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    1095 Avenue of the Americas

    New York, NY 10036-6797

    +1 212 698 3500 Main

    +1 212 698 3599 Fax

    www.dechert.com

     

     

     

    Allison M Fumai

     

    allison.fumai@dechert.com

    +1 212 698 3526 Direct

    +1 698 698 3599 Fax

 

February 27, 2024

 

Securities and Exchange Commission

Judiciary Plaza

100 F Street, NE

Washington, D.C. 20549

Attention: Michael Rosenberg, Division of Investment
Management

 

 Re: Morgan Stanley Institutional Liquidity Funds (the “Registrant” or the “Fund”)

(File No. 333-104972;
811-21339)

 

Dear Mr. Rosenberg:

 

Thank you for your telephonic
comments regarding the Fund’s registration statements on Form N-1A relating to certain changes to the Tax-Exempt Portfolio, the
addition of the Select Class of the Tax-Exempt Portfolio, the addition of the Impact Class of the Treasury Securities Portfolio and the
addition of the Impact Partner Class of the Money Market Portfolio, Prime Portfolio, Government Portfolio and Treasury Securities Portfolio,
each filed with the Securities and Exchange Commission (the “SEC” or “Commission”) on December 29, 2023, and the
Fund’s registration statement on Form N-1A relating to the addition of the Advisor Class of the Money Market Portfolio, Tax-Exempt
Portfolio, Government Portfolio and Treasury Portfolio, filed with the SEC on January 23, 2024. The Fund has considered your comments
and has authorized us to make responses, changes and acknowledgements discussed below relating to the Fund’s registration statement
on its behalf. Below, we describe the changes made to the registration statement in response to the Commission staff’s comments
and provide any responses to or any supplemental explanations of such comments, as requested. These changes are expected to be reflected
in Post-Effective Amendments No. 50, 51 and 52 to the Fund’s registration statement on Form N-1A, which will be filed via EDGAR
on or before February 28, 2024 and/or March 22, 2024.

 

 Comment 1.
Please refer to the Differential Advisory Fee Waivers SEC staff guidance that was issued on February 2, 2023 (the “Differential
Advisory Fee Waivers Guidance”). Specifically, the SEC staff notes that advisory fees charged to shareholders of all classes of
a mutual fund should generally be the same percentage amount. Differential advisory fee waivers that are long-term or permanent, or effectively
long-term or permanent, and are not substantiated with a clearly defined temporal purpose, could, in the SEC staff’s view, present
a means for cross-subsidization between classes in contravention of Rule 18f-3.

 

Response
1.           The Fund acknowledges the Differential Advisory Fee Waivers
Guidance.

 

     

     

 

 

 Comment 2.  The
section of each prospectus titled “Fund Summary—Money Market Portfolio—Principal Risks—U.S. Government Securities,”
 “Fund Summary—Government Portfolio—Principal Risks—U.S. Government Securities” and “Fund Summary—Prime
Portfolio—Principal Risks—U.S. Government Securities” states that “reduced participation in the repurchase agreement
market by the Federal Reserve Bank of New York may affect the Fund’s investment strategies, operations and/or return potential.”
Please consider adding disclosure explaining how reduced participation in the repurchase agreement market by the Federal Reserve Bank
of New York may affect the Fund’s investment strategies, operations and/or return potential.

 

Response
2.           The Fund respectfully acknowledges the comment; however, the
Fund believes that the Portfolios’ current disclosure is appropriate.

 

 Comment
                          3. Please
supplementally inform the SEC staff how the changes to the rules that govern money market funds adopted by the SEC in July 2023 (“MMF
Reform”) may affect a Portfolio’s investment strategies, performance, yield and operating expenses to such a degree that
the Portfolio would no longer be viable.

 

Response
3.           The Fund respectfully acknowledges the comment. Because certain aspects of the MMF Reform have not yet been fully
implemented, the Fund does not yet fully know how such changes may impact a Portfolio’s continued viability. In addition, the
Fund does not know whether investors will continue to invest in a Portfolio after the MMF Reform is fully implemented to the same
degree as they have to date. As a result, the Fund believes it is prudent to inform shareholders of the potential risk that the MMF
Reform may not operate as intended and may have a negative impact on a Portfolio, including with respect to the Portfolio’s
continued viability.

 

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 Comment
                          4. Responses to Item 5 of Form N-1A are limited to providing the name and address of the adviser, a description of the adviser’s
experience and the advisory services that the adviser provides, and the compensation of the adviser. Accordingly, please move the disclosure
regarding charitable contributions to your response to Item 10, or otherwise explain how it is appropriate to be included in response
to Item 5.

 

Response
4.          The Fund respectfully acknowledges the comment; however, the Fund believes that the disclosure regarding the Adviser’s
charitable contribution contained in the section of each Impact Class and Impact Partner Class prospectus titled “Fund Summary—Prime
Portfolio—Fund Management,” “Fund Summary—Government Portfolio—Fund Management” and “Fund Summary—Treasury
Securities Portfolio—Fund Management” provides important information to shareholders regarding the Impact Class and Impact
Partner Class shares of each Portfolio.

