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			811-05624
Morgan Stanley Institutional Fund, Inc.
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York					10036
(Address of principal executive offices)					(Zip code)
John H. Gernon 522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code:				212-296-0289
Date of fiscal year end:	December 31,
Date of reporting period:		June 30, 2015

Item 1 - Report to Shareholders

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Active International Allocation Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	15
Statement of Operations	17
Statements of Changes in Net Assets	18
Financial Highlights	19
Notes to Financial Statements	23
U.S. Privacy Policy	33
Director and Officer Information	36

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Active International Allocation Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Active International Allocation Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Active International Allocation Portfolio Class I	$	1,000.00	$	1,062.30	$	1,020.53	$	4.40	*	$	4.31	*		0.86	%
Active International Allocation Portfolio Class A		1,000.00		1,060.20		1,018.65		6.33	*		6.21	*		1.24
Active International Allocation Portfolio Class L		1,000.00		1,058.10		1,016.17		8.88	*		8.70	*		1.74
Active International Allocation Portfolio Class C		1,000.00		967.00		1,005.03		3.27	**		3.33	**		1.99

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was below its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Active International Allocation Portfolio

	Shares		Value (000)
Common Stocks (91.2%)
Australia (4.0%)
AGL Energy Ltd.		8,662	$	104
Amcor Ltd.		22,780		241
AMP Ltd.		46,659		217
APA Group		11,779		75
Asciano Ltd.		14,890		76
Aurizon Holding Ltd.		25,906		103
Australia & New Zealand Banking Group Ltd.		46,229		1,149
BHP Billiton Ltd.		44,511		929
Brambles Ltd.		24,126		197
CIMIC Group Ltd. (a)		2,100		35
Coca-Cola Amatil Ltd.		12,375		87
Cochlear Ltd.		867		54
Commonwealth Bank of Australia		23,168		1,522
Crown Resorts Ltd.		6,212		58
CSL Ltd.		7,815		521
Fortescue Metals Group Ltd. (a)		10,163		15
Goodman Group REIT (a)		29,102		141
Harvey Norman Holdings Ltd.		11,416		40
Iluka Resources Ltd.		8,380		50
Incitec Pivot Ltd.		29,955		89
Insurance Australia Group Ltd.		33,739		145
Lend Lease Group REIT		5,473		63
Macquarie Group Ltd.		4,404		277
National Australia Bank Ltd.		35,437		911
Orica Ltd. (a)		6,651		109
Origin Energy Ltd.		16,950		157
QBE Insurance Group Ltd.		17,075		180
Rio Tinto Ltd.		5,159		214
Santos Ltd.		14,631		88
Scentre Group REIT		109,326		316
Sonic Healthcare Ltd.		6,898		114
South32 Ltd. (b)		42,171		57
South32 Ltd. (a)(b)		44,511		62
Stockland REIT (a)		87,371		276
Suncorp Group Ltd.		18,770		195
Sydney Airport		4,662		18
Tabcorp Holdings Ltd.		10,883		38
Tatts Group Ltd.		20,980		60
Telstra Corp., Ltd.		62,078		294
Transurban Group		20,187		145
Wesfarmers Ltd.		19,161		577
Westfield Corp. REIT		39,003		274
Westpac Banking Corp.		42,076		1,044
Woodside Petroleum Ltd.		9,729		257
Woolworths Ltd. (a)		23,867		496
WorleyParsons Ltd. (a)		3,410		27
				12,097
Austria (0.1%)
Erste Group Bank AG (b)		9,621		273
Raiffeisen Bank International AG (b)		958		14
				287

	Shares		Value (000)
Belgium (1.4%)
Ageas		1,655	$	64
Anheuser-Busch InBev N.V.		17,046		2,043
Groupe Bruxelles Lambert SA		5,859		471
KBC Groep N.V.		11,720		783
Proximus		428		15
Solvay SA		1,363		187
Telenet Group Holding N.V. (b)		2,238		122
UCB SA		3,566		256
Umicore SA		6,321		300
				4,241
Brazil (0.0%)
Cia Energetica de Minas Gerais (Preference)		1		—	@
China (2.1%)
Agricultural Bank of China Ltd. H Shares (c)		145,000		78
Air China Ltd. H Shares (c)		50,000		56
Alibaba Group Holding Ltd. ADR (b)		4,800		395
Anhui Conch Cement Co., Ltd. H Shares (c)		13,500		47
Baidu, Inc. ADR (b)		2,000		398
Bank of China Ltd. H Shares (c)		332,000		216
Bank of Communications Co., Ltd. H Shares (c)		69,000		72
Beijing Enterprises Holdings Ltd. (c)		4,000		30
Belle International Holdings Ltd. (c)		34,000		39
Brilliance China Automotive Holdings Ltd. (c)		22,000		34
Byd Co., Ltd. H Shares (c)		5,500		33
China Citic Bank Corp., Ltd. H Shares (b)(c)		31,000		25
China Communications Construction Co., Ltd. H Shares (c)		18,000		27
China Construction Bank Corp. H Shares (c)		293,000		268
China Everbright Ltd. (c)		30,000		104
China Life Insurance Co., Ltd. H Shares (c)		89,000		387
China Longyuan Power Group Corp., Ltd. H Shares (c)		16,000		18
China Mengniu Dairy Co., Ltd. (c)		10,000		50
China Merchants Bank Co., Ltd. H Shares (c)		20,000		58
China Minsheng Banking Corp., Ltd. H Shares (c)		54,000		71
China Mobile Ltd. (c)		38,000		487
China National Building Material Co., Ltd. H Shares (a)(c)		22,000		21
China Oilfield Services Ltd. H Shares (a)(c)		12,000		19
China Overseas Land & Investment Ltd. (c)		28,000		99
China Pacific Insurance Group Co., Ltd. H Shares (a)(c)		30,000		144
China Petroleum & Chemical Corp. H Shares (c)		90,000		78
China Resources Land Ltd. (c)		19,555		63
China Resources Power Holdings Co., Ltd. (c)		6,000		17
China Shenhua Energy Co., Ltd. H Shares (c)		20,500		47
China Telecom Corp., Ltd. H Shares (c)		88,000		52
China Unicom Hong Kong Ltd. H Shares (c)		172,000		271
China Vanke Co., Ltd. H Shares (a)(c)		10,800		27
Citic Ltd. (c)		19,000		34
CITIC Securities Co., Ltd. H Shares (a)(c)		33,000		119
CNOOC Ltd. (c)		61,000		87

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
China (cont'd)
Dongfeng Motor Group Co., Ltd. H Shares (c)		14,000	$	19
ENN Energy Holdings Ltd. (c)		6,000		36
Great Wall Motor Co., Ltd. H Shares (c)		16,000		78
Haitong Securities Co., Ltd. H Shares (a)(c)		50,000		132
Hengan International Group Co., Ltd. (c)		5,000		59
Huaneng Power International, Inc. H Shares (c)		70,000		97
Industrial & Commercial Bank of China Ltd. H Shares (c)		308,000		245
JD.com, Inc. ADR (b)		13,300		454
Jiangxi Copper Co., Ltd. H Shares (c)		11,000		18
Kunlun Energy Co., Ltd. (c)		16,000		16
Lenovo Group Ltd. (c)		48,000		66
New China Life Insurance Co., Ltd. H Shares (c)		9,400		56
PetroChina Co., Ltd. H Shares (c)		76,000		85
PICC Property & Casualty Co., Ltd. H Shares (c)		24,000		55
Ping An Insurance Group Co. of China Ltd. H Shares (c)		3,000		40
Shanghai Electric Group Co., Ltd. H Shares (a)(c)		68,000		56
Shimao Property Holdings Ltd. (c)		7,500		15
Sihuan Pharmaceutical Holdings Group Ltd. (c)(d)		21,000		11
Tencent Holdings Ltd. (c)		32,000		639
Tingyi Cayman Islands Holding Corp. (c)		14,000		29
Tsingtao Brewery Co., Ltd. H Shares (a)(c)		10,000		61
Want Want China Holdings Ltd. (a)(c)		38,000		40
WH Group Ltd. (b)(c)(e)		119,000		81
Wynn Macau Ltd. (c)		33,600		56
				6,415
Denmark (1.4%)
AP Moeller - Maersk A/S Series A		107		188
AP Moeller - Maersk A/S Series B		475		860
DSV A/S		13,655		443
Novo Nordisk A/S Series B		46,094		2,511
Novozymes A/S Series B		3,515		167
TDC A/S		8,292		61
				4,230
Finland (1.1%)
Elisa Oyj		4,656		148
Kone Oyj, Class B (a)		8,071		328
Metso Oyj		2,666		73
Neste Oyj (a)		4,275		109
Nokia Oyj		155,912		1,059
Orion Oyj, Class B		2,798		98
Sampo Oyj, Class A		11,110		523
Stora Enso Oyj, Class R		26,594		274
UPM-Kymmene Oyj		22,910		405
Wartsila Oyj		4,960		232
				3,249
France (9.9%)
Accor SA		8,625		435
Aeroports de Paris (ADP)		1,612		182
Air Liquide SA		4,827		611
Airbus Group SE		15,834		1,027

