footwear Retail (2.1%)
	47,526	Abercrombie & Fitch Co. (Class A)		3,468,447
		Broadcasting (4.2%)
	255,097	Grupo Televisa S.A. (ADR) (Mexico)		7,043,228
		Casino/Gaming (3.0%)
	54,755	Wynn Resorts, Ltd.*		4,910,976
		Chemicals: Agricultural (6.7%)
	165,535	Monsanto Co.		11,180,234
		Computer Processing Hardware (3.3%)
	44,646	Apple Inc.*		5,448,598
		Discount Stores (9.0%)
	102,493	Costco Wholesale Corp.		5,997,890
	52,980	Sears Holdings Corp.*		8,980,110
				14,978,000
		Financial Conglomerates (12.0%)
	131,163	American Express Co.		8,024,552
	296,334	Brookfield Asset Management Inc. (Class A) (Canada)		11,823,727
				19,848,279
		Financial Publishing/ Services (3.5%)
	94,652	Moody's Corp.		5,887,354
		Hotels/Resorts/ Cruiselines (3.5%)
	65,535	Accor S.A. (France)		5,828,609
		Internet Retail (5.6%)
	136,724	Amazon.com, Inc.*		9,353,289

NUMBER OF SHARES			VALUE
		Internet Software/Services (9.9%)
	21,794	Google Inc. (Class A)*	$	11,406,544
	183,321	Yahoo! Inc.*		4,973,499
				16,380,043
		Miscellaneous Commercial Services (2.3%)
	58,576	Corporate Executive Board Co. (The)		3,802,168
		Oil & Gas Production (6.0%)
	180,923	Ultra Petroleum Corp. (Canada)*		9,994,187
		Other Consumer Services (5.7%)
	292,055	eBay Inc.*		9,398,330
		Personnel Services (1.8%)
	74,457	Monster Worldwide Inc.*		3,060,183
		Property - Casualty Insurers (3.4%)
	1,552	Berkshire Hathaway Inc. (Class B)*		5,594,960
		Steel (2.7%)
	75,338	Nucor Corp.		4,418,574
		Telecommunication Equipment (2.9%)
	24,462	Research In Motion Ltd. (Canada)*		4,892,155
		Wireless Telecommunications (4.8%)
	129,071	America Movil SAB de C.V. (Series L) (ADR) (Mexico)*		7,993,367
		Total Common Stocks (Cost $135,018,804)		162,472,563

See Notes to Financial Statements
88

Focus Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (2.5%)
		Investment Company
$	4,235	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $4,235,008)			$	4,235,008
Total Investments (Cost $139,253,812) (b)			100.3	%		166,707,571
Liabilities in Excess of Other Assets			(0.3	)		(520,797	)
Net Assets			100.0	%	$	166,186,774

ADR American Depositary Receipt.

* Non-income producing security.

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $35,252,163 and the aggregate gross unrealized depreciation is $7,798,404, resulting in net unrealized appreciation of $27,453,759.

See Notes to Financial Statements
89

Focus Growth

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Financial Conglomerates	$	19,848,279		12.0	%
Internet Software/Services		16,380,043		9.8
Discount Stores		14,978,000		9.0
Chemicals: Agricultural		11,180,234		6.7
Oil & Gas Production		9,994,187		6.0
Other Consumer Services		9,398,330		5.6
Internet Retail		9,353,289		5.6
Air Freight/Couriers		8,991,582		5.4
Wireless Telecommunications		7,993,367		4.8
Broadcasting		7,043,228		4.2
Financial Publishing/ Services		5,887,354		3.5
Hotels/Resorts/ Cruiselines		5,828,609		3.5

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Property - Casualty Insurers	$	5,594,960		3.4	%
Computer Processing Hardware		5,448,598		3.3
Casino/Gaming		4,910,976		2.9
Telecommunication Equipment		4,892,155		2.9
Steel		4,418,574		2.7
Investment Company		4,235,008		2.5
Miscellaneous Commercial Services		3,802,168		2.3
Apparel/Footwear Retail		3,468,447		2.1
Personnel Services		3,060,183		1.8
	$	166,707,571		100.0	%

See Notes to Financial Statements
90

Capital Opportunities

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (97.1%)
		Air Freight/Couriers (5.3%)
	20,187	C.H. Robinson Worldwide, Inc.	$	1,060,221
	18,686	Expeditors International of Washington, Inc.		771,732
				1,831,953
		Apparel/Footwear Retail (2.7%)
	12,545	Abercrombie & Fitch Co. (Class A)		915,534
		Biotechnology (2.2%)
	13,147	Techne Corp.*		752,140
		Broadcasting (3.0%)
	37,428	Grupo Televisa S.A. (ADR) (Mexico)		1,033,387
		Casino/Gaming (2.5%)
	9,569	Wynn Resorts, Ltd.*		858,244
		Chemicals: Agricultural (6.1%)
	31,472	Monsanto Co.		2,125,619
		Discount Stores (7.6%)
	17,580	Costco Wholesale Corp.		1,028,782
	9,522	Sears Holdings Corp.*		1,613,979
				2,642,761
		Financial Conglomerates (10.3%)
	24,243	American Express Co.		1,483,186
	52,053	Brookfield Asset Management Inc. (Class A) (Canada)		2,076,915
				3,560,101
		Financial Publishing/ Services (3.8%)
	20,941	Moody's Corp.		1,302,530
		Hotels/Resorts/Cruiselines (2.7%)
	10,385	Accor S.A. (France)		923,630
		Internet Retail (4.8%)
	24,456	Amazon.com, Inc.*		1,673,034

NUMBER OF SHARES			VALUE
		Internet Software/Services (9.1%)
	4,349	Google Inc. (Class A)*	$	2,276,180
	32,196	Yahoo! Inc.*		873,477
				3,149,657
		Investment Banks/Brokers (2.4%)
	12,291	Greenhill & Co., Inc.		844,515
		Investment Trusts/Mutual Funds (3.0%)
	52,750	Aeroplan Income Fund (Units)† (Canada)		1,052,323
		Medical Specialties (3.1%)
	19,961	Dade Behring Holdings, Inc.		1,060,328
		Miscellaneous Commercial Services (2.8%)
	14,799	Corporate Executive Board Co. (The)		960,603
		Oil & Gas Production (4.2%)
	26,544	Ultra Petroleum Corp. (Canada)*		1,466,291
		Other Consumer Services (4.8%)
	51,581	eBay Inc.*		1,659,877
		Personnel Services (2.3%)
	19,606	Monster Worldwide Inc.*		805,807
		Property - Casualty Insurers (2.7%)
	264	Berkshire Hathaway Inc. (Class B)*		951,720
		Specialty Telecommunications (2.1%)
	24,032	Cogent Communications Group, Inc.*		717,836
		Steel (2.2%)
	12,910	Nucor Corp.		757,172
		Water Utilities (2.0%)
	24,621	Nalco Holding Co.		675,846
		Wholesale Distributors (2.0%)
	196,000	Li & Fung Ltd. (Hong Kong)		705,631

See Notes to Financial Statements
91

Capital Opportunities

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Wireless Telecommunications (3.4%)
	19,081	America Movil SAB de C.V. (Series L) (ADR) (Mexico)*	$	1,181,686
		Total Common Stocks (Cost $26,358,193)		33,608,225

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (3.1%)
		Investment Company
$	1,062	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $1,061,589)			$	1,061,589
Total Investments (Cost $27,419,782) (b)			100.2	%		34,669,814
Liabilities in Excess of Other Assets			(0.2	)		(78,461	)
Net Assets			100.0	%	$	34,591,353

ADR American Depositary Receipt.

* Non-income producing security.

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

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $8,425,604 and the aggregate gross unrealized depreciation is $1,175,572, resulting in net unrealized appreciation of $7,250,032.

See Notes to Financial Statements
92

Capital Opportunities

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Financial Conglomerates	$	3,560,101		10.3	%
Internet Software/Services		3,149,657		9.1
Discount Stores		2,642,761		7.6
Chemicals: Agricultural		2,125,619		6.1
Air Freight/Couriers		1,831,953		5.3
Internet Retail		1,673,034		4.8
Other Consumer Services		1,659,877		4.8
Oil & Gas Production		1,466,291		4.2
Financial Publishing/ Services		1,302,530		3.8
Wireless Telecommunications		1,181,686		3.4
Investment Company		1,061,589		3.1
Medical Specialties		1,060,328		3.1
Investment Trusts/ Mutual Funds		1,052,323		3.0
Broadcasting		1,033,387		3.0

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Miscellaneous Commercial Services	$	960,603		2.8	%
Property - Casualty Insurers		951,720		2.7
Hotels/Resorts/ Cruiselines		923,630		2.7
Apparel/Footwear Retail		915,534		2.6
Casino/Gaming		858,244		2.5
Investment Banks/Brokers		844,515		2.4
Personnel Services		805,807		2.3
Steel		757,172		2.2
Biotechnology		752,140		2.2
Specialty Telecommunications		717,836		2.1
Wholesale Distributors		705,631		2.0
Water Utilities		675,846		1.9
	$	34,669,814		100.0	%

See Notes to Financial Statements
93

Global Equity

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (97.2%)
		Australia (2.8%)
		Data Processing Services
	118,500	Computershare Ltd.	$	1,133,974
		Other Consumer Services
	146,000	A.B.C. Learning Centres Ltd.		856,347
		Total Australia		1,990,321
		Bermuda (3.7%)
		Insurance Brokers/Services
	33,900	Willis Group Holdings Ltd.		1,493,634
		Multi-Line Insurance
	27,815	Axis Capital Holdings Ltd.		1,130,680
		Total Bermuda		2,624,314
		Canada (1.1%)
		Food: Specialty/Candy
	71,600	SunOpta Inc.*		798,340
		France (1.1%)
		Pharmaceuticals: Other
	15,800	Ipsen S.A.		812,521
		Germany (4.9%)
		Apparel/Footwear
	21,200	Adidas AG		1,342,116
		Financial Conglomerates
	16,000	Hypo Real Estate Holding AG		1,039,551
		Medical Specialties
	13,500	Fresenius AG		1,039,903
		Total Germany		3,421,570
		Greece (3.0%)
		Regional Banks
	36,931	EFG Eurobank Ergasias		1,209,485
		Wireless Telecommunications
	30,400	Cosmote Mobile Telecommunications S.A.		941,290
		Total Greece		2,150,775

NUMBER OF SHARES			VALUE
		Hong Kong (4.6%)
		Apparel/Footwear Retail
	142,500	Esprit Holdings Ltd.	$	1,807,881
		Wholesale Distributors
	386,800	Li & Fung Ltd. (Hong Kong)		1,392,541
		Total Hong Kong		3,200,422
		India (0.9%)
		Construction Materials
	27,400	ACC Limited		631,754
		Israel (2.0%)
		Pharmaceuticals: Other
	33,700	Teva Pharmaceutical Industries Ltd. (ADR)		1,390,125
		Italy (2.6%)
		Major Banks
	204,900	UniCredito Italiano SpA		1,838,440
		Japan (3.0%)
		Home Building
	25,200	Daito Trust Construction Co., Ltd.		1,202,732
		Industrial Machinery
	64,800	OSG Corp.		894,629
		Total Japan		2,097,361
		Mexico (1.1%)
		Beverages: Non-Alcoholic
	19,800	Fomento Economico Mexicano, S.A.B. de C.V. (ADR) (Units)†		778,536
		Singapore (5.3%)
		Airlines
	95,100	Singapore Airlines Ltd.		1,168,320
		Electronic Components
	65,860	Flextronics International Ltd.*		711,288
		Marine Shipping
	752,000	Cosco Corp (Singapore) Ltd.		1,837,862
		Total Singapore		3,717,470

