Whisk cream cheese, milk and 1/2 tsp. vanilla in medium bowl until blended. Add powdered sugar; mix well
Bring water, butter, and sugar to a boil over medium-high heat. Add flour; cook 1 min, stirring until mixture pulls from the pan. Remove from heat. Beat in eggs one at a time, then vanilla. Spoon into a pastry bag fitted with a large star tip.
Heat oil to 350°F. Pipe 3 dough rings onto a slotted spatula, then slide into oil. Fry 4 min per side until golden. Remove with spatula, drain on paper towels, and cool 5 min.
Dip tops of donuts in cream cheese mixture; sprinkle with coconut
