UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-02349

Morgan Stanley Income Securities Inc.

(Exact name of registrant as specified in charter)

522 Fifth Avenue, New York, New York		10036
(Address of principal executive offices)		(Zip code)

Arthur Lev
522 Fifth Avenue, New York, New York 10036

(Name and address of agent for service)

Registrant’s telephone number, including area code: 212-296-6963

Date of fiscal year end: September 30, 2011

Date of reporting period: June 30, 2011

 

 

Item 1. Schedule of Investments.

The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited)

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
				Corporate Bonds (92.7%)
				Basic Materials (7.5%)
$	1,085			ArcelorMittal (Luxembourg)			9.85	%			06/01/19			$	1,377,479
	1,165			CF Industries, Inc.			6.875				05/01/18				1,323,731
	675			Cliffs Natural Resources, Inc.			4.875				04/01/21				678,166
	395			FMG Resources August 2006 Pty Ltd. (Australia) (a)			6.375				02/01/16				395,988
	155			FMG Resources August 2006 Pty Ltd. (Australia) (a)			6.875				02/01/18				158,100
	315			Georgia-Pacific LLC			7.75				11/15/29				363,521
	435			Georgia-Pacific LLC			8.875				05/15/31				551,012
	134			Goldcorp, Inc. (Canada)			2.00				08/01/14				168,505
	375			Incitec Pivot Ltd. (Australia) (a)			4.00				12/07/15				383,349
	870			International Paper Co.			7.50				08/15/21				1,018,754
	495			Lubrizol Corp.			8.875				02/01/19				644,714
	319			Lyondell Chemical Co. (a)			8.00				11/01/17				355,685
	775			MeadWestvaco Corp.			7.375				09/01/19				867,947
	315			Nalco Co. (a)			6.625				01/15/19				324,450
	785			Reliance Steel & Aluminum Co.			6.85				11/15/36				782,661
	500			Rio Tinto Finance USA Ltd. (Australia)			9.00				05/01/19				663,508
	400			Southern Copper Corp. (Mexico)			5.375				04/16/20				411,720
	630			Teck Resources, Ltd. (Canada)			4.75				01/15/22				632,942
	705			Teck Resources, Ltd. (Canada)			6.25				07/15/41				714,193
	490			Vale Overseas Ltd. (Brazil)			6.875				11/21/36				533,260
															12,349,685
				Communications (15.8%)
	835			American Tower Corp.			4.50				01/15/18				835,781
	425			AT&T, Inc.			6.15				09/15/34				441,358
	245			Cablevision Systems Corp.			7.75				04/15/18				262,456
	565			CBS Corp.			8.875				05/15/19				721,311
	210			CenturyLink, Inc., Series Q			6.15				09/15/19				211,547
	1,080			Comcast Corp.			6.40				05/15/38				1,156,184
	1,485			Comcast Corp.			6.45				03/15/37				1,593,424
	265			Corning, Inc.			7.25				08/15/36				309,302
	180			COX Communications, Inc. (a)			8.375				03/01/39				236,108
	945			Deutsche Telekom International Finance BV (Germany)			8.75				06/15/30				1,250,468
	895			DirecTV Holdings LLC/DirecTV Financing Co., Inc.			4.60				02/15/21				900,978
	395			DirecTV Holdings LLC/DirecTV Financing Co., Inc.			5.875				10/01/19				438,806
	715			DirecTV Holdings LLC/DirecTV Financing Co., Inc.			7.625				05/15/16				780,144
	115			Expedia, Inc.			5.95				08/15/20				112,413
	495			Frontier Communications Corp.			8.50				04/15/20				542,025
	276			Liberty Media LLC			3.125				03/30/23				330,855
	590			Liberty Media LLC			3.50				01/15/31				321,550
	865			NBC Universal Media LLC (a)			4.375				04/01/21				857,642
	920			News America, Inc.			6.40				12/15/35				965,129
	610			News America, Inc.			6.65				11/15/37				655,837
	210			News America, Inc.			7.85				03/01/39				252,223
	248			Omnicom Group, Inc. (b)			0.00				07/01/38				274,350
	170			Omnicom Group, Inc.			4.45				08/15/20				168,949
	565			Qwest Corp.			6.50				06/01/17				615,850
	150			Qwest Corp.			6.875				09/15/33				145,313
	60			Qwest Corp.			8.375				05/01/16				71,100
	310			Sable International Finance Ltd. (South Africa) (a)			7.75				02/15/17				313,100
	232			SBA Communications Corp.			1.875				05/01/13				256,070
	180			SBA Telecommunications, Inc.			8.25				08/15/19				193,500
	250			Symantec Corp., Series B			1.00				06/15/13				305,000
	1,885			Telecom Italia Capital SA (Italy)			7.175				06/18/19				2,084,392