See Notes to Financial Statements
94

Global Equity

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		South Africa (1.2%)
		Pharmaceuticals: Generic Drugs
	156,500	Aspen Pharmacare Holdings Ltd.*	$	816,092
		Spain (6.8%)
		Apparel/Footwear Retail
	14,900	Industria de Diseno Textil, S.A.		882,586
		Major Banks
	41,265	Banco Bilbao Vizcaya Argentaria, S.A.		1,016,359
	77,700	Banco Santander Central Hispano S.A.		1,439,523
				2,455,882
		Major Telecommunications
	63,928	Telefonica S.A.		1,430,938
		Total Spain		4,769,406
		Switzerland (2.5%)
		Chemicals: Specialty
	7,400	Lonza Group AG (Registered Shares)		682,257
		Financial Conglomerates
	17,700	UBS AG (Registered Shares)		1,066,667
		Total Switzerland		1,748,924
		Taiwan (1.0%)
		Semiconductors
	66,010	Taiwan Semiconductor Manufacturing Co., Ltd. (ADR)		734,696
		United Kingdom (12.2%)
		Beverages: Alcoholic
	70,200	SABMiller PLC		1,784,307

NUMBER OF SHARES			VALUE
		Investment Managers
	69,700	BlueBay Asset Management PLC*	$	692,687
	78,394	Man Group PLC		958,515
	322,100	RAB Capital PLC		651,530
				2,302,732
		Investment Trusts/Mutual Funds
	39,300	KKR Private Equity Investors LP		884,250
		Major Banks
	49,100	Standard Chartered PLC		1,606,823
		Miscellaneous Commercial Services
	56,470	Intertek Group PLC		1,115,608
		Pharmaceuticals: Other
	34,672	Shire PLC		863,872
		Total United Kingdom		8,557,592
		United States (37.4%)
		Apparel/Footwear
	17,202	Under Armour, Inc. (Class A)*		785,271
		Beverages: Non-Alcoholic
	13,500	PepsiCo, Inc.		875,475
		Biotechnology
	13,100	Genentech, Inc.*		991,146
	23,830	Gilead Sciences, Inc.*		923,889
				1,915,035
		Computer Processing Hardware
	17,955	Apple Inc.*		2,191,228
		Data Processing Services
	51,000	Western Union Co.		1,062,330
		Electric Utilities
	18,000	Constellation Energy Group		1,569,060
		Electronic Components
	43,400	Amphenol Corporation (Class A)		1,547,210
		Financial Conglomerates
	15,000	Prudential Financial, Inc.		1,458,450

See Notes to Financial Statements
95

Global Equity

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
		Investment Banks/Brokers
	4,800	Goldman Sachs Group, Inc. (The)	$	1,040,400
	12,200	Merrill Lynch & Co., Inc.		1,019,676
				2,060,076
		Life/Health Insurance
	24,500	AFLAC Inc.		1,259,300
		Media Conglomerates
	82,500	News Corp. (Class A)		1,749,825
		Medical Specialties
	13,350	Bard (C.R.), Inc.		1,103,111
	25,210	Thermo Fisher Scientific, Inc.*		1,303,861
	22,300	West Pharmaceutical Services, Inc.		1,051,445
				3,458,417
		Miscellaneous Commercial Services
	27,200	FTI Consulting Inc.*		1,034,416
		Real Estate Development
	30,300	CB Richard Ellis Group, Inc. (Class A)*		1,105,950
		Specialty Stores
	32,200	Staples, Inc.		764,106
		Telecommunication Equipment
	30,280	Corning, Inc.*		773,654
		Wireless Telecommunications
	34,400	Metropcs Communications Inc.*		1,136,576
	18,900	NII Holdings Inc.*		1,525,986
				2,662,562
		Total United States		26,272,365
		Total Common Stocks (Cost $49,894,377)		68,351,024

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (3.1%)
		Investment Company
$	2,159	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $2,159,294)			$	2,159,294
Total Investments (Cost $52,053,671) (b)			100.3	%		70,510,318
Liabilities in Excess of Other Assets			(0.3	)		(188,397	)
Net Assets			100.0	%	$	70,321,921

ADR American Depositary Receipt.

* Non-income producing security.

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

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $19,156,043 and the aggregate gross unrealized depreciation is $699,396, resulting in net unrealized appreciation of $18,456,647.

See Notes to Financial Statements
96

Global Equity

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Major Banks	$	5,901,145		8.4	%
Medical Specialties		4,498,320		6.4
Wireless Telecommunications		3,603,852		5.1
Financial Conglomerates		3,564,668		5.1
Pharmaceuticals: Other		3,066,518		4.3
Apparel/Footwear Retail		2,690,467		3.8
Investment Managers		2,302,732		3.3
Electronic Components		2,258,498		3.2
Data Processing Services		2,196,304		3.1
Computer Processing Hardware		2,191,228		3.1
Investment Company		2,159,294		3.1
Miscellaneous Commercial Services		2,150,024		3.0
Apparel/Footwear		2,127,387		3.0
Investment Banks/Brokers		2,060,076		2.9
Biotechnology		1,915,035		2.7
Marine Shipping		1,837,862		2.6
Beverages: Alcoholic		1,784,307		2.5
Media Conglomerates		1,749,825		2.5
Beverages: Non-Alcoholic		1,654,011		2.3
Electric Utilities		1,569,060		2.2
Insurance Brokers/ Services		1,493,634		2.1

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Major Telecommunications	$	1,430,938		2.0	%
Wholesale Distributors		1,392,541		2.0
Life/Health Insurance		1,259,300		1.8
Regional Banks		1,209,485		1.7
Home Building		1,202,732		1.7
Airlines		1,168,320		1.7
Multi-Line Insurance		1,130,680		1.6
Real Estate Development		1,105,950		1.6
Industrial Machinery		894,629		1.3
Investment Trusts/Mutual Funds		884,250		1.3
Other Consumer Services		856,347		1.2
Pharmaceuticals: Generic Drugs		816,092		1.2
Food: Specialty/Candy		798,340		1.1
Telecommunication Equipment		773,654		1.1
Specialty Stores		764,106		1.1
Semiconductors		734,696		1.0
Chemicals: Specialty		682,257		1.0
Construction Materials		631,754		0.9
	$	70,510,318		100.0	%

See Notes to Financial Statements
97

Developing Growth

Portfolio of Investments n June 30, 2007 (unaudited)

NUMBER OF SHARES			VALUE
		Common Stocks (99.4%)
		Advertising/Marketing Services (2.3%)
	13,180	Focus Media Holdings Ltd. (ADR) (Cayman Islands)*	$	665,590
	7,479	Lamar Advertising Co. (Class A)*		469,382
				1,134,972
		Air Freight/Couriers (5.1%)
	28,291	C.H. Robinson Worldwide, Inc.		1,485,843
	26,154	Expeditors International of Washington, Inc.		1,080,160
				2,566,003
		Apparel/Footwear Retail (2.5%)
	17,547	Abercrombie & Fitch Co. (Class A)		1,280,580
		Biotechnology (3.2%)
	9,295	Gen-Probe Inc.*		561,604
	18,290	Techne Corp.*		1,046,371
				1,607,975
		Broadcasting (2.8%)
	51,095	Grupo Televisa S.A. (ADR) (Mexico)		1,410,733
		Casino/Gaming (2.4%)
	13,583	Wynn Resorts, Ltd.*		1,218,259
		Chemicals: Major Diversified (0.9%)
	9,527	Cabot Corp.		454,247
		Construction Materials (1.3%)
	8,604	Texas Industries, Inc.		674,640
		Data Processing Services (1.5%)
	18,927	Global Payments Inc.		750,456
		Electronic Production Equipment (1.1%)
	14,195	Tessera Technologies, Inc.*		575,607

NUMBER OF SHARES			VALUE
		Financial Conglomerates (1.6%)
	23,063	Leucadia National Corp.*	$	812,971
		Gas Distributors (1.1%)
	10,292	Questar Corp.		543,932
		Home Building (2.7%)
	11,826	Desarrolladora Homex S.A. de C.V. (ADR) (Mexico)*		716,537
	928	NVR, Inc.*		630,808
				1,347,345
		Hotels/Resorts/ Cruiselines (3.4%)
	12,689	Choice Hotels International, Inc.		501,469
	13,581	Hilton Hotels Corp.		454,556
	30,576	InterContinental Hotels Group PLC (ADR) (Britain)		757,673
				1,713,698
		Insurance Brokers/ Services (2.6%)
	15,713	Brown & Brown, Inc.		395,025
	21,374	ChoicePoint, Inc.*		907,326
				1,302,351
		Internet Retail (1.0%)
	7,220	Amazon.com, Inc.*		493,920
		Internet Software/ Services (7.7%)
	5,107	Baidu.com, Inc. (ADR) (Cayman Islands)*		857,874
	11,421	Equinix Inc.*		1,044,679
	4,007	NHN Corp. (South Korea)*		730,477
	9,714	SAVVIS Inc.*		480,940
	185,000	Tencent Holdings Ltd. (Cayman Islands)		745,290
				3,859,260
		Investment Managers (3.9%)
	29,285	Calamos Asset Management Inc. (Class A)		748,232

See Notes to Financial Statements
98

Developing Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

NUMBER OF SHARES			VALUE
	2,124	Fortress Investment Group LLC (Class A)	$	50,594
	42,402	Janus Capital Group, Inc.		1,180,472
				1,979,298
		Investment Trusts/ Mutual Funds (3.1%)
	78,862	Aeroplan Income Fund (Units) † (Canada)		1,573,238
		Media Conglomerates (1.5%)
	31,950	Discovery Holding Company (Class A)*		734,531
		Medical Specialties (2.9%)
	27,920	Dade Behring Holdings, Inc.		1,483,110
		Miscellaneous Commercial Services (4.5%)
	21,295	Corporate Executive Board Co. (The)		1,382,259
	34,279	Iron Mountain Inc.*		895,710
				2,277,969
		Miscellaneous Manufacturing (1.6%)
	20,760	Pentair, Inc.		800,713
		Oil & Gas Production (6.8%)
	29,302	Southwestern Energy Co.*		1,303,939
	38,149	Ultra Petroleum Corp. (Canada)*		2,107,351
				3,411,290
		Other Consumer Services (4.3%)
	20,175	Apollo Group, Inc. (Class A)*		1,178,825
	4,509	ITT Educational Services, Inc.*		529,266
	9,322	Weight Watchers International, Inc.		473,930
				2,182,021
		Packaged Software (1.4%)
	16,357	Salesforce.com Inc.*		701,061
		Personnel Services (2.2%)
	27,481	Monster Worldwide Inc.*		1,129,469

NUMBER OF SHARES			VALUE
		Property - Casualty Insurers (1.5%)
	1,859	Alleghany Corp.*	$	755,683
		Pulp & Paper (1.0%)
	13,631	MeadWestvaco Corp.		481,447
		Real Estate Development (2.7%)
	16,077	Forest City Enterprises, Inc. (Class A)		988,414
	8,308	St. Joe Co. (The)		384,993
				1,373,407
		Restaurants (1.5%)
	20,334	Wendy's International, Inc.		747,275
		Savings Banks (1.3%)
	37,520	People's United Financial Inc.		665,230
		Services to the Health Industry (1.9%)
	21,889	Stericycle, Inc.*		973,185
		Specialty Stores (2.7%)
	7,008	AutoZone, Inc.*		957,433
	12,956	PetSmart, Inc.		420,422
				1,377,855
		Specialty Telecommunications (1.9%)
	26,747	Crown Castle International Corp.*		970,114
		Steel (1.7%)
	11,792	Chaparral Steel Co.		847,491
		Water Utilities (2.5%)
	45,300	Nalco Holding Co.		1,243,485
		Wholesale Distributors (2.0%)
	278,000	Li & Fung Ltd. (Hong Kong)		1,000,844
		Wireless Telecommunications (3.3%)
	20,230	NII Holdings Inc.*		1,633,370
		Total Common Stocks (Cost $41,182,442)		50,089,035

See Notes to Financial Statements
99

Developing Growth

Portfolio of Investments n June 30, 2007 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		Short-Term Investment (a) (1.2%)
		Investment Company
$	624	Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class (Cost $623,856)			$	623,856
Total Investments (Cost $41,806,298) (b)			100.6	%		50,712,891
Liabilities in Excess of Other Assets			(0.6	)		(314,829	)
Net Assets			100.0	%	$	50,398,062

ADR American Depositary Receipt.