	Shares		Value (000)
Alcatel-Lucent (b)		107,400	$	391
Alstom SA (b)		6,078		173
Atos SE		3,245		242
AXA SA		37,759		953
BNP Paribas SA		37,099		2,240
Bouygues SA		8,037		301
Cap Gemini SA		5,480		485
Carrefour SA		15,805		506
Casino Guichard Perrachon SA		1,873		142
Christian Dior SE		1,029		201
Cie de Saint-Gobain		12,284		552
Cie Generale des Etablissements Michelin		4,162		436
CNP Assurances		3,647		61
Credit Agricole SA		32,226		479
Danone SA		12,037		778
Dassault Systemes		5,287		384
Edenred		4,583		113
Electricite de France SA		9,606		214
Essilor International SA		3,775		450
Eurazeo SA		815		54
Fonciere Des Regions REIT		1,923		163
GDF Suez		53,174		986
Gecina SA REIT		1,673		206
Hermes International		258		96
ICADE REIT		1,909		136
Iliad SA		1,207		268
Imerys SA		549		42
Kering		1,288		230
Klepierre REIT		10,241		451
L'Oreal SA		6,055		1,080
Lafarge SA		4,640		307
Lagardere SCA		3,081		90
Legrand SA		6,914		388
LVMH Moet Hennessy Louis Vuitton SE		4,187		734
Natixis SA		27,293		196
Orange SA		40,540		624
Pernod Ricard SA (a)		4,767		551
Publicis Groupe SA		4,922		364
Remy Cointreau SA		549		40
Renault SA		4,317		450
Safran SA		6,840		464
Sanofi		27,707		2,726
Schneider Electric SE		14,025		968
SES SA		10,295		346
Societe BIC SA		771		123
Societe Generale SA		28,022		1,308
Sodexo SA		1,604		152
STMicroelectronics N.V.		26,239		215
Suez Environnement Co.		11,136		207
Technip SA		649		40
Total SA		37,039		1,799
Unibail-Rodamco SE REIT		5,057		1,278
Valeo SA		2,420		381

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
France (cont'd)
Veolia Environnement SA		14,334	$	292
Vinci SA		16,097		931
Vivendi SA (a)		11,060		279
				30,321
Germany (7.0%)
Adidas AG		3,725		285
Allianz SE (Registered)		7,089		1,104
Axel Springer SE		830		44
BASF SE		16,870		1,482
Bayer AG (Registered)		17,821		2,494
Bayerische Motoren Werke AG		6,284		688
Beiersdorf AG		1,480		124
Brenntag AG		3,018		173
Commerzbank AG (b)		33,599		430
Continental AG		2,613		618
Daimler AG (Registered)		16,035		1,459
Deutsche Bank AG (Registered)		33,075		994
Deutsche Boerse AG		5,445		451
Deutsche Lufthansa AG (Registered) (b)		2,439		31
Deutsche Post AG (Registered)		14,593		426
Deutsche Telekom AG (Registered)		98,596		1,698
E.ON SE		30,595		408
Fraport AG Frankfurt Airport Services Worldwide		426		27
Fresenius Medical Care AG & Co., KGaA		6,873		567
GEA Group AG		4,166		186
HeidelbergCement AG		3,357		266
Henkel AG & Co., KGaA (Preference)		2,606		292
Hugo Boss AG		609		68
Infineon Technologies AG		41,545		516
Kabel Deutschland Holding AG (b)		1,257		168
Lanxess AG		1,442		85
Linde AG		2,220		421
Merck KGaA		2,923		291
Metro AG		10,164		321
Osram Licht AG		2,573		123
Porsche Automobil Holding SE (Preference)		4,334		365
ProSiebenSat.1 Media AG (Registered)		8,647		427
QIAGEN N.V. (b)		10,708		263
RTL Group SA (b)		2,067		187
RWE AG		13,731		295
SAP SE		11,832		826
Siemens AG (Registered)		15,875		1,599
Telefonica Deutschland Holding AG		7,591		44
ThyssenKrupp AG		7,020		183
United Internet AG (Registered)		5,016		223
Volkswagen AG		2,263		524
Volkswagen AG (Preference)		1,023		237
				21,413
Hong Kong (3.0%)
AIA Group Ltd.		374,400		2,451
Bank of East Asia Ltd. (The)		134,400		588

	Shares		Value (000)
BOC Hong Kong Holdings Ltd.		194,000	$	808
Cheung Kong Infrastructure Holdings Ltd.		14,000		109
CK Hutchison Holdings Ltd.		51,000		749
CLP Holdings Ltd.		39,500		336
Hang Lung Properties Ltd.		44,000		131
Hang Seng Bank Ltd.		41,700		815
Henderson Land Development Co., Ltd.		19,000		130
Hong Kong & China Gas Co., Ltd.		141,000		296
Hong Kong Exchanges and Clearing Ltd.		19,800		699
Link REIT (The)		43,000		252
MTR Corp., Ltd.		35,000		163
New World Development Co., Ltd.		107,284		140
Power Assets Holdings Ltd.		26,000		237
Sands China Ltd.		46,000		155
Sino Land Co., Ltd.		66,000		110
Sun Hung Kai Properties Ltd.		30,000		486
Swire Pacific Ltd., Class A		14,000		176
Swire Properties Ltd.		25,000		80
Techtronic Industries Co., Ltd.		29,500		97
Wharf Holdings Ltd.		25,000		166
Wheelock & Co., Ltd.		18,000		92
				9,266
Ireland (0.6%)
Bank of Ireland (b)		1,481,097		598
CRH PLC		27,965		789
Kerry Group PLC, Class A		3,556		264
Ryanair Holdings PLC ADR (a)		2,100		150
				1,801
Italy (1.1%)
Assicurazioni Generali SpA		35,841		646
Banca Monte dei Paschi di Siena SpA (b)		21,371		42
Banco Popolare SC (b)		3,108		51
Intesa Sanpaolo SpA		310,597		1,123
Luxottica Group SpA		5,931		394
Telecom Italia SpA		286,465		292
UniCredit SpA		92,769		623
Unione di Banche Italiane SCPA		22,716		182
				3,353
Japan (27.4%)
ABC-Mart, Inc.		800		49
Aeon Co., Ltd.		20,000		284
Aeon Mall Co., Ltd.		2,100		39
Ajinomoto Co., Inc.		20,000		433
Amada Co., Ltd.		6,400		68
ANA Holdings, Inc.		65,000		176
Asahi Glass Co., Ltd. (a)		25,300		152
Asahi Group Holdings Ltd.		11,600		369
Asahi Kasei Corp.		37,000		304
Asics Corp.		2,100		54
Astellas Pharma, Inc.		73,100		1,043
Bank of Kyoto Ltd. (The)		10,000		115
Bank of Yokohama Ltd. (The)		69,000		423