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
$	800			Telefonica Europe BV (Spain)			8.25	%			09/15/30			$	957,706
	2,190			Time Warner Cable, Inc.			6.75				07/01/18				2,543,335
	390			Time Warner Cable, Inc.			6.75				06/15/39				428,030
	130			Time Warner Cable, Inc.			8.25				04/01/19				162,378
	520			Time Warner Cable, Inc.			8.75				02/14/19				663,555
	350			Time Warner, Inc.			4.875				03/15/20				363,083
	85			Time Warner, Inc.			6.50				11/15/36				90,910
	1,565			Time Warner, Inc.			7.70				05/01/32				1,894,828
	860			Viacom, Inc.			6.875				04/30/36				963,117
	195			Vivendi SA (France) (a)			6.625				04/04/18				220,897
															25,891,004
				Consumer, Cyclical (6.6%)
	281			America West Airlines 2001-1 Pass-Through Trust, Series 011G (AMBAC Insd)			7.10				04/02/21				278,657
	825			Best Buy Co., Inc.			3.75				03/15/16				829,838
	830			Chrysler Group LLC/CG Co-Issuer, Inc. (a)			8.00				06/15/19				819,625
	1,330			CVS Pass-Through Trust			6.036				12/10/28				1,415,335
	798			CVS Pass-Through Trust (a)			8.353				07/10/31				978,390
	540			Daimler Finance North America LLC (Germany)			8.50				01/18/31				732,142
	228			DR Horton, Inc., Series DHI			2.00				05/15/14				253,650
	985			Gap, Inc. (The)			5.95				04/12/21				948,018
	265			Hyatt Hotels Corp. (a)			6.875				08/15/19				296,198
	70			Ingram Micro, Inc.			5.25				09/01/17				73,473
	138			International Game Technology			3.25				05/01/14				165,255
	135			JC Penney Co., Inc.			5.65				06/01/20				134,325
	276			JC Penney Corp., Inc.			6.375				10/15/36				248,400
	185			Levi Strauss & Co.			7.625				05/15/20				185,925
	395			QVC, Inc. (a)			7.125				04/15/17				416,725
	282			RadioShack Corp. (a)			2.50				08/01/13				283,058
	200			Tech Data Corp.			2.75				12/15/26				209,000
	250			Whirlpool Corp.			8.60				05/01/14				291,512
	575			Wyndham Worldwide Corp.			5.625				03/01/21				574,614
	250			Wyndham Worldwide Corp.			5.75				02/01/18				258,499
	405			Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp.			7.75				08/15/20				441,956
	825			Yum! Brands, Inc.			6.875				11/15/37				938,944
															10,773,539
				Consumer, Non-Cyclical (8.0%)
	685			Altria Group, Inc.			10.20				02/06/39				985,339
	200			Amgen, Inc., Series B			0.375				02/01/13				201,750
	301			Archer-Daniels-Midland Co.			0.875				02/15/14				319,060
	760			Boston Scientific Corp.			6.00				01/15/20				824,121
	680			Bunge Ltd. Finance Corp.			8.50				06/15/19				830,247
	200			Cephalon, Inc.			2.50				05/01/14				246,000
	195			ConAgra Foods, Inc.			7.00				10/01/28				205,117
	585			ConAgra Foods, Inc.			8.25				09/15/30				696,911
	95			Constellation Brands, Inc.			7.25				09/01/16				104,263
	775			Delhaize Group SA (Belgium)			5.70				10/01/40				723,494
	500			Fortune Brands, Inc.			6.375				06/15/14				556,237
	304			Gilead Sciences, Inc. (a)			1.00				05/01/14				339,720
	325			Grupo Bimbo SAB de CV (Mexico) (a)			4.875				06/30/20				327,725
	1,585			Kraft Foods, Inc.			5.375				02/10/20				1,735,727
	80			Kraft Foods, Inc.			6.875				02/01/38				92,855
	505			Kraft Foods, Inc.			6.875				01/26/39				584,302
	235			Kraft Foods, Inc.			7.00				08/11/37				274,646
	200			Life Technologies Corp.			1.50				02/15/24				229,500
	565			Lorillard Tobacco Co.			8.125				06/23/19				659,075
	218			Molson Coors Brewing Co.			2.50				07/30/13				240,345
	200			Mylan, Inc.			1.25				03/15/12				223,500
	265			Quest Diagnostics, Inc.			6.95				07/01/37				295,143
	585			Sigma Alimentos SA de CV (Mexico) (a)			5.625				04/14/18				599,625
	360			TreeHouse Foods, Inc.			7.75				03/01/18				383,400