* Non-income producing security.

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

(a) See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio - Institutional Class.

(b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $9,806,767 and the aggregate gross unrealized depreciation is $900,174, resulting in net unrealized appreciation of $8,906,593.

See Notes to Financial Statements
100

Developing Growth

Summary of Investments n June 30, 2007 (unaudited)

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Internet Software/Services	$	3,859,260		7.6	%
Oil & Gas Production		3,411,290		6.7
Air Freight/Couriers		2,566,003		5.1
Miscellaneous Commercial Services		2,277,969		4.5
Other Consumer Services		2,182,021		4.3
Investment Managers		1,979,298		3.9
Hotels/Resorts/Cruiselines		1,713,698		3.4
Wireless Telecommunications		1,633,370		3.2
Biotechnology		1,607,975		3.2
Investment Trusts/ Mutual Funds		1,573,238		3.1
Medical Specialties		1,483,110		2.9
Broadcasting		1,410,733		2.8
Specialty Stores		1,377,855		2.7
Real Estate Development		1,373,407		2.7
Home Building		1,347,345		2.7
Insurance Brokers/ Services		1,302,351		2.6
Apparel/Footwear Retail		1,280,580		2.5
Water Utilities		1,243,485		2.5
Casino/Gaming		1,218,259		2.4
Advertising/Marketing Services		1,134,972		2.2
Personnel Services		1,129,469		2.2
Wholesale Distributors		1,000,844		2.0

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Services to the Health Industry	$	973,185		1.9	%
Specialty Telecommunications		970,114		1.9
Steel		847,491		1.7
Financial Conglomerates		812,971		1.6
Miscellaneous Manufacturing		800,713		1.6
Property - Casualty Insurers		755,683		1.5
Data Processing Services		750,456		1.5
Restaurants		747,275		1.5
Media Conglomerates		734,531		1.4
Packaged Software		701,061		1.4
Construction Materials		674,640		1.3
Savings Banks		665,230		1.3
Investment Company		623,856		1.2
Electronic Production Equipment		575,607		1.1
Gas Distributors		543,932		1.1
Internet Retail		493,920		1.0
Pulp & Paper		481,447		0.9
Chemicals: Major Diversified		454,247		0.9
	$	50,712,891		100.0	%

See Notes to Financial Statements
101

Morgan Stanley Select Dimensions Investment Series

Financial Statements

Statements of Assets and Liabilities
For the six months ended June 30, 2007 (unaudited)

	Money Market		Flexible Income			Balanced			Utilities			Dividend Growth			Equally- Weighted S&P 500
Assets:
Investments in securities, at value*	$	120,175,749	$	50,685,530		$	78,828,011		$	68,019,303		$	229,826,973		$	204,211,250
Investments in affiliates**		—		2,610,916			1,058,117			1,721,365			4,879,672			6,135,139
Cash		3,193		—			—			—			—			—
Receivable for:
Investments sold		—		88,900			2,510,221			209,035			301,091			653,303
Shares of beneficial interest sold		683,795		—			—			—			—			153,781
Interest		201,659		566,137			264,590			—			—			—
Dividends		—		—			85,408			129,887			177,424			220,401
Periodic interest receivables on swap contracts		—		38,287			24,837			—			—			—
Foreign withholding taxes reclaimed		—		—			—			—			36,402			—
Principal paydowns		—		14			6,378			—			—			—
Dividends from affiliates		—		2,224			418			1,216			2,589			3,957
Compensated forward foreign currency contracts		—		541			—			—			—			—
Unrealized appreciation on open swap contracts		—		10,096			1,928			—			—			—
Unrealized appreciation on open forward foreign currency contracts		—		927			—			—			—			—
Prepaid expenses and other assets		5,696		29,864			3,837			3,496			12,431			10,219
Total Assets		121,070,092		54,033,436			82,783,745			70,084,302			235,236,582			211,388,050
Liabilities:
Payable for:
Investments purchased		—		1,084,998			2,490,698			38,412			—			—
Shares of beneficial interest redeemed		648,164		60,870			119,945			163,250			848,481			454,121
Investment advisory fee		42,649		13,875			34,733			33,467			107,035			21,192
Variation margin		—		52,797			12,453			—			—			8,550
Periodic interest payments on swap contracts		—		39,664			25,411			—			—			—
Distribution fee		15,347		5,290			6,220			3,957			11,093			23,787
Administration fee		4,739		3,469			5,343			4,697			15,712			14,128
Transfer agent fee		250		250			250			250			250			250
Unrealized depreciation on open swap contracts		—		187,699			118,695			—			—			—
Payable to bank		—		55,654			—			—			—			4,685
Written call options outstanding, at value		—		23,965			—			—			—			—
Unrealized depreciation on open forward foreign currency contracts		—		5,796			—			—			—			—
Accrued expenses and other payables		35,521		66,261			46,055			28,684			38,728			44,139
Total Liabilities		746,670		1,600,588			2,859,803			272,717			1,021,299			570,852
Net Assets	$	120,323,422	$	52,432,848		$	79,923,942		$	69,811,585		$	234,215,283		$	210,817,198
Composition of Net Assets:
Paid-in-capital	$	120,323,336	$	77,469,050		$	63,346,804		$	51,341,050		$	260,870,804		$	99,950,447
Accumulated undistributed net investment income (net investment loss)		86		28,790			(218,897	)		439			1,448			1,379,895
Accumulated net realized gain (loss)		—		(20,688,041	)		4,378,614			(15,665,542	)		(62,012,503	)		12,301,256
Net unrealized appreciation (depreciation)		—		(4,376,951	)		12,417,421			34,135,638			35,355,534			97,185,600
Net Assets	$	120,323,422	$	52,432,848		$	79,923,942		$	69,811,585		$	234,215,283		$	210,817,198
*Cost	$	120,175,749	$	54,938,531		$	66,577,146		$	33,883,665		$	194,471,439		$	107,612,133
Class X Shares:
Net Assets	$	40,284,918	$	26,786,828		$	49,960,750		$	51,167,869		$	180,791,595		$	96,589,219
Shares Outstanding (unlimited authorized shares of $.01 par value)		40,284,906		3,719,355			2,959,495			1,818,122			9,437,441			3,555,109
Net Asset Value Per Share	$	1.00	$	7.20		$	16.88		$	28.14		$	19.16		$	27.17
Class Y Shares:
Net Assets	$	80,038,504	$	25,646,020		$	29,963,192		$	18,643,716		$	53,423,688		$	114,227,979
Shares Outstanding (unlimited authorized shares of $.01 par value)		80,038,430		3,572,651			1,779,673			662,950			2,792,827			4,247,599
Net Asset Value Per Share	$	1.00	$	7.18		$	16.84		$	28.12		$	19.13		$	26.89

** Cost of $2,610,916, $770,430, $1,721,365, $4,879,672, $5,489,039, $893,185, $4,235,008, $1,061,589, $2,159,294 and $623,856, respectively.

# In foreign currency at value with cost of $72,369.

See Notes to Financial Statements
102

	Growth			Focus Growth			Capital Opportunities			Global Equity			Developing Growth
Assets:
Investments in securities, at value*	$	49,034,964		$	162,472,564		$	33,608,225		$	68,351,024		$	50,089,035
Investments in affiliates**		893,185			4,235,008			1,061,589			2,159,294			623,856
Cash		—			—			—			73,158	#		—
Receivable for:
Investments sold		700,132			12,254			2,556			—			3,727
Shares of beneficial interest sold		—			—			2,825			—			—
Interest		—			—			—			—			—
Dividends		19,146			64,460			14,458			51,009			12,897
Periodic interest receivables on swap contracts		—			—			—			—			—
Foreign withholding taxes reclaimed		2,975			—			—			25,953			—
Principal paydowns		—			—			—			—			—
Dividends from affiliates		670			1,282			791			1,641			724
Compensated forward foreign currency contracts		—			—			—			—			—
Unrealized appreciation on open swap contracts		—			—			—			—			—
Unrealized appreciation on open forward foreign currency contracts		—			—			—			—			—
Prepaid expenses and other assets		2,323			8,802			2,433			4,977			2,386
Total Assets		50,653,395			166,794,370			34,692,877			70,667,056			50,732,625
Liabilities:
Payable for:
Investments purchased		584,238			8,464			1,766			—			138,518
Shares of beneficial interest redeemed		75,754			471,863			48,741			262,771			141,689
Investment advisory fee		20,815			75,926			19,333			45,253			17,868
Variation margin		—			—			—			—			—
Periodic interest payments on swap contracts		—			—			—			—			—
Distribution fee		5,811			7,730			3,530			2,390			2,195
Administration fee		3,330			11,145			2,308			4,702			3,403
Transfer agent fee		250			250			250			250			250
Unrealized depreciation on open swap contracts		—			—			—			—			—
Payable to bank		—			—			—			—			—
Written call options outstanding, at value		—			—			—			—			—
Unrealized depreciation on open forward foreign currency contracts		—			—			—			—			—
Accrued expenses and other payables		24,964			32,218			25,596			29,769			30,640
Total Liabilities		715,162			607,596			101,524			345,135			334,563
Net Assets	$	49,938,233		$	166,186,774		$	34,591,353		$	70,321,921		$	50,398,062
Composition of Net Assets:
Paid-in-capital	$	67,428,789		$	346,616,974		$	104,269,718		$	50,933,822		$	58,286,128
Accumulated undistributed net investment income (net investment loss)		40,560			230,797			5,835			231,322			296,646
Accumulated net realized gain (loss)		(28,574,384	)		(208,114,756	)		(76,934,247	)		699,373			(17,091,327	)
Net unrealized appreciation (depreciation)		11,043,268			27,453,759			7,250,047			18,457,404			8,906,615
Net Assets	$	49,938,233		$	166,186,774		$	34,591,353		$	70,321,921		$	50,398,062
*Cost	$	37,991,684		$	135,018,804		$	26,358,193		$	49,894,377		$	41,182,442
Class X Shares:
Net Assets	$	22,001,476		$	128,974,916		$	17,551,779		$	58,715,874		$	39,802,470
Shares Outstanding (unlimited authorized shares of $.01 par value)		1,099,189			6,743,511			1,270,162			3,304,708			1,352,555
Net Asset Value Per Share	$	20.02		$	19.13		$	13.82		$	17.77		$	29.43
Class Y Shares:
Net Assets	$	27,936,757		$	37,211,858		$	17,039,574		$	11,606,047		$	10,595,592
Shares Outstanding (unlimited authorized shares of $.01 par value)		1,415,040			1,962,834			1,255,194			658,358			365,488
Net Asset Value Per Share	$	19.74		$	18.96		$	13.58		$	17.63		$	28.99

103

Morgan Stanley Select Dimensions Investment Series

Financial Statements continued

Statements of Operations
For the six months ended June 30, 2007 (unaudited)