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Benesse Holdings, Inc.		1,854	$	47
Bridgestone Corp. (a)		21,100		781
Brother Industries Ltd.		6,200		88
Canon, Inc. (a)		20,304		661
Casio Computer Co., Ltd. (a)		2,200		43
Central Japan Railway Co.		4,392		793
Chiba Bank Ltd. (The)		18,000		137
Chubu Electric Power Co., Inc.		15,200		227
Chugai Pharmaceutical Co., Ltd.		6,600		228
Chugoku Bank Ltd. (The)		3,800		60
Citizen Holdings Co., Ltd. (a)		10,300		72
Credit Saison Co., Ltd.		7,600		163
Dai Nippon Printing Co., Ltd.		11,100		115
Dai-ichi Life Insurance Co., Ltd. (The)		62,900		1,237
Daiichi Sankyo Co., Ltd.		22,200		411
Daikin Industries Ltd.		7,100		511
Daito Trust Construction Co., Ltd.		2,656		275
Daiwa House Industry Co., Ltd.		15,600		364
Daiwa Securities Group, Inc.		75,000		562
Denso Corp.		20,050		999
Dentsu, Inc.		2,000		104
Don Quijote Holdings Co., Ltd.		3,800		162
East Japan Railway Co.		11,300		1,017
Eisai Co., Ltd.		7,700		517
FANUC Corp.		8,450		1,732
Fast Retailing Co., Ltd.		1,800		817
Fuji Heavy Industries Ltd.		8,200		302
FUJIFILM Holdings Corp.		20,100		718
Fujitsu Ltd.		63,200		353
Fukuoka Financial Group, Inc.		27,000		140
Hachijuni Bank Ltd. (The)		9,000		68
Hakuhodo DY Holdings, Inc.		5,700		61
Hamamatsu Photonics KK		3,200		94
Hankyu Hanshin Holdings, Inc.		19,000		112
Hirose Electric Co., Ltd.		900		129
Hisamitsu Pharmaceutical Co., Inc.		1,400		54
Hitachi Ltd.		115,000		758
Hitachi Metals Ltd.		3,000		46
Honda Motor Co., Ltd.		42,613		1,379
Hoshino Resorts, Inc. REIT		7		77
Hoya Corp.		17,900		718
IHI Corp.		59,530		277
Inpex Corp.		39,700		451
Isetan Mitsukoshi Holdings Ltd.		12,900		231
Isuzu Motors Ltd.		9,600		126
Ito En Ltd.		3,800		80
ITOCHU Corp.		52,551		694
Japan Airlines Co., Ltd.		8,800		307
Japan Exchange Group, Inc.		14,500		471
Japan Hotel REIT Investment Corp. REIT		111		74
Japan Real Estate Investment Corp. REIT		21		95
Japan Retail Fund Investment Corp. REIT		37		74

	Shares		Value (000)
Japan Tobacco, Inc.		36,300	$	1,293
JFE Holdings, Inc.		20,400		453
JGC Corp.		9,546		180
Joyo Bank Ltd. (The)		27,000		151
JSR Corp.		3,308		59
JX Holdings, Inc.		107,846		465
Kajima Corp.		21,000		99
Kakaku.com, Inc. (a)		4,100		59
Kansai Electric Power Co., Inc. (The) (a)(b)		21,700		240
Kansai Paint Co., Ltd.		3,000		47
Kao Corp.		18,500		861
Kawasaki Heavy Industries Ltd.		67,500		315
KDDI Corp.		12,600		304
Keikyu Corp.		9,000		68
Keio Corp.		8,000		57
Keyence Corp.		2,157		1,164
Kinden Corp.		7,000		93
Kintetsu Group Holdings Co., Ltd.		37,750		129
Kirin Holdings Co., Ltd.		24,700		340
Kobe Steel Ltd.		187,000		315
Komatsu Ltd.		32,500		653
Konica Minolta, Inc.		16,730		195
Kose Corp.		2,000		164
Kubota Corp.		35,000		555
Kuraray Co., Ltd.		13,356		163
Kurita Water Industries Ltd.		4,400		103
Kyocera Corp.		12,100		629
Kyowa Exeo Corp.		4,500		52
Kyowa Hakko Kirin Co., Ltd. (a)		7,000		92
Kyushu Electric Power Co., Inc. (a)(b)		9,800		114
Lawson, Inc.		3,000		205
LIXIL Group Corp.		7,462		148
Mabuchi Motor Co., Ltd.		1,800		114
Makita Corp.		1,300		71
Marubeni Corp.		51,550		296
Maruichi Steel Tube Ltd.		600		15
Mazda Motor Corp.		8,100		159
MEIJI Holdings Co., Ltd.		700		90
Minebea Co., Ltd.		3,000		50
Miraca Holdings, Inc.		1,800		90
Mitsubishi Chemical Holdings Corp.		49,000		309
Mitsubishi Corp.		41,900		922
Mitsubishi Electric Corp.		51,352		664
Mitsubishi Estate Co., Ltd.		40,000		862
Mitsubishi Heavy Industries Ltd.		128,550		782
Mitsubishi Materials Corp.		60,000		230
Mitsubishi Motors Corp.		7,900		67
Mitsubishi Tanabe Pharma Corp.		5,200		78
Mitsubishi UFJ Financial Group, Inc. (See Note G)		153,106		1,101
Mitsui & Co., Ltd.		47,400		644
Mitsui Chemicals, Inc.		30,000		112
Mitsui Fudosan Co., Ltd.		29,900		837
Mitsui OSK Lines Ltd.		33,000		106

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Mizuho Financial Group, Inc.		692,800	$	1,500
MS&AD Insurance Group Holdings, Inc.		13,760		429
Murata Manufacturing Co., Ltd.		8,000		1,396
Nabtesco Corp.		1,600		40
Namco Bandai Holdings, Inc.		5,500		106
NEC Corp.		60,900		185
NGK Insulators Ltd.		9,660		249
NGK Spark Plug Co., Ltd.		8,459		235
NH Foods Ltd.		2,000		46
Nidec Corp.		7,700		577
Nikon Corp. (a)		15,500		179
Nintendo Co., Ltd.		2,208		369
Nippon Building Fund, Inc. REIT (a)		26		114
Nippon Express Co., Ltd.		21,300		105
Nippon Paint Holdings Co., Ltd.		2,000		56
Nippon Steel Sumitomo Metal Corp.		279,108		724
Nippon Telegraph & Telephone Corp.		25,400		920
Nippon Television Holdings, Inc.		3,700		65
Nippon Yusen KK		59,015		164
Nissan Motor Co., Ltd.		78,405		817
Nitori Holdings Co., Ltd.		800		65
Nitto Denko Corp.		7,400		608
Nomura Holdings, Inc.		127,950		868
NSK Ltd.		7,253		112
NTT Data Corp.		4,100		179
NTT DoCoMo, Inc.		20,800		398
Obayashi Corp. (a)		10,571		77
Obic Co., Ltd.		2,200		98
Odakyu Electric Railway Co., Ltd.		18,000		168
Oji Holdings Corp.		8,000		35
Omron Corp.		9,304		404
Ono Pharmaceutical Co., Ltd.		2,500		273
Oriental Land Co., Ltd.		8,400		536
ORIX Corp.		52,860		787
Osaka Gas Co., Ltd.		86,600		342
Otsuka Holdings Co., Ltd.		11,500		367
Panasonic Corp.		20,700		284
Rakuten, Inc.		24,900		402
Resona Holdings, Inc.		28,100		154
Rohm Co., Ltd.		6,505		436
Santen Pharmaceutical Co., Ltd.		12,700		180
SBI Holdings, Inc.		13,400		185
Secom Co., Ltd.		7,985		518
Sega Sammy Holdings, Inc.		2,300		30
Seiko Epson Corp.		2,200		39
Sekisui Chemical Co., Ltd.		19,072		234
Sekisui House Ltd.		47,246		750
Seven & I Holdings Co., Ltd.		22,100		950
Shimamura Co., Ltd.		200		21
Shimano, Inc.		3,750		512
Shimizu Corp.		9,000		76
Shin-Etsu Chemical Co., Ltd.		11,793		732