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
$	368			UnitedHealth Group, Inc.			5.80	%			03/15/36			$	372,613
	1,020			Verisk Analytics, Inc.			5.80				05/01/21				1,083,947
															13,134,662
				Energy (8.8%)
	258			Alpha Natural Resources, Inc.			2.375				04/15/15				303,150
	65			Alpha Natural Resources, Inc.			6.00				06/01/19				65,162
	280			Alpha Natural Resources, Inc.			6.25				06/01/21				282,800
	395			Anadarko Petroleum Corp.			6.95				06/15/19				462,086
	835			Anadarko Petroleum Corp.			8.70				03/15/19				1,065,615
	261			Chesapeake Energy Corp.			2.75				11/15/35				290,036
	385			Chesapeake Energy Corp.			7.625				07/15/13				421,575
	110			Concho Resources, Inc.			7.00				01/15/21				114,125
	550			Continental Resources, Inc.			7.125				04/01/21				583,000
	775			Energy Transfer Partners LP			9.00				04/15/19				965,042
	350			Enterprise Products Operating LLC			5.20				09/01/20				369,727
	1,400			Enterprise Products Operating LLC			5.95				02/01/41				1,395,272
	580			EQT Corp.			8.125				06/01/19				710,566
	190			Gazprom OAO Via Gaz Capital SA (Russia) (a)			6.51				03/07/22				201,875
	300			Hess Corp.			6.00				01/15/40				311,567
	490			Hess Corp.			7.125				03/15/33				583,735
	355			Kinder Morgan Energy Partners LP			6.85				02/15/20				411,147
	980			Kinder Morgan Finance Co. ULC			5.70				01/05/16				1,025,325
	225			Marathon Petroleum Corp. (a)			5.125				03/01/21				231,750
	575			Marathon Petroleum Corp. (a)			6.50				03/01/41				596,266
	1,030			Petro-Canada (Canada)			5.95				05/15/35				1,053,234
	200			Petrobras International Finance Co. (Brazil)			5.75				01/20/20				214,351
	1,090			Plains All American Pipeline LP/PAA Finance Corp.			6.70				05/15/36				1,164,151
	375			QEP Resources, Inc.			6.875				03/01/21				397,500
	1,100			Valero Energy Corp.			6.125				02/01/20				1,210,866
															14,429,923
				Finance (33.5%)
	790			Aegon N.V. (Netherlands)			4.625				12/01/15				838,020
	375			Aflac, Inc.			8.50				05/15/19				459,310
	500			Ally Financial, Inc. (a)			6.25				12/01/17				498,541
	1,290			American Financial Group, Inc.			9.875				06/15/19				1,606,505
	2,315			American International Group, Inc.			6.40				12/15/20				2,496,281
	313			Ares Capital Corp. (a)			5.75				02/01/16				330,215
	845			Banco Bradesco SA (Brazil) (a)			4.125				05/16/16				854,549
	815			Banco de Credito del Peru (Peru) (a)			4.75				03/16/16				810,925
	700			Banco Votorantim SA (Brazil) (a)			5.25				02/11/16				713,160
	1,100			Barclays Bank PLC (United Kingdom) (a)			6.05				12/04/17				1,166,218
	810			BBVA Bancomer SA (Mexico) (a)			4.50				03/10/16				828,225
	700			BBVA US Senior SAU (Spain)			3.25				05/16/14				692,720
	1,220			BNP Paribas (France)			5.00				01/15/21				1,228,904
	1,125			Brandywine Operating Partnership			4.95				04/15/18				1,142,167
	360			Brookfield Asset Management, Inc. (Canada)			5.80				04/25/17				387,025
	1,000			Capital One Bank, USA NA			8.80				07/15/19				1,229,081
	600			Capital One Capital VI			8.875				05/15/40				621,845
	1,385			CNA Financial Corp.			7.35				11/15/19				1,581,329
	150			Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (Netherlands) (a)			11.00	(c)			06/30/19	(d)			191,956
	600			Countrywide Financial Corp.			6.25				05/15/16				632,955
	855			Credit Agricole SA (France) (a)			8.375	(c)			10/13/19	(d)			897,750
	440			Credit Suisse AG (Switzerland)			5.40				01/14/20				446,202
	575			Dexus Diversfied Trust/Dexus Office Trust (Australia) (a)			5.60				03/15/21				582,112
	800			Digital Realty Trust LP			5.25				03/15/21				797,345
	320			Discover Bank/Greenwood			7.00				04/15/20				356,012
	420			Discover Bank/Greenwood			8.70				11/18/19				507,454
	200			ERP Operating LP			3.85				08/15/26				204,740
	205			Farmers Exchange Capital (a)			7.05				07/15/28				211,680