	Money Market		Flexible Income			Balanced			Utilities			Dividend Growth			Equally- Weigthed S&P 500
Investment Income:
Income
Interest	$	3,140,943	$	1,862,599		$	652,862		$	38,613		$	122,600		$	89,090
Interest and dividends from affiliates		—		2,224			6,818			1,216			2,589			11,317
Dividends		—		—			668,553	*		879,123	*		2,118,409	*		1,678,216
Total Income		3,140,943		1,864,823			1,328,233			918,952			2,243,598			1,778,623
Expenses
Investment advisory fee		263,544		85,501			212,783			204,606			658,457			128,240
Distribution fee (Class Y shares)		92,137		31,917			37,345			23,518			66,425			142,019
Administration fee		29,283		21,375			32,736			28,717			96,730			85,493
Custodian fees		11,113		18,919			20,315			4,198			12,743			27,678
Shareholder reports and notices		17,122		10,265			16,454			16,472			16,531			14,686
Professional fees		12,724		17,157			17,228			12,197			12,346			12,262
Trustees' fees and expenses		913		411			634			549			1,839			1,581
Transfer agent fees and expenses		250		250			250			250			250			250
Other		4,854		13,223			9,789			4,015			8,368			18,460
Total Expenses		431,940		199,018			347,534			294,522			873,689			430,669
Net Investment Income		2,709,003		1,665,805			980,699			624,430			1,369,909			1,347,954
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		—		380,531			4,560,057			5,202,263			12,294,507			12,495,867
Investments in affiliates		—		—			87,213			—			—			52,927
Futures contracts		—		82,956			(55,764	)		—			—			149,889
Option contracts		—		(9,198	)		(19,284	)		—			—			—
Swap contracts		—		(3,697	)		247			—			—			—
Foreign exchange transactions		—		(18,396	)		—			—			—			—
Net Realized Gain		—		432,196			4,572,469			5,202,263			12,294,507			12,698,683
Net Change in Unrealized Appreciation/Depreciation on:
Investments		—		(1,051,279	)		(963,878	)		2,610,742			1,624,481			3,841,379
Investments in affiliates		—		—			(49,398	)		—			—			(12,095	)
Future contracts		—		(23,483	)		10,914			—			—			(40,734	)
Swap contracts		—		(178,955	)		(117,511	)		—			—			—
Option contracts		—		23,790			20,597			—			—			—
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies		—		31,636			—			—			—			—
Net Appreciation (Depreciation)		—		(1,198,291	)		(1,099,276	)		2,610,742			1,624,481			3,788,550
Net Gain (Loss)		—		(766,095	)		3,473,193			7,813,005			13,918,988			16,487,233
Net Increase	$	2,709,003	$	899,710		$	4,453,892		$	8,437,435		$	15,288,897		$	17,835,187

* Net of foreign withholding tax of $30,212, $3,924, $13,778, $11,593, $51,587, $15,527, $50,490, and $4,505, respectively.

See Notes to Financial Statements
104

	Growth			Focus Growth			Capital Opportunities			Global Equity			Developing Growth
Investment Income:
Income
Interest	$	17,243		$	77,457		$	18,789		$	36,746		$	29,129
Interest and dividends from affiliates		670			1,282			791			1,641			724
Dividends		233,389	*		798,918	*		170,521	*		570,026	*		389,712	*
Total Income		251,302			877,657			190,101			608,413			419,565
Expenses
Investment advisory fee		125,448			464,252			116,812			273,642			108,138
Distribution fee (Class Y shares)		34,241			46,186			20,718			13,920			12,949
Administration fee		20,072			68,147			13,948			28,430			20,598
Custodian fees		6,657			6,224			6,394			9,133			15,295
Shareholder reports and notices		9,648			37,795			12,850			15,502			12,108
Professional fees		10,933			14,955			10,496			14,360			12,273
Trustees' fees and expenses		408			1,305			300			552			414
Transfer agent fees and expenses		250			250			250			250			250
Other		2,960			7,160			2,400			7,340			3,263
Total Expenses		210,617			646,274			184,168			363,129			185,288
Net Investment Income		40,685			231,383			5,933			245,284			234,277
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		3,506,839			12,957,932			4,043,481			700,422			4,642,386
Investments in affiliates		—			—			—			—			—
Futures contracts		—			—			—			—			—
Option contracts		—			—			—			—			—
Swap contracts		—			—			—			—			—
Foreign exchange transactions		(1,525	)		(12,312	)		(11,305	)		4,377			(4,382	)
Net Realized Gain		3,505,314			12,945,620			4,032,176			704,799			4,638,004
Net Change in Unrealized Appreciation/Depreciation on:
Investments		1,246,300			4,564,780			(897,614	)		6,096,454			1,206,526
Investments in affiliates		—			—			—			—			—
Future contracts		—			—			—			—			—
Swap contracts		—			—			—			—			—
Option contracts		—			—			—			—			—
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies		(12	)		—			(47	)		5,872			(88	)
Net Appreciation (Depreciation)		1,246,288			4,564,780			(897,661	)		6,102,326			1,206,438
Net Gain (Loss)		4,751,602			17,510,400			3,134,515			6,807,125			5,844,442
Net Increase	$	4,792,287		$	17,741,783		$	3,140,448		$	7,052,409		$	6,078,719

105

Morgan Stanley Select Dimensions Investment Series

Financial Statements continued

Statements of Changes in Net Assets

	Money Market						Flexible Income						Balanced
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,709,003		$	4,750,921		$	1,665,805		$	3,543,966		$	980,699		$	2,040,234
Net realized gain (loss)		—			—			432,196			(1,055,185	)		4,572,469			7,033,886
Net change in unrealized appreciation/depreciation		—			—			(1,198,291	)		648,368			(1,099,276	)		1,164,357
Net Increase		2,709,003			4,750,921			899,710			3,137,149			4,453,892			10,238,477
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(1,038,475	)		(2,251,668	)		(830,834	)		(2,061,634	)		(678,035	)		(1,472,120	)
Class Y shares		(1,670,487	)		(2,499,264	)		(734,464	)		(1,561,924	)		(361,774	)		(684,320	)
Net realized gain
Class X shares		—			—			—			—			(3,856,860	)		(2,930,416	)
Class Y shares		—			—			—			—			(2,319,112	)		(1,474,726	)
Total Dividends and Distributions		(2,708,962	)		(4,750,932	)		(1,565,298	)		(3,623,558	)		(7,215,781	)		(6,561,582	)
Net increase (decrease) from transactions in shares of beneficial interest		(646,753	)		31,930,535			(1,832,151	)		(5,962,604	)		(2,080,023	)		(11,544,412	)
Total Increase (Decrease)		(646,712	)		31,930,524			(2,497,739	)		(6,449,013	)		(4,841,912	)		(7,867,517	)
Net Assets:
Beginning of period		120,970,134			89,039,610			54,930,587			61,379,600			84,765,854			92,633,371
End of period	$	120,323,422		$	120,970,134		$	52,432,848		$	54,930,587		$	79,923,942		$	84,765,854
Accumulated Undistributed Net Investment Income (Net Investment Loss)	$	86		$	45		$	28,790		$	(71,861	)	$	(218,897	)	$	(159,787	)

See Notes to Financial Statements
106

	Utilities						Dividend Growth						Equally-Weighted S&P 500
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	624,430		$	1,401,526		$	1,369,909		$	3,446,215		$	1,347,954		$	2,793,405
Net realized gain (loss)		5,202,263			7,880,331			12,294,507			63,869,804			12,698,683			18,163,872
Net change in unrealized appreciation/depreciation		2,610,742			3,815,315			1,624,481			(39,187,495	)		3,788,550			10,411,695
Net Increase		8,437,435			13,097,172			15,288,897			28,128,524			17,835,187			31,368,972
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(477,122	)		(1,119,915	)		(1,121,804	)		(2,848,225	)		(1,353,767	)		(1,392,883	)
Class Y shares		(149,830	)		(301,849	)		(257,469	)		(589,644	)		(1,348,006	)		(1,139,754	)
Net realized gain
Class X shares		—			—			—			—			(8,266,186	)		(5,833,944	)
Class Y shares		—			—			—			—			(9,864,510	)		(5,717,915	)
Total Dividends and Distributions		(626,952	)		(1,421,764	)		(1,379,273	)		(3,437,869	)		(20,832,469	)		(14,084,496	)
Net increase (decrease) from transactions in shares of beneficial interest		(8,385,636	)		(17,378,352	)		(35,117,945	)		(74,844,792	)		(2,906,889	)		(21,836,041	)
Total Increase (Decrease)		(575,153	)		(5,702,944	)		(21,208,321	)		(50,154,137	)		(5,904,171	)		(4,551,565	)
Net Assets:
Beginning of period		70,386,738			76,089,682			255,423,604			305,577,741			216,721,369			221,272,934
End of period	$	69,811,585		$	70,386,738		$	234,215,283		$	255,423,604		$	210,817,198		$	216,721,369
Accumulated Undistributed Net Investment Income (Net Investment Loss)	$	439		$	2,961		$	1,448		$	10,812		$	1,379,895		$	2,733,714

107

Morgan Stanley Select Dimensions Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued

	Growth						Focus Growth						Capital Opportunities
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	40,685		$	(80,350	)	$	231,383		$	(392,926	)	$	5,933		$	(162,185	)
Net realized gain		3,505,314			1,573,408			12,945,620			29,779,086			4,032,176			4,022,364
Net change in unrealized appreciation/depreciation		1,246,288			341,544			4,564,780			(30,408,616	)		(897,661	)		(1,099,975	)
Net Increase (Decrease)		4,792,287			1,834,602			17,741,783			(1,022,456	)		3,140,448			2,760,204
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		—			—			—			(35,137	)		—			—
Class Y shares		—			—			—			—			—			—
Net realized gain
Class X shares		—			—			—			—			—			—
Class Y shares		—			—			—			—			—			—
Total Dividends and Distributions		—			—			—			(35,137	)		—			—
Net increase (decrease) from transactions in shares of beneficial interest		(5,838,324	)		(3,722,481	)		(25,531,202	)		(54,505,323	)		(3,787,740	)		(7,505,548	)
Total Decrease		(1,046,037	)		(1,887,879	)		(7,789,419	)		(55,562,916	)		(647,292	)		(4,745,344	)
Net Assets:
Beginning of period		50,984,270			52,872,149			173,976,193			229,539,109			35,238,645			39,983,989
End of period	$	49,938,233		$	50,984,270		$	166,186,774		$	173,976,193		$	34,591,353		$	35,238,645
Accumulated Undistributed Net Investment Income (Net Investment Loss)	$	40,560		$	(125	)	$	230,797		$	(586	)	$	5,835		$	(98	)

See Notes to Financial Statements
108

	Global Equity						Developing Growth
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	245,284		$	411,740		$	234,277		$	238,240
Net realized gain		704,799			9,681,471			4,638,004			8,698,331
Net change in unrealized appreciation/depreciation		6,102,326			3,993,158			1,206,438			(3,381,453	)
Net Increase (Decrease)		7,052,409			14,086,369			6,078,719			5,555,118
Dividends and Distributions to Shareholders from:
Net investment income
Class X shares		(376,293	)		(460,965	)		(160,805	)		—
Class Y shares		(50,146	)		(53,742	)		(15,686	)		—
Net realized gain
Class X shares		(8,038,444	)		(4,401,631	)		—			—
Class Y shares		(1,596,154	)		(716,087	)		—			—
Total Dividends and Distributions		(10,061,037	)		(5,632,425	)		(176,491	)		—
Net increase (decrease) from transactions in shares of beneficial interest		1,853,490			(10,329,241	)		(7,161,891	)		(13,717,808	)
Total Decrease		(1,155,138	)		(1,875,297	)		(1,259,663	)		(8,162,690	)
Net Assets:
Beginning of period		71,477,059			73,352,356			51,657,725			59,820,415
End of period	$	70,321,921		$	71,477,059		$	50,398,062		$	51,657,725
Accumulated Undistributed Net Investment Income (Net Investment Loss)	$	231,322		$	412,477		$	296,646		$	238,860