 

 Comment 5. Please supplementally confirm whether the contribution amounts described in the section of the Portfolios’ prospectus
entitled “Fund Management—Advisory Fees” will be disclosed in the Fund’s annual report.

 

Response
5.           The contribution amounts described in the section of the Impact
Class and Impact Partner Class prospectus titled “Fund Management—Advisory Fees” will be disclosed on the Fund’s
website.

 

 Comment
6. Please
supplementally confirm that the Adviser will not directly or indirectly pass any costs of its contributions through to the Portfolio.

 

Response
6.           The Fund hereby confirms that no costs associated with the
Adviser’s contributions will be passed through to the Portfolios.

 

 Comment 7. Please disclose whether the Adviser or any affiliated persons of the Adviser have a material relationship with the charitable
organizations selected to receive contributions.

 

Response
7.           The Fund hereby confirms that neither the Adviser nor any affiliated
persons of the Adviser will sit on the board of the charitable organizations selected to receive contributions.

 

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 Comment
8. The section of each prospectus titled “Fund Summary—Government Portfolio—Principal
                  Investment Strategies” states that “[t]he Fund has adopted a policy to invest exclusively in obligations
                  issued or guaranteed by the U.S. Government and its agencies and instrumentalities and in repurchase agreements collateralized
                  by such securities in order to qualify as a “government money market fund” under federal regulations.”
                  (emphasis added.) The same section of each prospectus also states that “the Fund has adopted a policy that provides,
                  under normal circumstances, at least 80% of the Fund’s assets will be invested in obligations issued or guaranteed
                  by the U.S. Government and its agencies and instrumentalities and in repurchase agreements collateralized by such securities.”
                  Please update the disclosure to remove these contradictory statements or explain the discrepancy between these two
                  statements.

 

Response
8.          The Fund respectfully acknowledges the comment; however, the Fund believes that the Portfolio’s current disclosure
is appropriate. Although the Portfolio’s principal investment strategies state that the Portfolio will invest both “exclusively”
and “at least 80%” of its assets in U.S. Government and its agencies and instrumentalities and in repurchase agreements collateralized
by such securities, this disclosure is not contradictory. The Fund respectfully notes that the Portfolio adopted its 80% investment policy
pursuant to Rule 35d-1 under the Investment Company Act of 1940 in response to a prior SEC staff comment.

 

 Comment 9. The
section of each prospectus titled “Fund Summary—Treasury Securities Portfolio—Principal Investment Strategies”
states that the “Fund has adopted a policy to invest exclusively in U.S. Treasury obligations, which are backed by the full faith
and credit of the United States, in order to qualify as a ‘government money market fund’ under federal regulations.”
(emphasis added.) The Fund does not have to invest exclusively in U.S. Treasury obligations in order to qualify as a government money
market fund. Accordingly, please consider changing the sentence to read: “The Fund has adopted a policy to invest exclusively in
U.S. Treasury obligations, which are backed by the full faith and credit of the United States, and, accordingly, qualifies as a ‘government
money market fund’ under federal regulations.”

 

Response
9.          The disclosure has been revised accordingly.

 

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 Comment 10. The section of the Impact Class and Impact Partner Class prospectus titled “Additional Information About Fund Investment
Strategies and Related Risks—Liquidity” states that “[a] Fund may make investments that are illiquid or restricted[.]”
Please clarify whether this statement is only applicable to the Prime Portfolio.

 

Response
10.          The Fund respectfully acknowledges the comment; however, the Fund believes that the Portfolios’ current disclosure
is appropriate.

 

 Comment 11. Please consider revising the following sentence in the section of the Impact Class and Impact Partner Class prospectus titled
 “Additional Information About Fund Investment Strategies and Related Risks—U.S. Government Securities” to clarify that
it is not applicable to the Treasury Securities Portfolio: “In addition, a Fund may purchase securities issued or guaranteed by
agencies and instrumentalities of the U.S. Government which are backed by the full faith and credit of the United States.”

 

Response
11.          The disclosure has been revised accordingly.

 

 Comment
                          12. The
section of the Impact Class and Impact Partner class prospectus titled “Additional Information About Fund Investment Strategies
and Related Risks—Fixed-Income Securities” states that “a type of fixed-income securities in which the Fund may invest
are corporate debt obligations.” Please consider clarifying which Portfolio this example is applicable to.

 

Response
12.          The disclosure has been revised accordingly.

 

 Comment 13. In
the section of the Advisory Class prospectus titled “Fund Summary—Tax-Exempt Portfolio—Principal Risks—Liquidity,”
please clarify that the Portfolio’s illiquid investments are limited to 5% of its total assets.

 

Response
13.          The disclosure has been revised accordingly.

 

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If you would like to discuss
any of these responses in further detail or if you have any questions, please feel free to contact me at (212) 698-3526 (tel). Thank you.

 

    Best regards,
     

     
     

    /s/ Allison Fumai
     

    Allison Fumai
     

 

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