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
$	830			Farmers Insurance Exchange (a)			8.625	%			05/01/24			$	999,273
	455			Ford Motor Credit Co. LLC			5.75				02/01/21				455,577
	355			General Electric Capital Corp.			5.30				02/11/21				370,087
	1,335			Genworth Financial, Inc.			7.70				06/15/20				1,393,278
	590			Goldman Sachs Group, Inc. (The)			6.15				04/01/18				643,013
	180			Goldman Sachs Group, Inc. (The)			6.75				10/01/37				180,548
	1,100			Goodman Funding Pty Ltd. (Australia) (a)			6.375				04/15/21				1,131,396
	295			Harley-Davidson Funding Corp. (a)			6.80				06/15/18				333,875
	1,250			Hartford Financial Services Group, Inc.			5.50				03/30/20				1,290,739
	795			HBOS PLC (United Kingdom) (a)			6.75				05/21/18				766,087
	325			HCP, Inc.			5.375				02/01/21				335,839
	825			HCP, Inc.			5.625				05/01/17				897,103
	200			Health Care REIT, Inc.			4.75				07/15/27				226,250
	625			Health Care REIT, Inc.			6.125				04/15/20				670,586
	420			Huntington Bancshares, Inc.			7.00				12/15/20				474,386
	685			International Lease Finance Corp.			5.75				05/15/16				675,236
	710			International Lease Finance Corp.			6.25				05/15/19				694,777
	390			Intesa Sanpaolo SpA (Italy) (a)			6.50				02/24/21				407,469
	150			Jefferies Group, Inc.			3.875				11/09/15				152,587
	480			Jefferies Group, Inc.			6.875				04/15/21				516,807
	1,535			JPMorgan Chase Capital XXVII, Series AA			7.00				11/01/39				1,537,801
	430			Lincoln National Corp.			8.75				07/01/19				543,434
	470			Lloyds TSB Bank PLC (United Kingdom) (a)			5.80				01/13/20				471,464
	425			Lloyds TSB Bank PLC (United Kingdom)			6.375				01/21/21				443,239
	365			Macquarie Bank Ltd. (Australia) (a)			6.625				04/07/21				367,869
	380			Macquarie Group Ltd. (Australia) (a)			6.00				01/14/20				381,677
	305			Merrill Lynch & Co., Inc., MTN			6.875				04/25/18				337,920
	560			MetLife, Inc.			10.75				08/01/39				790,264
	175			NASDAQ OMX Group, Inc. (The)			5.25				01/16/18				179,387
	185			NASDAQ OMX Group, Inc. (The)			5.55				01/15/20				184,711
	750			Nationwide Building Society (United Kingdom) (a)			6.25				02/25/20				781,240
	575			Nationwide Financial Services (a)			5.375				03/25/21				578,637
	225			Platinum Underwriters Finance, Inc., Series B			7.50				06/01/17				242,453
	410			Principal Financial Group, Inc.			8.875				05/15/19				522,304
	850			Protective Life Corp.			7.375				10/15/19				967,921
	285			Prudential Financial, Inc., MTN			6.625				12/01/37				303,551
	575			QBE Capital Funding III Ltd. (Australia) (a)			7.25	(c)			05/24/41				577,947
	810			Regions Financial Corp.			5.75				06/15/15				798,543
	450			Reinsurance Group of America, Inc.			6.45				11/15/19				489,515
	545			Royal Bank of Scotland Group PLC (United Kingdom)			6.40				10/21/19				560,700
	830			Royal Bank of Scotland PLC (The) (United Kingdom)			4.875				03/16/15				862,123
	375			Santander Holdings USA, Inc.			4.625				04/19/16				377,264
	800			Santander US Debt SA Unipersonal (Spain) (a)			3.724				01/20/15				775,005
	1,589			SLM Corp., MTN			6.25				01/25/16				1,650,211
	320			SLM Corp., MTN			8.00				03/25/20				344,161
	570			Standard Chartered Bank (United Kingdom) (a)			6.40				09/26/17				635,582
	825			Ventas Realty LP/Ventas Capital Corp.			4.75				06/01/21				806,899
	200			Vornado Realty LP			3.875				04/15/25				226,750
	700			WEA Finance LLC (Australia) (a)			4.625				05/10/21				680,645
	1,000			Wells Operating Partnership II LP (a)			5.875				04/01/18				1,033,036
	825			Willis Group Holdings PLC			4.125				03/15/16				842,008
	500			XL Group PLC (Cayman Islands)			5.25				09/15/14				536,104
															54,758,504
				Industrials (5.2%)
	810			BAA Funding Ltd. (United Kingdom) (a)			4.875				07/15/21				792,195
	370			Ball Corp.			7.375				09/01/19				406,075
	160			Bombardier, Inc. (Canada) (a)			7.50				03/15/18				180,000
	325			Bombardier, Inc. (Canada) (a)			7.75				03/15/20				367,250
	895			CRH America, Inc.			6.00				09/30/16				983,524
	460			CRH America, Inc.			8.125				07/15/18				546,276