	Shares		Value (000)
Shionogi & Co., Ltd.		16,000	$	620
Shiseido Co., Ltd.		11,900		270
Shizuoka Bank Ltd. (The)		17,000		178
SMC Corp.		1,805		544
Softbank Corp.		30,500		1,797
Sojitz Corp.		48,400		117
Sompo Japan Nipponkoa Holdings, Inc.		9,000		330
Sony Corp. (b)		36,193		1,024
Sumitomo Chemical Co., Ltd.		51,600		310
Sumitomo Corp.		38,700		450
Sumitomo Electric Industries Ltd.		21,100		327
Sumitomo Metal Mining Co., Ltd.		21,300		324
Sumitomo Mitsui Financial Group, Inc.		48,400		2,159
Sumitomo Mitsui Trust Holdings, Inc.		264,167		1,210
Sumitomo Realty & Development Co., Ltd.		12,500		439
Suruga Bank Ltd.		5,800		125
Suzuken Co., Ltd.		2,600		83
Suzuki Motor Corp.		2,900		98
Sysmex Corp.		1,500		90
T&D Holdings, Inc.		17,200		257
Taiheiyo Cement Corp. (a)		21,000		61
Taisei Corp.		29,000		167
Takeda Pharmaceutical Co., Ltd.		23,400		1,130
TDK Corp.		5,952		456
Teijin Ltd.		5,608		22
Terumo Corp.		13,800		331
THK Co., Ltd.		7,700		167
Tobu Railway Co., Ltd.		48,900		210
Toho Co., Ltd.		2,900		72
Tohoku Electric Power Co., Inc.		14,200		192
Tokio Marine Holdings, Inc.		21,620		900
Tokyo Electron Ltd.		4,900		310
Tokyo Gas Co., Ltd.		95,600		508
Tokyu Corp.		33,400		224
Tokyu Fudosan Holdings Corp.		12,900		100
Toppan Printing Co., Ltd.		11,600		97
Toray Industries, Inc.		53,100		449
Toshiba Corp.		104,026		358
TOTO Ltd.		4,000		72
Toyo Suisan Kaisha Ltd.		3,600		131
Toyota Industries Corp.		2,450		140
Toyota Motor Corp.		73,555		4,930
Trend Micro, Inc.		3,100		106
Unicharm Corp.		16,400		390
USS Co., Ltd.		4,100		74
West Japan Railway Co.		1,342		86
Yahoo! Japan Corp. (a)		63,600		257
Yakult Honsha Co., Ltd. (a)		3,100		184
Yamada Denki Co., Ltd. (a)		42,000		168
Yamaha Corp.		4,100		83
Yamaha Motor Co., Ltd.		7,300		160
Yamato Holdings Co., Ltd.		10,235		198
Yaskawa Electric Corp. (a)		9,300		119
				83,585

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Korea, Republic of (0.0%)
Nexon Co., Ltd.		6,300	$	87
Luxembourg (0.1%)
Altice SA (b)		1,797		248
Macau (0.1%)
Galaxy Entertainment Group Ltd. (c)		45,000		179
Malta (0.0%)
BGP Holdings PLC (b)(d)(f)		72,261		—
Netherlands (3.5%)
Aegon N.V.		45,726		336
Akzo Nobel N.V.		6,051		440
ArcelorMittal (a)		27,588		269
ASML Holding N.V.		13,766		1,423
Boskalis Westminster N.V.		120		6
CNH Industrial N.V. (a)		80,161		731
Gemalto N.V. (a)		3,130		279
Heineken N.V.		5,641		428
ING Groep N.V. CVA		130,963		2,162
Koninklijke Ahold N.V.		22,981		430
Koninklijke DSM N.V.		4,004		232
Koninklijke KPN N.V.		104,124		398
Koninklijke Philips N.V.		23,254		592
Randstad Holding N.V.		1,264		82
Reed Elsevier N.V.		26,463		628
TNT Express N.V.		22,240		189
Unilever N.V. CVA		36,840		1,534
Wolters Kluwer N.V.		17,981		534
				10,693
Norway (0.2%)
Akastor ASA (a)(b)		169		—	@
DNB ASA		6,141		103
Norsk Hydro ASA		5,271		22
Orkla ASA		3,033		24
Statoil ASA		5,285		94
Subsea 7 SA (a)(b)		286		3
Telenor ASA		17,571		385
				631
Portugal (0.1%)
Banco Comercial Portugues SA (a)(b)		318,514		28
Galp Energia SGPS SA		18,413		216
				244
South Africa (0.3%)
SABMiller PLC		15,737		817
Spain (1.6%)
Abertis Infraestructuras SA		2,402		39
ACS Actividades de Construccion y Servicios SA		1,275		41
Amadeus IT Holding SA, Class A		8,684		346
Banco Bilbao Vizcaya Argentaria SA		96,187		943
Banco de Sabadell SA		108,973		263
Banco Popular Espanol SA		38,795		188
Banco Santander SA		221,338		1,546

	Shares		Value (000)
Bankia SA (b)		117,502	$	149
Bankinter SA		5,631		42
CaixaBank SA		52,554		243
Distribuidora Internacional de Alimentacion SA		7,104		54
Ferrovial SA		3,443		75
Grifols SA		3,855		155
Inditex SA		8,937		290
International Consolidated Airlines Group SA (b)		1,446		11
International Consolidated Airlines Group SA (b)		10,386		81
Mapfre SA		6,036		21
Repsol SA		9,179		161
Telefonica SA		23,256		331
Zardoya Otis SA (a)		1,371		15
				4,994
Sweden (2.3%)
Assa Abloy AB, Class B		18,883		356
Electrolux AB, Class B		2,769		87
Elekta AB, Class B (a)		7,571		47
Getinge AB, Class B		6,985		168
Hennes & Mauritz AB, Class B		15,347		591
Hexagon AB, Class B		7,456		270
Investor AB, Class B		22,575		841
Lundin Petroleum AB (b)		3,996		68
Nordea Bank AB		99,641		1,243
Securitas AB, Class B		2,161		29
Skanska AB, Class B		8,914		181
Svenska Cellulosa AB SCA, Class B		14,723		374
Svenska Handelsbanken AB, Class A		33,204		485
Swedbank AB, Class A		20,888		487
Swedish Match AB		6,810		194
Tele2 AB, Class B		571		7
Telefonaktiebolaget LM Ericsson, Class B		87,718		909
TeliaSonera AB		45,418		267
Volvo AB, Class B		23,482		291
				6,895
Switzerland (7.3%)
ABB Ltd. (Registered) (b)		47,275		990
Actelion Ltd. (Registered) (b)		2,464		360
Adecco SA (Registered) (b)		793		64
Baloise Holding AG (Registered)		1,223		149
Cie Financiere Richemont SA (Registered)		7,029		572
Credit Suisse Group AG (Registered) (b)		46,458		1,277
Geberit AG (Registered)		1,139		380
Givaudan SA (Registered) (b)		162		280
Holcim Ltd. (Registered) (b)		5,087		375
Julius Baer Group Ltd. (b)		6,131		344
Lonza Group AG (Registered) (b)		1,624		217
Nestle SA (Registered)		56,645		4,090
Novartis AG (Registered)		45,848		4,519
Pargesa Holding SA		209		14
Partners Group Holding AG		366		109
Roche Holding AG (Genusschein)		14,001		3,923