109

Morgan Stanley Select Dimensions Investment Series

Financial Statements continued

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

	Money Market						Flexible Income						Balanced
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Class X Shares
Shares
Sold		9,133,945			25,663,978			93,577			102,776			24,235			99,897
Reinvestment of dividends and distributions		1,038,475			2,251,668			114,103			285,367			267,936			269,614
Redeemed		(16,618,489	)		(33,214,539	)		(486,544	)		(1,256,801	)		(418,104	)		(1,115,273	)
Net decrease - Class X		(6,446,069	)		(5,298,893	)		(278,864	)		(868,658	)		(125,933	)		(745,762	)
Amount
Sold	$	9,133,945		$	25,663,978		$	683,429		$	746,143		$	430,879		$	1,655,881
Reinvestment of dividends and distributions		1,038,475			2,251,668			830,834			2,061,631			4,534,895			4,402,536
Redeemed		(16,618,489	)		(33,214,539	)		(3,556,671	)		(9,108,213	)		(7,524,727	)		(18,898,544	)
Net decrease - Class X	$	(6,446,069	)	$	(5,298,893	)	$	(2,042,408	)	$	(6,300,439	)	$	(2,558,953	)	$	(12,840,127	)
Class Y Shares
Shares
Sold		24,478,551			86,294,328			157,282			775,040			21,068			148,540
Reinvestment of dividends and distributions		1,670,487			2,499,264			101,179			216,856			158,829			132,633
Redeemed		(20,349,722	)		(51,564,164	)		(229,208	)		(946,293	)		(144,206	)		(198,107	)
Net increase (decrease) - Class Y		5,799,316			37,229,428			29,253			45,603			35,691			83,066
Amount
Sold	$	24,478,551		$	86,294,328		$	1,145,640		$	5,607,433		$	381,411		$	2,496,976
Reinvestment of dividends and distributions		1,670,487			2,499,264			734,464			1,561,924			2,680,886			2,159,046
Redeemed		(20,349,722	)		(51,564,164	)		(1,669,847	)		(6,831,522	)		(2,583,367	)		(3,360,307	)
Net increase (decrease) - Class Y	$	5,799,316		$	37,229,428		$	210,257		$	337,835		$	478,930		$	1,295,715

See Notes to Financial Statements
110

	Utilities						Dividend Growth						Equally-Weighted S&P 500
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Class X Shares
Shares
Sold		4,183			37,839			2,552			106,132			36,448			145,503
Reinvestment of dividends and distributions		17,164			49,105			60,342			168,303			354,065			289,536
Redeemed		(294,680	)		(786,512	)		(1,743,247	)		(4,298,055	)		(576,216	)		(1,365,361	)
Net decrease - Class X		(273,333	)		(699,568	)		(1,680,353	)		(4,023,620	)		(185,703	)		(930,322	)
Amount
Sold	$	118,663		$	866,975		$	47,436		$	1,757,286		$	1,046,087		$	3,800,860
Reinvestment of dividends and distributions		477,122			1,119,915			1,121,804			2,848,225			9,619,953			7,226,827
Redeemed		(8,100,142	)		(17,861,538	)		(32,397,130	)		(72,590,541	)		(16,731,533	)		(36,087,618	)
Net decrease - Class X	$	(7,504,357	)	$	(15,874,648	)	$	(31,227,890	)	$	(67,985,030	)	$	(6,065,493	)	$	(25,059,931	)
Class Y Shares
Shares
Sold		55,776			31,525			10,342			105,973			24,236			543,498
Reinvestment of dividends and distributions		5,395			13,212			13,861			34,898			416,977			277,302
Redeemed		(90,527	)		(111,875	)		(234,239	)		(544,997	)		(303,456	)		(681,604	)
Net increase (decrease) - Class Y		(29,356	)		(67,138	)	($	210,036	)	($	404,126	)		137,757			139,196
Amount
Sold	$	1,512,231		$	713,626		$	189,295		$	1,786,154		$	697,043		$	14,352,004
Reinvestment of dividends and distributions		149,830			301,849			257,469			589,644			11,212,516			6,857,669
Redeemed		(2,543,340	)		(2,519,179	)		(4,336,819	)		(9,235,560	)		(8,750,955	)		(17,985,783	)
Net increase (decrease) - Class Y	$	(881,279	)	$	(1,503,704	)	$	(3,890,055	)	$	(6,859,762	)	$	3,158,604		$	3,223,890

111

Morgan Stanley Select Dimensions Investment Series

Financial Statements continued

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

	Growth						Focus Growth						Capital Opportunities
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)						(unaudited)
Class X Shares
Shares
Sold		436			38,904			809			85,463			1,957			79,795
Reinvestment of dividends and distributions		—			—			—			2,134			—			—
Redeemed		(218,506	)		(499,691	)		(1,202,378	)		(2,996,731	)		(245,746	)		(622,269	)
Net increase (decrease) - Class X		(218,070	)		(460,787	)		(1,201,569	)		(2,909,134	)		(243,789	)		(542,474	)
Amount
Sold	$	8,190		$	680,201		$	15,253		$	1,430,663		$	26,106		$	964,660
Reinvestment of dividends and distributions		—			—			—			35,137			—			—
Redeemed		(4,196,960	)		(8,631,987	)		(22,065,956	)		(50,131,141	)		(3,273,021	)		(7,500,919	)
Net increase (decrease) - Class X	$	(4,188,770	)	$	(7,951,786	)	$	(22,050,703	)	$	(48,665,341	)	$	(3,246,915	)	$	(6,536,259	)
Class Y Shares
Shares
Sold		33,944			418,406			9,251			69,710			86,970			285,870
Reinvestment of dividends and distributions		—			—			—			—			—			—
Redeemed		(121,506	)		(170,547	)		(201,029	)		(423,640	)		(130,124	)		(363,454	)
Net increase (decrease) - Class Y		(87,562	)		247,859			(191,778	)		(353,930	)		(43,154	)		(77,584	)
Amount
Sold	$	644,242		$	7,176,934		$	172,625		$	1,170,015		$	1,135,341		$	3,388,336
Reinvestment of dividends and distributions		—			—			—			—			—			—
Redeemed		(2,293,796	)		(2,947,629	)		(3,653,124	)		(7,009,997	)		(1,676,166	)		(4,357,625	)
Net increase (decrease) - Class Y	$	(1,649,554	)	$	4,229,305		$	(3,480,499	)	$	(5,839,982	)	$	(540,825	)	$	(969,289	)

See Notes to Financial Statements
112

	Global Equity						Developing Growth
	For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006			For The Six Months Ended June 30, 2007			For The Year Ended December 31, 2006
	(unaudited)						(unaudited)
Class X Shares
Shares
Sold		7,415			67,142			2,594			41,264
Reinvestment of dividends and distributions		473,536			297,406			5,464			—
Redeemed		(411,015	)		(962,808	)		(233,143	)		(531,062	)
Net increase (decrease) - Class X		69,936			(598,260	)		(225,085	)		(489,798	)
Amount
Sold	$	146,989		$	1,178,092		$	73,707		$	1,018,016
Reinvestment of dividends and distributions		8,414,737			4,862,596			160,805			—
Redeemed		(8,127,761	)		(17,033,668	)		(6,613,656	)		(13,193,063	)
Net increase (decrease) - Class X	$	433,965		$	(10,992,980	)	$	(6,379,144	)	$	(12,175,047	)
Class Y Shares
Shares
Sold		25,666			65,712			12,335			65,851
Reinvestment of dividends and distributions		93,381			47,403			541			—
Redeemed		(37,657	)		(74,106	)		(41,533	)		(128,590	)
Net increase (decrease) - Class Y		81,390			39,009			(28,657	)		(62,739	)
Amount
Sold	$	497,747		$	1,169,532		$	339,115		$	1,632,493
Reinvestment of dividends and distributions		1,646,300			769,829			15,686			—
Redeemed		(724,522	)		(1,275,622	)		(1,137,548	)		(3,175,254	)
Net increase (decrease) - Class Y	$	1,419,525		$	663,739		$	(782,747	)	$	(1,542,761	)

113

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited)

1. Organization and Accounting Policies

Morgan Stanley Select Dimensions Investment Series (the "Fund") is registered under the Investment Company Act of 1940 as amended (the "Act"), as a diversified (except Focus Growth is non-diversified, effective August 1, 2007), open-end management investment company. The Fund, which consists of 11 separate portfolios ("Portfolios"), was organized on June 2, 1994, as a Massachusetts business trust and commenced operations on November 9, 1994, with the exception of Capital Opportunities which commenced operations on January 21, 1997.

On July 24, 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 July 24, 2000.

The investment objectives of each Portfolio are as follows:

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

Flexible Income				Seeks, as a primary objective, to earn a high level of current income and, as a secondary objective, to maximize total return, but only to the extent consistent with its primary objective.

Balanced* (formerly Balanced Growth)				Seeks to provide capital growth with reasonable current income.

Utilities				Seeks both capital appreciation and current income.

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

Equally-Weighted S&P 500				Seeks to achieve a high level of total return on its assets through a combination of capital appreciation and current income.

Growth				Seeks long-term growth of capital.

Focus Growth				Seeks long-term capital growth.

Capital Opportunities				Seeks long-term capital growth.

Global Equity				Seeks to obtain total return on its assets primarily through long-term capital growth and to a lesser extent from income.

Developing Growth				Seeks long-term capital growth.

* Name change effective May 1, 2007.

114

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

The following is a summary of significant accounting policies:

A. Valuation of Investments — Money Market: securities are valued at amortized cost which approximates market value, in accordance with rule 2a-7 of the Investment Company Act of 1940. 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 asked 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 asked price; (3) all other portfolio securities for which over-the-counter market quotations are readily a vailable are valued at the mean between the last reported bid and asked 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) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) credit default/interest rate swaps are marked-to-market daily based upon quotations from market makers and the change, if any , is recorded as unrealized appreciation or depreciation in the Statement of Operations; (7) listed options are valued at the latest sale price on the exchange on which they are listed unless no sale of such options have taken place that day, in which case they are valued at the mean between their latest bid and asked price; (8) when market quotations are not readily available including circumstances under wh ich Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the 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 app roved by the Trustees of the Fund; (9) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; and (10) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day.

115

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost.

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 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. The Fund amortizes premiums and accretes discounts over the life of the respective securities.

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.

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. Futures Contracts — 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 which is known as variation margin. Such receipts or payments are recorded by the Fund as unrealized gains or 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 val ue at the time it was closed.

F. Credit Default Swaps — A credit default swap is an agreement between two parties to exchange the credit risk of an issuer. The Fund may purchase credit protection on the referenced obligation of the credit default swap ("Buy Contract"), or provide credit protection on the referenced obligation of the credit default swap ("Sale Contract"). 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, 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

116

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

stable or improves while the swap is outstanding. If a credit event occurs, the seller pays to the buyer the maximum payout limited to the notional amount of the swap contract as disclosed in the table following the Portfolio of Investments. During the term of the swap agreement, the Fund receives or pays periodic fixed payments from or to the respective counterparty calculated at the agreed upon interest rate applied to the notional amount. These periodic payments are accrued daily and recorded as realized gains or losses in the Statement of Operations. In addition, upon termination of the swap contract, gains and losses are also realized. Any upfront payment received or paid by the Fund is recorded as assets/liabilities on the Fund's books.

G. Interest Rate Swaps — Interest rate swaps involve the exchange of commitments to pay and receive interest based on a notional principal amount. Net periodic interest payments to be received or paid are accrued daily and are recorded as realized gains or losses in the Statement of Operations.

H. 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 or currency 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 secur ity which the Fund purchases upon exercise of the option.

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.

117

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

Transactions in written options for the six months ended June 30, 2007 for Flexible Income were as follows:

	CONTRACT AMOUNT			PREMIUMS
Options written, outstanding at beginning of the period		—			—
Options written
		1,128,585		$	18,320
		783,790			24,166
Options exercise
		(452,585	)		(7,335	)
		(411,790	)		(5,808	)
Options expired		—			—
Option written, outstanding at end of period		1,048,000		$	29,343

I. 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 gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purpos es. 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 gain or loss. 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.

J. Federal Income Tax Policy — It is the Fund's policy to comply individually for each Portfolio 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 provision for federal income taxes is required. The Fund files tax returns with the U.S. Internal Revenue Service and various states. Generally, the tax authorities can examine all tax returns filed for the last three years. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital

118

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

gains and net unrealized appreciation, as applicable, as the income is earned or capital gains are recorded. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. The Fund adopted the provisions of the Financial Accounting Standards Board's (FASB) Interpretation number 48 Accounting for Uncertainty in Income Taxes, on June 30, 2007. As of June 30, 2007, this did not result in an impact to the Fund's financial statements.