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

PRINCIPAL
AMOUNT IN						COUPON				MATURITY
THOUSANDS						RATE				DATE				VALUE
$	415			Crown Americas LLC / Crown Americas Capital Corp. III (a)			6.25	%			02/01/21			$	421,225
	335			DISH DBS Corp.			7.125				02/01/16				355,100
	430			Holcim US Finance Sarl & Cie SCS (Switzerland) (a)			6.00				12/30/19				460,258
	650			L-3 Communications Corp.			4.95				02/15/21				649,815
	775			Lafarge SA (France) (a)			5.85				07/09/15				829,331
	485			Masco Corp.			6.125				10/03/16				498,770
	425			Meccanica Holdings USA (Italy) (a)			7.375				07/15/39				450,203
	550			Odebrecht Finance Ltd. (Brazil) (a)			6.00				04/05/23				549,313
	232			Orbital Sciences Corp.			2.438				01/15/27				240,120
	247			Owens-Brockway Glass Container, Inc. (a)			3.00				06/01/15				244,530
	500			Roper Industries, Inc.			6.25				09/01/19				567,046
															8,541,031
				Technology (0.9%)
	550			KLA-Tencor Corp.			6.90				05/01/18				622,147
	200			Linear Technology Corp., Series A			3.00				05/01/27				212,750
	314			Microsoft Corp. (a)(b)			0.00				06/15/13				322,635
	250			SanDisk Corp.			1.00				05/15/13				242,813
															1,400,345
				Utilities (6.4%)
	760			AES Corp. (The)			8.00				06/01/20				813,200
	465			CMS Energy Corp.			6.25				02/01/20				497,150
	525			EDP Finance BV (Portugal) (a)			4.90				10/01/19				450,511
	750			Enel Finance International N.V. (Italy) (a)			5.125				10/07/19				759,608
	300			Entergy Gulf States Louisiana LLC			6.00				05/01/18				335,805
	2,400			Exelon Generation Co. LLC			4.00				10/01/20				2,269,462
	405			FirstEnergy Solutions Corp.			6.05				08/15/21				436,630
	1,060			FirstEnergy Solutions Corp.			6.80				08/15/39				1,105,786
	500			Iberdrola Finance Ireland Ltd. (Ireland) (a)			5.00				09/11/19				493,925
	215			Indianapolis Power & Light Co. (a)			6.30				07/01/13				235,475
	170			NRG Energy, Inc.			8.50				06/15/19				176,800
	1,000			PPL WEM Holdings PLC (United Kingdom) (a)			3.90				05/01/16				1,027,306
	825			Puget Energy, Inc.			6.50				12/15/20				853,476
	140			Toledo Edison Co. (The)			7.25				05/01/20				168,973