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Switzerland (cont'd)
Schindler Holding AG		1,032	$	169
SGS SA (Registered)		18		33
Sonova Holding AG (Registered)		789		107
Swatch Group AG (The)		1,028		209
Swiss Life Holding AG (Registered) (b)		632		145
Swiss Prime Site AG (Registered) (b)		2,819		214
Swisscom AG (Registered)		784		439
Syngenta AG (Registered)		1,228		499
UBS Group AG (Registered) (b)		89,636		1,901
Zurich Insurance Group AG (b)		3,238		986
				22,365
United Kingdom (16.6%)
3i Group PLC		21,345		173
Aberdeen Asset Management PLC		29,452		187
Admiral Group PLC		3,010		66
Amec Foster Wheeler PLC		2,167		28
Anglo American PLC		26,392		381
ARM Holdings PLC		45,153		736
AstraZeneca PLC		26,712		1,687
Aviva PLC		63,636		492
BAE Systems PLC		57,443		407
Barclays PLC		274,234		1,122
BG Group PLC		79,895		1,330
BHP Billiton PLC		39,929		784
BP PLC		273,966		1,809
British American Tobacco PLC		37,516		2,013
British Land Co., PLC REIT		8,518		106
BT Group PLC		209,891		1,485
Bunzl PLC		8,327		227
Burberry Group PLC		6,307		156
Capita PLC		28,368		552
Carnival PLC		4,732		241
Centrica PLC		100,096		415
Cobham PLC		38,152		158
Compass Group PLC		52,288		865
Croda International PLC		3,094		134
Diageo PLC		49,388		1,429
easyJet PLC		5,515		134
Experian PLC		26,119		476
G4S PLC		14,296		60
GKN PLC		36,199		190
GlaxoSmithKline PLC		102,980		2,140
Glencore PLC (b)		290,689		1,166
Hammerson PLC REIT		7,884		76
Hargreaves Lansdown PLC		3,477		63
HSBC Holdings PLC		403,187		3,612
Imperial Tobacco Group PLC		20,628		994
Indivior PLC (b)		15,115		53
InterContinental Hotels Group PLC		8,432		340
Intertek Group PLC		3,991		154
Intu Properties PLC REIT		6,132		30
Investec PLC		8,360		75

	Shares		Value (000)
J Sainsbury PLC (a)		29,539	$	123
Johnson Matthey PLC		4,332		207
Kingfisher PLC		62,680		342
Land Securities Group PLC REIT		7,595		144
Legal & General Group PLC		105,182		411
Lloyds Banking Group PLC		1,857,604		2,488
Lonmin PLC (b)		3,313		6
Marks & Spencer Group PLC		22,512		190
Meggitt PLC		13,615		100
National Grid PLC		18,797		241
Next PLC		3,633		425
Old Mutual PLC		80,048		253
Pearson PLC		26,122		494
Persimmon PLC (b)		9,394		291
Petrofac Ltd.		1,693		25
Prudential PLC		36,827		887
Reckitt Benckiser Group PLC		11,968		1,032
Reed Elsevier PLC		35,703		581
Rexam PLC		14,753		128
Rio Tinto PLC		20,612		847
Rolls-Royce Holdings PLC (b)		30,863		422
Royal Dutch Shell PLC, Class A		85,327		2,395
Royal Dutch Shell PLC, Class B		65,041		1,847
RSA Insurance Group PLC		11,896		74
Sage Group PLC (The)		35,632		287
Schroders PLC		2,982		149
Segro PLC REIT		15,809		101
Severn Trent PLC		1,199		39
Shire PLC		12,623		1,010
Sky PLC		56,549		921
Smith & Nephew PLC		54,791		925
Smiths Group PLC		9,295		165
SSE PLC		4,884		118
Standard Chartered PLC		35,018		561
Standard Life PLC		26,527		185
Tesco PLC		162,876		544
Tullow Oil PLC		418		2
Unilever PLC		16,938		726
United Utilities Group PLC		3,462		48
Vodafone Group PLC		567,885		2,051
Weir Group PLC (The)		3,385		90
Whitbread PLC		5,756		447
Wolseley PLC		5,553		354
WPP PLC		66,259		1,485
				50,707
United States (0.0%)
AAC Technologies Holdings, Inc. (a)(c)		5,000		28
Li & Fung Ltd. (c)		126,000		100
				128
Total Common Stocks (Cost $251,535)				278,246

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Short-Term Investments (9.1%)
Securities held as Collateral on Loaned Securities (2.3%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G)		5,886,598	$	5,887
	Face Amount (000)
Repurchase Agreements (0.4%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $537; fully collateralized by a U.S. Government obligation; 2.75% due 5/31/17; valued at $548)	$	537		537
Merrill Lynch & Co., Inc., (0.14%, dated 6/30/15, due 7/1/15; proceeds $537; fully collateralized by a U.S. Government obligation; Zero Coupon due 7/2/15; valued at $548)		537		537
				1,074
Total Securities held as Collateral on Loaned Securities (Cost $6,961)				6,961

	Shares		Value (000)
Investment Company (6.8%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $20,708)		20,707,974	$	20,708
Total Short-Term Investments (Cost $27,669)				27,669
Total Investments (100.3%) (Cost $279,204) Including $7,274 of Securities Loaned (g)				305,915
Liabilities in Excess of Other Assets (-0.3%)				(834	)
Net Assets (100.0%)			$	305,081

(a)  All or a portion of this security was on loan at June 30, 2015.

(b)  Non-income producing security.

(c)  Security trades on the Hong Kong exchange.

(d)  Security has been deemed illiquid at June 30, 2015.

(e)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(f)  At June 30, 2015, the Portfolio held a fair valued security valued at $0, representing 0.0% of net assets. This security has been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(g)  Securities are available for collateral in connection with open foreign currency forward exchange contracts and futures contracts.

@  Value is less than $500.

ADR  American Depositary Receipt.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2015:

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Appreciation (Depreciation) (000)
Bank of New York Mellon	JPY	2,120,370	$	17,330	7/23/15	USD	17,187	$	17,187	$	(143	)
Bank of New York Mellon	JPY	1,187,541		9,706	7/23/15	USD	9,581		9,581		(125	)
Bank of New York Mellon	SEK	616		74	7/23/15	USD	75		75		1
Bank of New York Mellon	USD	1,642		1,642	7/23/15	JPY	203,720		1,665		23
Bank of New York Mellon	USD	11,444		11,444	7/23/15	JPY	1,403,440		11,470		26
Bank of New York Mellon	USD	1,292		1,292	7/23/15	SEK	10,653		1,286		(6	)
Citibank NA	AUD	12,419		9,570	7/23/15	USD	9,581		9,581		11
Citibank NA	EUR	3,455		3,853	7/23/15	USD	3,923		3,923		70
Citibank NA	EUR	13,569		15,132	7/23/15	USD	15,132		15,132		—	@
Citibank NA	USD	7,255		7,255	7/23/15	AUD	9,373		7,224		(31	)
Citibank NA	USD	279		279	7/23/15	EUR	248		277		(2	)
Citibank NA	USD	14,717		14,717	7/23/15	EUR	12,905		14,390		(327	)
Citibank NA	USD	388		388	7/23/15	GBP	248		390		2
Goldman Sachs International	HKD	7,206		929	7/23/15	USD	929		929		(—	@)
Goldman Sachs International	USD	34		34	7/23/15	EUR	30		34		(—	@)
Goldman Sachs International	USD	929		929	7/23/15	HKD	7,206		929		—	@
Northern Trust Company	JPY	341,063		2,788	7/23/15	USD	2,765		2,765		(23	)
State Street Bank and Trust Co.	CHF	81		87	7/23/15	USD	89		89		2
State Street Bank and Trust Co.	CHF	716		767	7/23/15	USD	770		770		3
State Street Bank and Trust Co.	USD	3,365		3,365	7/23/15	CHF	3,130		3,351		(14	)
State Street Bank and Trust Co.	USD	2,335		2,335	7/23/15	CHF	2,181		2,334		(1	)
State Street Bank and Trust Co.	USD	10		10	7/23/15	EUR	9		10		(—	@)
State Street Bank and Trust Co.	USD	1,530		1,530	7/23/15	GBP	979		1,539		9
State Street Bank and Trust Co.	USD	6,210		6,210	7/23/15	GBP	3,927		6,169		(41	)
			$	111,666				$	111,100	$	(566	)

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

Futures Contracts:

The Portfolio had the following futures contracts open at June 30, 2015:

	Number of Contracts		Value (000)		Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
China H-Shares Index (Hong Kong)		1	$	83	Jul-15	$	(1	)
Dax Index (Germany)		34		10,425	Sep-15		(273	)
E-Mini MSCI Eafe Index (United States)		10		917	Sep-15		(31	)
Euro Stoxx 50 Index (Germany)		59		2,260	Sep-15		(102	)
FTSE MIB Index (Italy)		38		4,782	Sep-15		89
IBEX 35 Index (Spain)		67		8,048	Jul-15		51
						$	(267	)

@  Value is less than $500.