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

L. 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.

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

2. Investment Advisory/Administration 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 Portfolio's net assets determined at the close of each business day.

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

Flexible Income — 0.32%.

Balanced — 0.52% to the portion of the daily net assets not exceeding $500 million and 0.495% to the portion of the daily net assets in excess of $500 million.

Utilities — 0.57% to the portion of the daily net assets not exceeding $500 million; 0.47% to the portion of the daily net assets exceeding $500 million but not exceeding $1 billion; 0.445% to the portion of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.42% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2.5 billion; 0.395% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3.5 billion; 0.37% to the portion of the daily net assets exceeding $3.5 billion but not exceeding $5 billion and 0.345% to the portion of the daily net assets in excess of $5 billion.

119

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

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.

Equally-Weighted S&P 500 — 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.

Growth — 0.50% to the portion of the daily net assets not exceeding $1 billion; 0.45% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion; 0.40% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion and 0.35% to the portion of the daily net assets in excess of $3 billion.

Focus 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 $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 $4.5 billion and 0.345% to the portion of the daily net assets in excess of $4.5 billion.

Capital Opportunities — 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.

Global Equity — 0.77%.

Developing Growth — 0.42% to the portion of the daily net assets not exceeding $500 million and 0.395% to the portion of the daily net assets in excess of $500 million.

Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment 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 each Portfolio's daily net assets.

3. Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. 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.

120

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

4. Security Transactions and Transactions with Affiliates

Each Portfolio may invest in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class, an open-end management investment company managed by the Investment Adviser. Investment advisory fees paid by the Portfolio are reduced by an amount equal to the advisory and administrative services fees paid by Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class with respect to assets invested by the Portfolio in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class. For the six months ended June 30, 2007, the tables below identifies, for each Portfolio that invested in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class, the income distributions earned, if any, by each Portfolio for that Portfolio's investment in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class. I ncome distributions are recorded as income in the Statement of Operations.

PORTFOLIO	INCOME DISTRIBUTION EARNED
Flexible Income	$	2,224
Balanced		418
Utilities		1,216
Dividend Growth		2,589
Equally-Weighted S&P 500		3,957
Growth		670
Focus Growth		1,282
Capital Opportunities		791
Global Equity		1,641
Developing Growth		724

During the six months ended June 30, 2007, each Portfolio's cost of purchases and proceeds from sales of investments in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class were as follows:

PORTFOLIO	PURCHASES		SALES
Flexible Income	$	3,737,562	$	1,126,646
Balanced		801,122		308,452
Utilities		1,729,101		7,737
Dividend Growth		5,148,310		268,638
Equally-Weighted S&P 500		5,745,345		428,059
Growth		953,780		60,595
Focus Growth		4,235,008		—
Capital Opportunities		1,171,264		109,675
Global Equity		2,515,072		355,779
Developing Growth		1,561,365		937,509

121

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

Purchases and sales/maturities of portfolio securities, excluding short-term investments (except for the Money Market Portfolio), for the six months ended June 30, 2007 were as follows:

	U.S. GOVERNMENT SECURITIES				OTHER
	PURCHASES		SALES/PREPAYMENTS MATURITIES		PURCHASES		SALES/PREPAYMENTS MATURITIES
Money Market	$	2,347,795	$	2,347,795	$	471,939,201	$	475,166,000
Flexible Income		9,283,889		5,117,268		6,772,862		12,236,068
Balanced		21,464,473		20,615,446		8,059,591		18,190,091
Utilities		—		—		2,792,216		11,676,016
Dividend Growth		—		—		66,281,935		88,790,759
Equally-Weighted S&P 500		—		—		12,150,310		37,493,940
Growth		—		—		13,791,862		3,549,205
Focus Growth		—		—		33,720,208		60,683,521
Capital Opportunities		—		—		8,467,833		12,232,113
Global Equity		—		—		8,984,796		15,810,545
Developing Growth		—		—		15,994,282		21,311,145

Equally-Weighted S&P 500 had transactions in Morgan Stanley common stock, an affiliate of the Investment Adviser, Administrator and Distributor:

PURCHASES				SALES				NET REALIZED GAINS				INCOME				VALUE
	—			$	56,708			$	29,388			$	2,953			$	405,392

The following Portfolios had transactions in Hartford Financial Services Group, Inc., an affiliate of the Fund:

	PURCHASES		SALES		NET REALIZED GAINS		INCOME		VALUE
Balanced		—	$	147,932	$	87,213	$	6,400	$	565,447
Equally-Weighted S&P 500		—		51,195		23,539		4,407		412,461

The following Portfolios had transactions with other Morgan Stanley funds during the six months ended June 30, 2007:

	PURCHASES		SALES		NET REALIZED GAINS (LOSSES)
Balanced	$	100,338		—		—
Dividend Growth		1,579,882		—		—
Equally-Weighted S&P 500		—	$	29,520	$	18,438
Growth		—		12,066		2,072
Focus Growth		—		279,153		(22,109	)
Capital Opportunities		902,917		119,957		5,402
Developing Growth		182,962		1,774,096		471,417

122

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

For the six months ended June 30, 2007, the following Portfolios incurred brokerage commissions with Morgan Stanley & Co., Inc., an affiliate of the Investment Adviser, Administrator and Distributor, for portfolio transactions executed on behalf of the Portfolio:

BALANCED				UTILITIES				DIVIDEND GROWTH				FOCUS GROWTH				CAPIAL OPPORTUNITIES				GLOBAL EQUITY				DEVELOPING GROWTH
$	407			$	1,208			$	22,294			$	447			$	5			$	844			$	33

For the six months ended June 30, 2007, Dividend Growth had open receivables of $301,091, with Morgan Stanley & Co., an affiliate of the Investment Adviser, Administrator and Distributor.

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

5. Purposes of and Risks Relating to Certain Financial Instruments

Some 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 amounts reflected in the Statement of Assets and Liabilities. The Portfolio bears 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.

Some Portfolios may purchase and sell interest rate 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 contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Portfolio bears the risk of an unfavorable change in the value of the underlying securities. Risk may also arise upon entering into these contracts from potential inability of the counterparts to meet the terms of their contracts.

Some Portfolios may enter into credit default swaps for hedging purposes to add leverage to its portfolio or gain exposure to a credit in which the Portfolio may otherwise invest. Credit default swaps may involve greater risks than if a fund had invested in the issuer directly. Credit default swaps are subject to general

123

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

market risks, counterparty risk and credit risk. If the Portfolio is a buyer and no credit event occurs, it will lose its investments. In addition, if the Portfolio is a seller and 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.

Some Portfolios may enter into interest rate swaps and may purchase or sell interest rate caps, floors and collars. The Portfolio expects 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 Portfolio may also enter into these transactions to protect against any increase in the price of securities the Portfolio anticipates purchasing at a later date. Interest rate 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 risk may exceed the related amounts shown in the Statement of Assets and Liabilities.

6. 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 generally accepted accounting principles. 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.

As of December 31, 2006, 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,	2007		2008		2009		2010		2011		2012		2013		2014		TOTAL
Flexible Income	$	941	$	1,681	$	2,688	$	6,782	$	6,161	$	1,199	$	562	$	896	$	20,910
Utilities		—		—		—		19,991		—		—		—		—		19,991
Dividend Growth		—		—		—		52,375		21,222		—		—		—		73,597
Growth		—		—		12,380		16,400		3,145		60		—		—		31,985
Focus Growth		—		—		144,614		74,785		—		—		—		—		219,399
Capital Opportunities		—		—		23,397		57,567		—		—		—		—		80,964
Developing Growth		—		—		3,385		18,313		—		—		—		—		21,698

124

Morgan Stanley Select Dimensions Investment Series

Notes to Financial Statements n June 30, 2007 (unaudited) continued

At December 31, 2006, the primary reason(s) for significant temporary book/tax differences were as follows:

	TEMPORARY DIFFERENCES
	POST-OCTOBER LOSSES	LOSS DEFERRALS FROM WASH SALES
Flexible Income	•	•
Balanced		•
Utilities		•
Dividend Growth		•
Equally-Weighted S&P 500		•
Growth		•
Focus Growth	•	•
Capital Opportunities		•
Developing Growth		•

Additionally, the following Portfolios had other temporary differences: Flexible Income — interest on bonds in default; Flexible Income and Balanced — capital loss deferrals on straddles; Flexible Income, Balanced and Equally-Weighted S&P 500 — capital gain/loss from the mark-to-market of futures and/or options contracts; Equally-Weighted S&P 500 — tax adjustment on real estate investment trusts (REITs) held by the Portfolio.

7. Accounting Pronouncements

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.

125

Morgan Stanley Select Dimensions Investment Series

Financial Highlights

Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:


FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME*		NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
MONEY MARKET CLASS X SHARES
	2002		$	1.00	$	0.01		—		$	0.01		$	(0.01	)		—		$	(0.01	)
	2003			1.00		0.01		—			0.01			(0.01	)		—			(0.01	)
	2004			1.00		0.01		—			0.01			(0.01	)		—			(0.01	)
	2005			1.00		0.03		—			0.03			(0.03	)		—			(0.03	)
	2006			1.00		0.04		—			0.04			(0.04	)		—			(0.04	)
	2007	(a)		1.00		0.02		—			0.02			(0.02	)		—			(0.02	)
CLASS Y SHARES
	2002			1.00		0.01		—			0.01			(0.01	)		—			(0.01	)
	2003			1.00		0.00		—			0.00			(0.00	)		—			(0.00	)
	2004			1.00		0.01		—			0.01			(0.01	)		—			(0.01	)
	2005			1.00		0.02		—			0.02			(0.02	)		—			(0.02	)
	2006			1.00		0.04		—			0.04			(0.04	)		—			(0.04	)
	2007	(a)		1.00		0.02		—			0.02			(0.02	)		—			(0.02	)
FLEXIBLE INCOME CLASS X SHARES
	2002			6.99		0.51	$	0.08			0.59			(0.35	)		—			(0.35	)
	2003			7.23		0.34		0.62			0.96			(0.39	)		—			(0.39	)
	2004			7.80		0.38		0.14			0.52			(0.64	)		—			(0.64	)
	2005			7.68		0.38		(0.17	)		0.21			(0.54	)		—			(0.54	)
	2006			7.35		0.46		(0.04	)		0.42			(0.47	)		—			(0.47	)
	2007	(a)		7.30		0.23		(0.11	)		0.12			(0.22	)		—			(0.22	)
CLASS Y SHARES
	2002			6.97		0.48		0.10			0.58			(0.33	)		—			(0.33	)
	2003			7.22		0.32		0.61			0.93			(0.37	)		—			(0.37	)
	2004			7.78		0.36		0.13			0.49			(0.62	)		—			(0.62	)
	2005			7.65		0.36		(0.16	)		0.20			(0.52	)		—			(0.52	)
	2006			7.33		0.44		(0.05	)		0.39			(0.45	)		—			(0.45	)
	2007	(a)		7.27		0.22		(0.10	)		0.12			(0.21	)		—			(0.21	)
BALANCED CLASS X SHARES
	2002			14.62		0.36		(2.02	)		(1.66	)		(0.38	)		—			(0.38	)
	2003			12.58		0.27		2.19			2.46			(0.33	)		—			(0.33	)
	2004			14.71		0.31		1.28			1.59			(0.35	)		—			(0.35	)
	2005			15.95		0.34		0.95			1.29			(0.36	)		—			(0.36	)
	2006			16.88		0.41		1.60			2.01			(0.44	)	$	(0.88	)		(1.32	)
	2007	(a)		17.57		0.22		0.75			0.97			(0.24	)		(1.42	)		(1.66	)