	825			UIL Holdings Corp.			4.625				10/01/20				806,214
															10,430,321
				Total Corporate Bonds (Cost $143,647,910)											151,709,014
				Municipal Bond (0.1%)
	190			Illinois State Toll Highway Authority, Highway Revenue, Build America Bonds (Cost $190,000)			6.184				01/01/34				197,642

NUMBER OF

SHARES

Preferred Stock (0.3%)

Consumer Finance

16,250

GMAC Capital Trust I (Cost $410,490) (e)

416,000

Convertible Preferred Stock (0.2%)

Diversified Financial Services

250

Bank of America Corp., Series L $72.50 (Cost $241,264)

250,300

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

PRINCIPAL
AMOUNT IN
THOUSANDS														VALUE
				Short-Term Investments (4.7%)
				U.S. Treasury Securities (f)(g)
$	7,722			U.S. Treasury Bills (Cost $7,721,856)			0.046-0.091	%			07/07/11- 09/22/11			$	7,721,856
				Total Investments (Cost $152,211,520) (h)(i)							98.0	%			160,294,812
				Other Assets in Excess of Liabilities							2.0				3,300,631
				Net Assets							100.0	%		$	163,595,443

Bond Insurance:

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

Futures Contracts Open at June 30, 2011:

						DESCRIPTION,				UNDERLYING				UNREALIZED
NUMBER OF		LONG/				DELIVERY MONTH				FACE AMOUNT				APPRECIATION
CONTRACTS		SHORT				AND YEAR				AT VALUE				(DEPRECIATION)
188		Long				U.S. Treasury 5 yr. Note, Sep-11				$	22,408,719			$	40,398
43		Long				U.S. Treasury Ultra Long Bond, Sep-11					5,428,750				(111,526	)
4		Short				U.S. Treasury 2 yr. Note, Sep-11					(877,375	)			(1,712	)
13		Short				U.S. Treasury 30 yr. Bond, Sep-11					(1,599,406	)			9,445
195		Short				U.S. Treasury 10 yr. Note, Sep-11					(23,853,984	)			(78,924	)
						Net Unrealized Depreciation								$	(142,319	)

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

Credit Default Swap Contracts Open at June 30, 2011:

CREDIT

SWAP COUNTERPARTY

RATING OF

&

NOTIONAL

REFERENCE

REFERENCE

BUY/SELL

AMOUNT

INTEREST

TERMINATION

UNREALIZED

UPFRONT

OBLIGATION+

OBLIGATION

PROTECTION

(000’s)

RATE

DATE

DEPRECIATION

PAYMENTS

VALUE

(unaudited)

Barclays Capital Whirlpoor Corp.