AUD  —  Australian Dollar

CHF  —  Swiss Franc

EUR  —  Euro

GBP  —  British Pound

HKD  —  Hong Kong Dollar

JPY  —  Japanese Yen

SEK  —  Swedish Krona

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		71.0	%
Banks		13.2
Pharmaceuticals		8.9
Short-Term Investment		6.9
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

***  Does not include open long futures contracts with an underlying face amount of approximately $26,515,000 with net unrealized depreciation of approximately $267,000. Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $566,000.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $250,918)	$	278,219
Investment in Security of Affiliated Issuer, at Value (Cost $28,286)		27,696
Total Investments in Securities, at Value (Cost $279,204)		305,915
Foreign Currency, at Value (Cost $4,588)		4,585
Cash		299
Receivable for Variation Margin on Futures Contracts		2,208
Dividends Receivable		567
Tax Reclaim Receivable		409
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		147
Receivable for Portfolio Shares Sold		103
Receivable for Investments Sold		8
Receivable from Affiliate		3
Other Assets		74
Total Assets		314,318
Liabilities:
Collateral on Securities Loaned, at Value		7,260
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		713
Payable for Advisory Fees		508
Payable for Portfolio Shares Redeemed		413
Payable for Sub Transfer Agency Fees — Class I		115
Payable for Sub Transfer Agency Fees — Class A		34
Payable for Sub Transfer Agency Fees — Class L		5
Payable for Custodian Fees		37
Payable for Professional Fees		34
Payable for Administration Fees		21
Payable for Shareholder Services Fees — Class A		16
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Directors' Fees and Expenses		20
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		4
Payable for Transfer Agency Fees — Class L		1
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		50
Total Liabilities		9,237
Net Assets	$	305,081
Net Assets Consist of:
Paid-in-Capital	$	325,073
Accumulated Undistributed Net Investment Income		3,785
Accumulated Net Realized Loss		(49,645	)
Unrealized Appreciation (Depreciation) on:
Investments		27,301
Investments in Affiliates		(590	)
Futures Contracts		(267	)
Foreign Currency Forward Exchange Contracts		(566	)
Foreign Currency Translations		(10	)
Net Assets	$	305,081

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	223,288
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,785,556
Net Asset Value, Offering and Redemption Price Per Share	$	13.30
CLASS A:
Net Assets	$	73,338
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,406,461
Net Asset Value, Redemption Price Per Share	$	13.56
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.75
Maximum Offering Price Per Share	$	14.31
CLASS L:
Net Assets	$	8,420
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		624,551
Net Asset Value, Offering and Redemption Price Per Share	$	13.48
CLASS C:
Net Assets	$	35
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,582
Net Asset Value, Offering and Redemption Price Per Share	$	13.48
(1) Including: Securities on Loan, at Value:	$	7,274

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Active International Allocation Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $498 of Foreign Taxes Withheld)	$	5,222
Income from Securities Loaned — Net		120
Dividends from Security of Affiliated Issuer (Note G)		33
Interest from Securities of Unaffiliated Issuers		2
Total Investment Income		5,377
Expenses:
Advisory Fees (Note B)		1,009
Shareholder Services Fees — Class A (Note D)		93
Distribution and Shareholder Services Fees — Class L (Note D)		33
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		124
Sub Transfer Agency Fees — Class I		29
Sub Transfer Agency Fees — Class A		51
Sub Transfer Agency Fees — Class L		9
Custodian Fees (Note F)		78
Professional Fees		52
Shareholder Reporting Fees		39
Pricing Fees		26
Registration Fees		17
Transfer Agency Fees — Class I (Note E)		4
Transfer Agency Fees — Class A (Note E)		7
Transfer Agency Fees — Class L (Note E)		2
Transfer Agency Fees — Class C (Note E)		—	@
Directors' Fees and Expenses		1
Other Expenses		12
Total Expenses		1,586
Reimbursement of Class Specific Expenses — Class I (Note B)		(45	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(11	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(13	)
Net Expenses		1,512
Net Investment Income		3,865
Realized Gain (Loss):
Investments Sold		1,263
Foreign Currency Forward Exchange Contracts		(1,518	)
Foreign Currency Transactions		(82	)
Futures Contracts		4,884
Net Realized Gain		4,547
Change in Unrealized Appreciation (Depreciation):
Investments		11,570
Investments in Affiliates		262
Foreign Currency Forward Exchange Contracts		(470	)
Foreign Currency Translations		78
Futures Contracts		(1,075	)
Net Change in Unrealized Appreciation (Depreciation)		10,365
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		14,912
Net Increase in Net Assets Resulting from Operations	$	18,777

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Active International Allocation Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	3,865		$	8,206
Net Realized Gain (Loss)		4,547			(8,464	)
Net Change in Unrealized Appreciation (Depreciation)		10,365			(20,813	)
Net Increase (Decrease) in Net Assets Resulting from Operations		18,777			(21,071	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(6,048	)
Class A:
Net Investment Income		—			(1,668	)
Class L:
Net Investment Income		—			(153	)
Total Distributions		—			(7,869	)
Capital Share Transactions:(1)
Class I:
Subscribed		3,203			13,277
Distributions Reinvested		—			6,009
Redeemed		(13,251	)		(39,288	)
Class A:
Subscribed		2,824			4,264
Distributions Reinvested		—			1,634
Redeemed		(5,816	)		(17,601	)
Class L:
Subscribed		58			30
Distributions Reinvested		—			150
Redeemed		(761	)		(1,082	)
Class C:
Subscribed		36	*		—
Net Decrease in Net Assets Resulting from Capital Share Transactions		(13,707	)		(32,607	)
Redemption Fees		—	@		—	@
Total Increase (Decrease) in Net Assets		5,070			(61,547	)
Net Assets:
Beginning of Period		300,011			361,558
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $3,785 and $(80), respectively)	$	305,081		$	300,011
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		246			980
Shares Issued on Distributions Reinvested		—			484
Shares Redeemed		(996	)		(2,888	)
Net Decrease in Class I Shares Outstanding		(750	)		(1,424	)
Class A:
Shares Subscribed		209			309
Shares Issued on Distributions Reinvested		—			128
Shares Redeemed		(429	)		(1,270	)
Net Decrease in Class A Shares Outstanding		(220	)		(833	)
Class L:
Shares Subscribed		4			2
Shares Issued on Distributions Reinvested		—			12
Shares Redeemed		(55	)		(79	)
Net Decrease in Class L Shares Outstanding		(51	)		(65	)
Class C:
Shares Subscribed		3	*		—