See Notes to Financial Statements
126

										RATIOS TO AVERAGE NET ASSETS**
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN†			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			PORTFOLIO TURNOVER RATE
MONEY MARKET CLASS X SHARES
	2002		$	1.00		1.34	%	$	152,479		0.52	%		1.34	%		N/A
	2003			1.00		0.65			91,730		0.54			0.66			N/A
	2004			1.00		0.86			67,945		0.55			0.84			N/A
	2005			1.00		2.73			52,030		0.57			2.68			N/A
	2006			1.00		4.59			46,731		0.58			4.56			N/A
	2007	(a)		1.00		2.41	(1)		40,285		0.58	(2)		4.78	(2)		N/A
CLASS Y SHARES
	2002			1.00		1.09			41,006		0.77			1.09			N/A
	2003			1.00		0.40			39,183		0.79			0.41			N/A
	2004			1.00		0.61			33,468		0.80			0.59			N/A
	2005			1.00		2.48			37,010		0.82			2.43			N/A
	2006			1.00		4.34			74,239		0.83			4.31			N/A
	2007	(a)		1.00		2.29	(1)		80,038		0.83	(2)		4.53	(2)		N/A
FLEXIBLE INCOME CLASS X SHARES
	2002			7.23		8.67			54,669		0.50			7.26			115	%
	2003			7.80		13.54			53,270		0.57			4.49			258
	2004			7.68		7.00			43,658		0.69			4.96			201
	2005			7.35		2.88			35,755		0.60			5.11			83
	2006			7.30		5.76			29,166		0.56			6.30			52
	2007	(a)		7.20		1.75	(1)		26,787		0.59	(2)		5.98	(2)		32	(1)
CLASS Y SHARES
	2002			7.22		8.59			14,626		0.75			7.01			115
	2003			7.78		13.15			20,955		0.82			4.24			258
	2004			7.65		6.61			26,927		0.94			4.71			201
	2005			7.33		2.62			25,624		0.85			4.86			83
	2006			7.27		5.68			25,765		0.81			6.05			52
	2007	(a)		7.18		1.63	(1)		25,646		0.84	(2)		5.73	(2)		32	(1)
BALANCED CLASS X SHARES
	2002			12.58		(11.49	)		84,846		0.66			2.58			161
	2003			14.71		19.84			84,151		0.68			2.01			124
	2004			15.95		10.93			75,517		0.69			2.04			62
	2005			16.88		8.21			64,663		0.70			2.07			55
	2006			17.57		12.67			54,204		0.74			2.42			45
	2007	(a)		16.88		5.56	(1)		49,961		0.76	(2)		2.49	(2)		36	(1)

127

Morgan Stanley Select Dimensions Investment Series

Financial Highlights continued


FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME*		NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
BALANCED CLASS Y SHARES
	2002		$	14.59	$	0.32	$	(2.01	)	$	(1.69	)	$	(0.34	)		—		$	(0.34	)
	2003			12.56		0.23		2.19			2.42			(0.30	)		—			(0.30	)
	2004			14.68		0.27		1.28			1.55			(0.31	)		—			(0.31	)
	2005			15.92		0.30		0.94			1.24			(0.32	)		—			(0.32	)
	2006			16.84		0.37		1.59			1.96			(0.40	)	$	(0.88	)		(1.28	)
	2007	(a)		17.52		0.20		0.76			0.96			(0.22	)		(1.42	)		(1.64	)
UTILITIES CLASS X SHARES
	2002			17.10		0.47		(3.93	)		(3.46	)		(0.48	)		—			(0.48	)
	2003			13.16		0.35		2.31			2.66			(0.36	)		—			(0.36	)
	2004			15.46		0.36		3.37			3.73			(0.37	)		—			(0.37	)
	2005			18.82		0.43		2.62			3.05			(0.44	)		—			(0.44	)
	2006			21.43		0.46		3.88			4.34			(0.48	)		—			(0.48	)
	2007	(a)		25.29		0.25		2.85			3.10			(0.25	)		—			(0.25	)
CLASS Y SHARES
	2002			17.09		0.44		(3.93	)		(3.49	)		(0.45	)		—			(0.45	)
	2003			13.15		0.31		2.31			2.62			(0.32	)		—			(0.32	)
	2004			15.45		0.32		3.37			3.69			(0.33	)		—			(0.33	)
	2005			18.81		0.38		2.62			3.00			(0.39	)		—			(0.39	)
	2006			21.42		0.40		3.87			4.27			(0.42	)		—			(0.42	)
	2007	(a)		25.27		0.21		2.86			3.07			(0.22	)		—			(0.22	)
DIVIDEND GROWTH CLASS X SHARES
	2002			14.71		0.26		(2.88	)		(2.62	)		(0.26	)		—			(0.26	)
	2003			11.83		0.24		3.00			3.24			(0.24	)		—			(0.24	)
	2004			14.83		0.23		0.99			1.22			(0.24	)		—			(0.24	)
	2005			15.81		0.20		0.67			0.87			(0.20	)		—			(0.20	)
	2006			16.48		0.22		1.62			1.84			(0.23	)		—			(0.23	)
	2007	(a)		18.09		0.11		1.07			1.18			(0.11	)		—			(0.11	)
CLASS Y SHARES
	2002			14.69		0.23		(2.88	)		(2.65	)		(0.23	)		—			(0.23	)
	2003			11.81		0.20		3.01			3.21			(0.21	)		—			(0.21	)
	2004			14.81		0.20		0.98			1.18			(0.20	)		—			(0.20	)
	2005			15.79		0.16		0.66			0.82			(0.16	)		—			(0.16	)
	2006			16.45		0.18		1.62			1.80			(0.18	)		—			(0.18	)
	2007	(a)		18.07		0.09		1.06			1.15			(0.09	)		—			(0.09	)

See Notes to Financial Statements
128

										RATIOS TO AVERAGE NET ASSETS**
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN†			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			PORTFOLIO TURNOVER RATE
BALANCED CLASS Y SHARES
	2002		$	12.56		(11.66	)%	$	12,327		0.91	%		2.33	%		161	%
	2003			14.68		19.51			22,898		0.93			1.76			124
	2004			15.92		10.68			27,308		0.94			1.79			62
	2005			16.84		7.89			27,970		0.95			1.82			55
	2006			17.52		12.37			30,562		0.99			2.17			45
	2007	(a)		16.84		5.50	(1)		29,963		1.01	(2)		2.24	(2)		36	(1)
UTILITIES CLASS X SHARES
	2002			13.16		(20.37	)		66,825		0.70			3.22			77
	2003			15.46		20.47			63,728		0.71			2.51			91
	2004			18.82		24.44			63,052		0.71			2.19			29
	2005			21.43		16.28			59,823		0.72			2.12			38
	2006			25.29		20.50			52,892		0.74			2.02			21
	2007	(a)		28.14		12.28	(1)		51,168		0.75	(2)		1.81	(2)		4	(1)
CLASS Y SHARES
	2002			13.15		(20.58	)		10,749		0.95			2.97			77
	2003			15.45		20.20			13,440		0.96			2.26			91
	2004			18.81		24.15			15,650		0.96			1.94			29
	2005			21.42		16.00			16,267		0.97			1.87			38
	2006			25.27		20.17			17,495		0.99			1.77			21
	2007	(a)		28.12		12.15	(1)		18,644		1.00	(2)		1.55	(2)		4	(1)
DIVIDEND GROWTH CLASS X SHARES
	2002			11.83		(17.92	)		341,673		0.64			1.89			22
	2003			14.83		27.73			356,056		0.66			1.85			42
	2004			15.81		8.29			307,093		0.65			1.54			44
	2005			16.48		5.57			249,516		0.63			1.26			38
	2006			18.09		11.25			201,169		0.67			1.31			115
	2007	(a)		19.16		6.57	(1)		180,792		0.67	(2)		1.19	(2)		28	(1)
CLASS Y SHARES
	2002			11.81		(18.15	)		29,318		0.89			1.64			22
	2003			14.81		27.48			51,527		0.91			1.60			42
	2004			15.79		8.03			59,314		0.90			1.29			44
	2005			16.45		5.32			56,061		0.88			1.01			38
	2006			18.07		10.98			54,255		0.92			1.06			115
	2007	(a)		19.13		6.38	(1)		53,424		0.92	(2)		0.94	(2)		28	(1)

129

Morgan Stanley Select Dimensions Investment Series

Financial Highlights continued


FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME (LOSS)*			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
EQUALLY-WEIGHTED S&P 500 CLASS X SHARES
	2002		$	19.12	$	0.19		$	(3.22	)	$	(3.03	)	$	(0.21	)		—		$	(0.21	)
	2003			15.88		0.19			5.59			5.78			(0.21	)	$	(0.32	)		(0.53	)
	2004			21.13		0.23			3.27			3.50			(0.18	)		—			(0.18	)
	2005			24.45		0.32			1.54			1.86			(0.23	)		(0.37	)		(0.60	)
	2006			25.71		0.37			3.45			3.82			(0.34	)		(1.44	)		(1.78	)
	2007	(a)		27.75		0.20			2.21			2.41			(0.42	)		(2.57	)		(2.99	)
CLASS Y SHARES
	2002			19.05		0.16			(3.22	)		(3.06	)		(0.20	)		—			(0.20	)
	2003			15.79		0.15			5.56			5.71			(0.19	)		(0.32	)		(0.51	)
	2004			20.99		0.18			3.23			3.41			(0.15	)		—			(0.15	)
	2005			24.25		0.26			1.53			1.79			(0.19	)		(0.37	)		(0.56	)
	2006			25.48		0.30			3.42			3.72			(0.29	)		(1.44	)		(1.73	)
	2007	(a)		27.47		0.16			2.18			2.34			(0.35	)		(2.57	)		(2.92	)
GROWTH CLASS X SHARES
	2002			15.48		0.01			(4.32	)		(4.31	)		—			—			—
	2003			11.17		0.03			2.97			3.00			(0.01	)		—			(0.01	)
	2004			14.16		0.05			1.03			1.08			(0.03	)		—			(0.03	)
	2005			15.21		0.01			2.35			2.36			(0.06	)		—			(0.06	)
	2006			17.51		(0.01	)		0.70			0.69			—			—			—
	2007	(a)		18.20		0.03			1.79			1.82			—			—			—
CLASS Y SHARES
	2002			15.42		(0.02	)		(4.30	)		(4.32	)		—			—			—
	2003			11.10		(0.01	)		2.96			2.95			—			—			—
	2004			14.05		0.03			1.01			1.04			(0.01	)		—			(0.01	)
	2005			15.08		(0.03	)		2.32			2.29			(0.04	)		—			(0.04	)
	2006			17.33		(0.05	)		0.69			0.64			—			—			—
	2007	(a)		17.97		—			1.77			1.77			—			—			—
FOCUS GROWTH CLASS X SHARES
	2002			14.99		0.04			(3.26	)		(3.22	)		(0.09	)		—			(0.09	)
	2003			11.68		0.04			2.36			2.40			(0.05	)		—			(0.05	)
	2004			14.03		0.08			1.08			1.16			(0.05	)		—			(0.05	)
	2005			15.14		0.01			2.15			2.16			(0.11	)		—			(0.11	)
	2006			17.19		(0.03	)		0.09			0.06			0.00	#		—			0.00	#
	2007	(a)		17.25		0.03			1.85			1.88			—			—			0.00