Buy

$

250

1.00

%

06/20/14

$

(14,631

)

$

13,480

$

(1,151

)

BBB-

Morgan Stanley Income Securities, Inc.

Portfolio of Investments § June 30, 2011 (unaudited) Continued

Interest Rate Swap Contracts Open at June 30, 2011:

		NOTIONAL
		AMOUNT				FLOATING RATE				PAY/RECEIVE								TERMINATION				UNREALIZED
SWAP COUNTERPARTY		(000)				INDEX				FLOATING RATE				FIXED RATE				DATE				DEPRECIATION
Credit Suisse		$	15,210			3 Month LIBOR				Receive					0.80	%			10/28/13			$	(5,097	)
Credit Suisse			6,370			3 Month LIBOR				Pay					2.098				10/28/17				(122,841	)
						Total Unrealized Depreciation																$	(127,938	)

Morgan Stanley Income Securities Inc.

Notes to Portfolio of Investments § June 30, 2011 (unaudited)

Fair Valuation Measurements

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

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

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

• Level 3 — significant unobservable inputs including the Fund’s own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances

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

The following is a summary of the inputs used as of June 30, 2011 in valuing the Fund’s investments carried at fair value:

		FAIR VALUE MEASUREMENTS AT JUNE 30, 2011 USING
						UNADJUSTED
						QUOTED PRICES IN
						ACTIVE MARKETS				OTHER
						FOR				SIGNIFICANT				SIGNIFICANT
						IDENTICAL				OBSERVABLE				UNOBSERVABLE
						INVESTMENTS				INPUTS				INPUTS
INVESTMENT TYPE		TOTAL				(LEVEL 1)				(LEVEL 2)				(LEVEL 3)
Assets:
Corporate Bonds		$	151,709,014				—			$	151,709,014				—
Municipal Bond			197,642				—				197,642				—
Preferred Stock			416,000			$	416,000				—				—
Convertible Preferred Stock			250,300				250,300				—				—
Short-Term Investments — U.S. Treasury Securities			7,721,856				—				7,721,856				—
Futures			49,843				49,843				—				—
Total Assets		$	160,344,655			$	716,143			$	159,628,512				—
Liabilities:
Futures		$	(192,162	)		$	(192,162	)			—				—
Credit Default Swaps			(14,631	)			—			$	(14,631	)			—
Interest Rate Swaps			(127,938	)			—				(127,938	)			—
Total Liabilities		$	(334,731	)		$	(192,162	)		$	(142,569	)
Total		$	160,009,924			$	523,981			$	159,485,943				—

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes. The Fund recognizes transfers between the Levels as of the end of the period. As of June 30, 2011, the Fund did not have any investments transfer between valuation levels.

Valuation of Investments — (1) Certain portfolio securities may be valued by an outside pricing service approved by the Fund’s Directors; The prices provided by a pricing service take into account broker dealer market price quotations for trading in similar groups of securities, security quality, maturity, coupon and other security characteristics as well as any developments related to the specific securities; (2) portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and ask price; (3) futures are valued at the latest price published by the commodities exchange on which they trade; (4) swaps are marked-to-market daily based upon quotations from market makers; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Advisors Inc. (the “Investment Adviser”), a wholly owned subsidiary of Morgan Stanley, determines that the market quotations are not reflective of a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Directors; and (6) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost, which approximates market value.

Item 2. 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-Q 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 fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the fund’s internal control over financial reporting.

Item 3. Exhibits.

(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

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 Income Securities Inc.

/s/ Arthur Lev   Arthur Lev
Principal Executive Officer
August 25, 2011

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

/s/ Arthur Lev   Arthur Lev
Principal Executive Officer
August 25, 2011
/s/ Francis Smith   Francis Smith
Principal Financial Officer
August 25, 2011