@  Amount is less than $500.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Active International Allocation Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	12.52		$	13.75		$	11.65		$	10.07		$	12.06		$	11.30
Income (Loss) from Investment Operations:
Net Investment Income†		0.17			0.34			0.22			0.23			0.27			0.20
Net Realized and Unrealized Gain (Loss)		0.61			(1.22	)		2.25			1.51			(2.03	)		0.81
Total from Investment Operations		0.78			(0.88	)		2.47			1.74			(1.76	)		1.01
Distributions from and/or in Excess of:
Net Investment Income		—			(0.35	)		(0.37	)		(0.16	)		(0.23	)		(0.25	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	13.30		$	12.52		$	13.75		$	11.65		$	10.07		$	12.06
Total Return++		6.23	%#		(6.37	)%		21.38	%		17.30	%		(14.56	)%		8.95	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	223,288		$	219,467		$	260,614		$	251,657		$	302,048		$	441,350
Ratio of Expenses to Average Net Assets (1)		0.86	%+*		0.88	%+		0.83	%+		0.89	%+		0.84	%+^		0.79	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			0.88	%+		N/A			0.84	%+^		0.79	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.61	%+*		2.53	%+		1.71	%+		2.12	%+		2.33	%+		1.82	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.02	%		0.02	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		19	%#		32	%		36	%		27	%		26	%		19	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.90	%*		0.99	%		0.99	%		0.98	%		0.95	%		0.92	%+
Net Investment Income to Average Net Assets		2.57	%*		2.42	%		1.55	%		2.03	%		2.22	%		1.69	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective July 1, 2011, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.90% for Class I shares. Prior to July 1, 2011, the maximum ratio was 0.80% for Class I shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Active International Allocation Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	12.79		$	14.03		$	11.89		$	10.27		$	12.28		$	11.50
Income (Loss) from Investment Operations:
Net Investment Income†		0.15			0.30			0.11			0.20			0.25			0.18
Net Realized and Unrealized Gain (Loss)		0.62			(1.24	)		2.36			1.55			(2.07	)		0.81
Total from Investment Operations		0.77			(0.94	)		2.47			1.75			(1.82	)		0.99
Distributions from and/or in Excess of:
Net Investment Income		—			(0.30	)		(0.33	)		(0.13	)		(0.19	)		(0.21	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	13.56		$	12.79		$	14.03		$	11.89		$	10.27		$	12.28
Total Return++		6.02	%#		(6.70	)%		20.94	%		17.05	%		(14.75	)%		8.69	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	73,338		$	71,938		$	90,599		$	8,608		$	10,387		$	14,477
Ratio of Expenses to Average Net Assets (1)		1.24	%+*		1.23	%+		1.09	%+^^		1.14	%+		1.09	%+^		1.04	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.21	%+^^		N/A			1.09	%+^		1.04	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.22	%+*		2.18	%+		0.84	%+		1.80	%+		2.08	%+		1.57	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.02	%		0.02	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		19	%#		32	%		36	%		27	%		26	%		19	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.28	%*		1.31	%+		1.25	%+		1.23	%		1.20	%		1.17	%+
Net Investment Income to Average Net Assets		2.18	%*		2.10	%+		0.68	%+		1.71	%		1.97	%		1.44	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.25% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.15% for Class A shares.

^  Effective July 1, 2011, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.15% for Class A shares. Prior to July 1, 2011, the maximum ratio was 1.05% for Class A shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Active International Allocation Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from June 14, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	12.74		$	13.97		$	11.84		$	10.09
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.11			0.23			0.12			(0.02	)
Net Realized and Unrealized Gain (Loss)		0.63			(1.23	)		2.27			1.91
Total from Investment Operations		0.74			(1.00	)		2.39			1.89
Distributions from and/or in Excess of:
Net Investment Income		—			(0.23	)		(0.26	)		(0.14	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	13.48		$	12.74		$	13.97		$	11.84
Total Return++		5.81	%#		(7.17	)%		20.34	%		18.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,420		$	8,606		$	10,345		$	10,246
Ratio of Expenses to Average Net Assets (1)		1.74	%+*		1.73	%+		1.61	%+^^		1.63	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.66	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.71	%+*		1.68	%		0.94	%+		(0.33	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.02	%		0.02	%		0.02	%*
Portfolio Turnover Rate		19	%#		32	%		36	%		27	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.87	%*		1.87	%		1.76	%		1.79	%*

Net Investment Income (Loss) to Average Net Assets 1.58 %* 1.54 % 0.79 % (0.49 )%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.75% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.65% for Class L shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Active International Allocation Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	13.94
Income (Loss) from Investment Operations:
Net Investment Income†		0.03
Net Realized and Unrealized Gain		(0.49	)
Total from Investment Operations		(0.46	)
Net Asset Value, End of Period	$	13.48
Total Return++		(3.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	35
Ratios of Expenses to Average Net Assets (1)		1.99	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.28	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		19	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		6.67	%*
Net Investment Loss to Average Net Assets		(3.40	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Active International Allocation Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily, in accordance with country and sector weightings determined by Morgan Stanley Investment Management Inc. (the "Adviser"), in equity securities of non-U.S. issuers which, in the aggregate, replicate broad market indices.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) futures are valued at the latest price published by the commodities exchange on which they trade; (4) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)			Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	2,578	$	—	$	—		$	2,578
Air Freight & Logistics		813		—		—			813
Airlines		946		—		—			946
Auto Components		4,107		—		—			4,107
Automobiles		11,847		78		—			11,925
Banks		39,398		—		—			39,398
Beverages		6,245		—		—			6,245
Biotechnology		1,036		—		—			1,036
Building Products		2,171		—		—			2,171
Capital Markets		7,519		—		—			7,519
Chemicals		8,414		—		—			8,414
Commercial Services & Supplies		1,252		—		—			1,252
Communications Equipment		2,359		—		—			2,359
Construction & Engineering		2,341		—		—			2,341
Construction Materials		1,908		—		—			1,908
Consumer Finance		163		—		—			163
Containers & Packaging		369		—		—			369
Diversified Consumer Services		47		—		—			47
Diversified Financial Services		3,788		—		—	†		3,788	†

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Diversified Telecommunication Services	$	7,992	$	—	$	—	$	7,992
Electric Utilities		1,787		—		—		1,787
Electrical Equipment		4,053		—		—		4,053
Electronic Equipment, Instruments & Components		5,519		—		—		5,519
Energy Equipment & Services		142		—		—		142
Food & Staples Retailing		4,632		—		—		4,632
Food Products		7,774		—		—		7,774
Gas Utilities		1,257		—		—		1,257
Health Care Equipment & Supplies		2,890		—		—		2,890
Health Care Providers & Services		854		—		—		854
Hotels, Restaurants & Leisure		3,562		—		—		3,562
Household Durables		2,989		—		—		2,989
Household Products		2,088		—		—		2,088
Independent Power Producers & Energy Traders		132		—		—		132
Industrial Conglomerates		3,527		—		—		3,527
Information Technology Services		1,703		—		—		1,703
Insurance		14,379		—		—		14,379
Internet & Catalog Retail		856		—		—		856
Internet Software & Services		1,971		—		—		1,971
Leisure Products		731		—		—		731
Life Sciences Tools & Services		480		—		—		480
Machinery		7,833		—		—		7,833
Marine		1,318		—		—		1,318
Media		7,220		—		—		7,220
Metals & Mining		7,110		—		—		7,110
Multi-Utilities		2,948		—		—		2,948
Multi-line Retail		1,048		—		—		1,048
Oil, Gas & Consumable Fuels		11,561		—		—		11,561
Paper & Forest Products		714		—		—		714
Personal Products		3,284		—		—		3,284
Pharmaceuticals		26,701		11		—		26,712
Professional Services		1,361		—		—		1,361
Real Estate Investment Trusts (REITs)		4,384		—		—		4,384
Real Estate Management & Development		4,908		—		—		4,908
Road & Rail		3,754		—		—		3,754
Semiconductors & Semiconductor Equipment		3,636		—		—		3,636
Software		2,338		—		—		2,338
Specialty Retail		2,417		—		—		2,417
Tech Hardware, Storage & Peripherals		1,952		—		—		1,952
Textiles, Apparel & Luxury Goods		3,138		—		—		3,138

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)			Total (000)
Common Stocks (cont'd)
Tobacco	$	4,494		$	—		$	—		$	4,494
Trading Companies & Distributors		3,877			—			—			3,877
Transportation Infrastructure		411			—			—			411
Water Utilities		87			—			—			87
Wireless Telecommunication Services		5,044			—			—			5,044
Total Common Stocks		278,157			89			—	†		278,246	†
Short-Term Investments
Investment Company		26,595			—			—			26,595
Repurchase Agreements		—			1,074			—			1,074
Total Short-Term Investments		26,595			1,074			—			27,669
Foreign Currency Forward Exchange Contracts		—			147			—			147
Futures Contracts		140			—			—			140
Total Assets		304,892			1,310			—	†		306,202	†
Liabilities:
Foreign Currency Forward Exchange Contracts		—			(713	)		—			(713	)
Futures Contracts		(407	)		—			—			(407	)
Total Liabilities		(407	)		(713	)		—			(1,120	)
Total	$	304,485		$	597		$	—	†	$	305,082	†

†  Includes one security which is valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $267,695,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

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

	Common Stock (000)
Beginning Balance	$	—	†
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		—
Realized gains (losses)		—
Ending Balance	$	—	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	—

†  Includes one security which is valued at zero.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are

treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are

settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Portfolio's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a broker with which the Portfolio has open positions in the futures contract.