See Notes to Financial Statements
130

										RATIOS TO AVERAGE NET ASSETS**
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN†			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME (LOSS)			PORTFOLIO TURNOVER RATE
EQUALLY-WEIGHTED S&P 500 CLASS X SHARES
	2002		$	15.88		(15.97	)%	$	121,065		0.54	%		1.09	%		8	%
	2003			21.13		37.14			143,019		0.55			1.11			24
	2004			24.45		16.65			142,320		0.50			1.07			20
	2005			25.71		7.81			120,117		0.27			1.30			17
	2006			27.75		15.69			103,824		0.27			1.40			17
	2007	(a)		27.17		8.67	(1)		96,589		0.27	(2)		1.39	(2)		6	(1)
CLASS Y SHARES
	2002			15.79		(16.21	)		18,843		0.79			0.84			8
	2003			20.99		36.87			47,554		0.80			0.86			24
	2004			24.25		16.33			80,900		0.75			0.82			20
	2005			25.48		7.57			101,156		0.52			1.05			17
	2006			27.47		15.34			112,897		0.52			1.15			17
	2007	(a)		26.89		8.54	(1)		114,228		0.52	(2)		1.14	(2)		6	(1)
GROWTH CLASS X SHARES
	2002			11.17		(27.84	)		39,834		0.91			0.08			135
	2003			14.16		26.90			40,356		0.93			0.21			128
	2004			15.21		7.64			34,038		0.93			0.37			168
	2005			17.51		15.55			31,126		0.70			0.05			83
	2006			18.20		3.94			23,975		0.71			(0.04	)		61
	2007	(a)		20.02		10.00	(1)		22,001		0.70	(2)		0.30	(2)		26	(1)
CLASS Y SHARES
	2002			11.10		(28.02	)		3,520		1.16			(0.17	)		135
	2003			14.05		26.58			6,850		1.18			(0.04	)		128
	2004			15.08		7.38			10,934		1.18			0.12			168
	2005			17.33		15.21			21,746		0.95			(0.20	)		83
	2006			17.97		3.75			27,009		0.96			(0.29	)		61
	2007	(a)		19.74		9.79	(1)		27,937		0.95	(2)		0.05	(2)		26	(1)
FOCUS GROWTH CLASS X SHARES
	2002			11.68		(21.56	)		274,710		0.66			0.27			309
	2003			14.03		20.57			260,230		0.67			0.33			261
	2004			15.14		8.29			212,736		0.67			0.60			134
	2005			17.19		14.39			186,633		0.67			0.06			73
	2006			17.25		0.37			137,081		0.69			(0.15	)		98
	2007	(a)		19.13		10.90	(1)		128,975		0.70	(2)		0.33	(2)		20	(1)

131

Morgan Stanley Select Dimensions Investment Series

Financial Highlights continued


FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME (LOSS)*			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
FOCUS GROWTH CLASS Y SHARES
	2002		$	14.93	$	0.01		$	(3.25	)	$	(3.24	)	$	(0.06	)		—		$	(0.06	)
	2003			11.63		0.01			2.34			2.35			(0.02	)		—			(0.02	)
	2004			13.96		0.05			1.06			1.11			(0.02	)		—			(0.02	)
	2005			15.05		(0.03	)		2.15			2.12			(0.07	)		—			(0.07	)
	2006			17.10		(0.07	)		0.09			0.02			—			—			—
	2007	(a)		17.12		0.01			1.83			1.84			—			—			—
CAPITAL OPPORTUNITIES CLASS X SHARES
	2002			9.79		(0.05	)		(4.24	)		(4.29	)		—			—			—
	2003			5.50		(0.04	)		2.33			2.29			—			—			—
	2004			7.79		(0.03	)		1.79			1.76			—			—			—
	2005			9.55		(0.03	)		2.19			2.16			—			—			—
	2006			11.71		(0.04	)		0.95			0.91			—			—			—
	2007	(a)		12.62		0.01			1.19			1.20			—			—			—
CLASS Y SHARES
	2002			9.75		(0.07	)		(4.22	)		(4.29	)		—			—			—
	2003			5.46		(0.05	)		2.31			2.26			—			—			—
	2004			7.72		(0.05	)		1.78			1.73			—			—			—
	2005			9.45		(0.06	)		2.16			2.10			—			—			—
	2006			11.55		(0.07	)		0.94			0.87			—			—			—
	2007	(a)		12.42		(0.01	)		1.17			1.16			—			—			—
GLOBAL EQUITY CLASS X SHARES
	2002			12.79		0.04			(2.26	)		(2.22	)		(0.01	)		—			(0.01	)
	2003			10.56		0.04			3.62			3.66			(0.05	)		—			(0.05	)
	2004			14.17		0.09			1.06			1.15			(0.03	)		—			(0.03	)
	2005			15.29		0.13			1.49			1.62			(0.11	)		—			(0.11	)
	2006			16.80		0.11			3.31			3.42			(0.14	)	$	(1.31	)		(1.45	)
	2007	(a)		18.77		0.07			1.88			1.95			(0.13	)		(2.82	)		(2.95	)
CLASS Y SHARES
	2002			12.75		0.01			(2.26	)		(2.25	)		—			—			—
	2003			10.50		0.01			3.60			3.61			(0.02	)		—			(0.02	)
	2004			14.09		0.06			1.05			1.11			(0.01	)		—			(0.01	)
	2005			15.19		0.09			1.47			1.56			(0.07	)		—			(0.07	)
	2006			16.68		0.06			3.30			3.36			(0.10	)		(1.31	)		(1.41	)
	2007	(a)		18.63		0.05			1.90			1.95			(0.13	)		(2.82	)		(2.95	)

See Notes to Financial Statements
132

										RATIOS TO AVERAGE NET ASSETS**
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN†			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME (LOSS)			PORTFOLIO TURNOVER RATE
FOCUS GROWTH CLASS Y SHARES
	2002		$	11.63		(21.73	)%	$	30,035		0.91	%		0.02	%		309	%
	2003			13.96		20.25			46,126		0.92			0.08			261
	2004			15.05		7.96			43,269		0.92			0.35			134
	2005			17.10		14.16			42,906		0.92			(0.19	)		73
	2006			17.12		0.12			36,895		0.94			(0.40	)		98
	2007	(a)		18.96		10.75	(1)		37,212		0.95	(2)		0.08	(2)		20	(1)
CAPITAL OPPORTUNITIES CLASS X SHARES
	2002			5.50		(43.82	)		22,097		0.90			(0.71	)		103
	2003			7.79		41.64			25,473		0.87			(0.57	)		184
	2004			9.55		22.59			25,408		0.90			(0.32	)		118
	2005			11.71		22.62			24,087		0.89			(0.33	)		87
	2006			12.62		7.86			19,112		0.90			(0.32	)		59
	2007	(a)		13.82		9.42	(1)		17,552		0.94	(2)		0.15	(2)		25	(1)
CLASS Y SHARES
	2002			5.46		(44.00	)		6,537		1.15			(0.96	)		103
	2003			7.72		41.39			11,302		1.12			(0.82	)		184
	2004			9.45		22.41			13,980		1.15			(0.57	)		118
	2005			11.55		22.22			15,897		1.14			(0.58	)		87
	2006			12.42		7.53			16,127		1.15			(0.57	)		59
	2007	(a)		13.58		9.34	(1)		17,040		1.19	(2)		(0.10	)(2)		25	(1)
GLOBAL EQUITY CLASS X SHARES
	2002			10.56		(17.37	)		75,611		1.08			0.35			44
	2003			14.17		34.71			83,607		1.08			0.35			72
	2004			15.29		8.17			73,290		1.11			0.64			48
	2005			16.80		10.64			64,377		1.12			0.83			75
	2006			18.77		21.59			60,727		1.05			0.60			42
	2007	(a)		17.77		10.43	(1)		58,716		0.98	(2)		0.73	(2)		9	(1)
CLASS Y SHARES
	2002			10.50		(17.57	)		3,951		1.33			0.10			44
	2003			14.09		34.33			7,593		1.33			0.10			72
	2004			15.19		7.89			8,399		1.36			0.39			48
	2005			16.68		10.32			8,975		1.37			0.58			75
	2006			18.63		21.35			10,750		1.30			0.35			42
	2007	(a)		17.63		10.27	(1)		11,606		1.23	(2)		0.48	(2)		9	(1)

133

Morgan Stanley Select Dimensions Investment Series

Financial Highlights continued


FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME (LOSS)*			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS		TOTAL DIVIDENDS AND DISTRIBUTIONS
DEVELOPING GROWTH CLASS X SHARES
	2002		$	16.01	$	(0.03	)	$	(4.41	)	$	(4.44	)		—			—		—
	2003			11.57		(0.03	)		4.82			4.79			—			—		—
	2004			16.36		(0.03	)		3.68			3.65			—			—		—
	2005			20.01		(0.03	)		3.78			3.75			—			—		—
	2006			23.76		0.12			2.40			2.52			—			—		—
	2007	(a)		26.28		0.13			3.14			3.27		$	(0.12	)		—	$	(0.12	)
CLASS Y SHARES
	2002			15.95		(0.06	)		(4.40	)	$	(4.46	)		—			—		—
	2003			11.49		(0.07	)		4.80			4.73			—			—		—
	2004			16.22		(0.07	)		3.64			3.57			—			—		—
	2005			19.79		(0.08	)		3.72			3.64			—			—		—
	2006			23.43		0.05			2.38			2.43			—			—		—
	2007	(a)		25.86		0.10			3.07			3.17			(0.04	)		—		(0.04	)

(a) For the six months ended June 30, 2007 (unaudited).

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

** Reflects overall Portfolio ratios for investment income and non-class specific expenses.

† Calculated based on the net asset value as of the last business day of the period.

# Includes dividends of less than $0.001.

(1) Not annualized.

(2) Annualized.

See Notes to Financial Statements
134

										RATIOS TO AVERAGE NET ASSETS**
FOR THE YEAR ENDED DECEMBER 31			NET ASSET VALUE END OF PERIOD		TOTAL RETURN†			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME (LOSS)			PORTFOLIO TURNOVER RATE
DEVELOPING GROWTH CLASS X SHARES
	2002		$	11.57		(27.73	)%	$	45,892		0.61	%		(0.26	)%		251	%
	2003			16.36		41.40			53,996		0.62			(0.20	)		193
	2004			20.01		22.31			52,359		0.64			(0.19	)		135
	2005			23.76		18.69			49,116		0.63			(0.15	)		102
	2006			26.28		10.69			41,466		0.63			0.47			65
	2007	(a)		29.43		12.40	(1)		39,802		0.67	(2)		0.96	(2)		32	(1)
CLASS Y SHARES
	2002			11.49		(27.96	)		2,602		0.86			(0.51	)		251
	2003			16.22		41.17			6,798		0.87			(0.45	)		193
	2004			19.79		21.95			8,943		0.89			(0.44	)		135
	2005			23.43		18.40			10,704		0.88			(0.40	)		102
	2006			25.86		10.42			10,192		0.88			0.22			65
	2007	(a)		28.99		12.27	(1)		10,596		0.92	(2)		0.71	(2)		32	(1)

135

(This page has been intentionally left blank.)

Trustees
Frank L. Bowman				Joseph J. Kearns

Michael Bozic				Michael F. Klein

Kathleen A. Dennis				Michael E. Nugent

James F. Higgins				W. Allen Reed

Dr. Manuel H. Johnson				Fergus Reid

Officers
Michael E. Nugent Chairperson of the Board

Ronald E. Robison President and Principal Executive Officer

J. David Germany Vice President

Dennis F. Shea Vice President

Amy R. Doberman Vice President

Carsten Otto Chief Compliance Officer

Stefanie V. Chang Yu Vice President

Francis J. Smith Treasurer and Chief Financial Officer

Mary E. Mullin Secretary

Transfer Agent				Independent Registered Public Accounting Firm
Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311				Deloitte & Touche LLP Two World Financial Center New York, New York 10281

Legal Counsel				Counsel to the Independent Trustees
Clifford Chance US LLP 31 West 52nd Street New York, New York 10019				Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036

Investment Adviser
Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036

The financial statements included herein have been taken from the records of the fund without examination by the independent auditors and accordingly they do not express an opinion thereon.

This report is submitted for the general information of shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available without charge, by calling (800) 869-NEWS.

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

Morgan Stanley Funds are distributed by Morgan Stanley Distributors Inc.

Morgan Stanley Distributors Inc., member NASD.

#40474

SELDIMSAN IU07-02942P-Y06/07

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

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

Not applicable for semiannual reports.

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

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable to reports filed by closed-end funds.

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

Not applicable.

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

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

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

SIGNATURES

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

Morgan Stanley Select Dimensions Investment Series

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
August 9, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
August 9, 2007

/s/ Francis Smith
Francis Smith
Principal Financial Officer
August 9, 2007

Morgan Stanley Select Dimensions Investment Series Inactive N-CSRSCertified semi-annual shareholder report (management investment company)