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities are not denominated. Unanticipated changes in

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following tables set forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	147
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		140	(a)
Total			$	287
	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	(713	)
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		(407	)(a)
Total			$	(1,120	)

(a) This amount represents the cumulative appreciation (depreciation) as reported in the Portfolio of Investments. The Statement of Assets and Liabilities only reflects the current day's net variation margin.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(1,518	)
Interest Rate Risk	Futures Contracts		4,884
	Total	$	3,366
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(470	)
Interest Rate Risk	Futures Contracts		(1,075	)
	Total	$	(1,545	)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives(b)	Assets(c) (000)		Liabilities(c) (000)
Foreign Currency Forward Exchange Contracts	$	147	$	(713	)

(b) Excludes exchange traded derivatives.

(c) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)			Collateral Received (000)		Net Amount (not less than $0) (000)
Bank of New York Mellon	$	50		$	(50	)	$	—	$	0
Citibank NA		83			(83	)		—		0
Goldman Sachs International		—	@		(—	@)		—		0
State Street Bank and Trust Co.		14			(14	)		—		0
Total	$	147		$	(147	)	$	—	$	0
Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)			Collateral Pledged (000)		Net Amount (not less than $0) (000)
Bank of New York Mellon	$	274		$	(50	)	$	—	$	224
Citibank NA		360			(83	)		—		277
Goldman Sachs International		—	@		(—	@)		—		—	@
Northern Trust Company		23			—			—		23
State Street Bank and Trust Co.		56			(14	)		—		42
Total	$	713		$	(147	)	$	—	$	566

@ Value is less than $500.

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	90,670,000
Futures Contracts:
Average monthly original value	$	64,532,000

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	7,274	(d)	$	—	$	(7,274	)(e)(f)	$	0

(d) Represents market value of loaned securities at period end.

(e) The Portfolio received cash collateral of approximately $7,260,000, of which approximately $6,961,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $299,000, which is not reflected in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $450,000 in the form of U.S. Government obligations, which the Portfolio cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(f) The actual collateral received is greater than the amount shown here due to overcollateralization.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

6.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares and Class C shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

7.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

8.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semiannually. Net realized capital gains, if any, are distributed at least annually.

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually in the following calendar

year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.65	%		0.60	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.64% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.90% for Class I shares, 1.25% for Class A shares, 1.75% for Class L shares and 2.00% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $61,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $51,283,000 and $55,624,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $13,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	34,576	$	47,582	$	55,563	$	21	$	26,595

The Portfolio had transactions with Mitsubishi UFJ Financial Group, Inc. and its affiliated broker-dealers, which may be deemed affiliates of the Adviser/Administrator and Distributor under Section 17 the Act.

A summary of the Portfolio's transactions in shares of the Mitsubishi UFJ Financial Group, Inc. during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Realized Gain (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	839	$	—	$	—	$	—	$	12	$	1,101

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	7,870	$	—	$	9,242	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following

reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(18	)	$	18	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	479	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $48,666,000 and the aggregate gross unrealized depreciation is approximately $21,955,000 resulting in net unrealized appreciation of approximately $26,711,000.

At December 31, 2014, the Portfolio had available unused long-term capital losses of approximately $8,817,000 that do not have an expiration date.

In addition, at December 31, 2014, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, through the indicated expiration dates:

Amount (000)		Expiration*
$	7,834	December 31, 2016
	33,505	December 31, 2017

*  Includes capital losses acquired from Morgan Stanley International Fund that may be subject to limitation under IRC Section 382 in future years.

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

36

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIAIASAN
1260907 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

U.S. Real Estate Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in U.S. Real Estate Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

U.S. Real Estate Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
U.S. Real Estate Portfolio Class I	$	1,000.00	$	943.80	$	1,019.93	$	4.72	*	$	4.91	*		0.98	%
U.S. Real Estate Portfolio Class A		1,000.00		942.70		1,018.20		6.41	*		6.66	*		1.33
U.S. Real Estate Portfolio Class L		1,000.00		940.00		1,015.87		8.66	*		9.00	*		1.80
U.S. Real Estate Portfolio Class C		1,000.00		953.40		1,004.85		3.43	**		3.52	**		2.10
U.S. Real Estate Portfolio Class IS		1,000.00		944.50		1,020.38		4.29	*		4.46	*		0.89

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that the Portfolio's contractual management fee was higher but close to its peer group average and the actual management fee and total expense ratio were higher than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were acceptable.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

U.S. Real Estate Portfolio

	Shares		Value (000)
Common Stocks (99.8%)
Apartments (18.8%)
AvalonBay Communities, Inc. REIT		289,988	$	46,360
Camden Property Trust REIT		406,319		30,181
Equity Residential REIT		1,070,822		75,140
Essex Property Trust, Inc. REIT		39,838		8,465
Mid-America Apartment Communities, Inc. REIT		119,607		8,709
				168,855
Diversified (6.8%)
Lexington Realty Trust REIT		40,630		345
Vornado Realty Trust REIT		633,836		60,170
				60,515
Health Care (6.5%)
HCP, Inc. REIT		153,847		5,611
Health Care REIT, Inc.		193,725		12,714
Healthcare Realty Trust, Inc. REIT		130,334		3,032
Senior Housing Properties Trust REIT		526,721		9,244
Ventas, Inc. REIT		439,835		27,309
				57,910
Industrial (3.6%)
Cabot Industrial Value Fund II, LP REIT (a)(b)(c)(d)		14,000		7,405
Exeter Industrial Value Fund, LP REIT (a)(b)(c)(d)		7,905,000		5,866
ProLogis, Inc. REIT		438,099		16,253
Rexford Industrial Realty, Inc. REIT		200,737		2,927
				32,451
Lodging/Resorts (12.5%)
Chesapeake Lodging Trust REIT		430,000		13,107
Hilton Worldwide Holdings, Inc. (a)		464,915		12,809
Host Hotels & Resorts, Inc. REIT		2,979,843		59,090
LaSalle Hotel Properties REIT		121,188		4,297
Starwood Hotels & Resorts Worldwide, Inc.		284,167		23,043
				112,346
Manufactured Homes (1.4%)
Equity Lifestyle Properties, Inc. REIT		242,396		12,745
Mixed Industrial/Office (1.3%)
Duke Realty Corp. REIT		246,835		4,584
Liberty Property Trust REIT		209,240		6,741
				11,325
Office (13.0%)
Alexandria Real Estate Equities, Inc. REIT		58,580		5,123
BioMed Realty Trust, Inc. REIT		325,348		6,292
Boston Properties, Inc. REIT		381,240		46,145
BRCP REIT I, LP (a)(b)(c)(d)		6,101,396		397
BRCP REIT II, LP (a)(b)(c)(d)		8,363,574		4,868
Corporate Office Properties Trust REIT		136,050		3,203
Cousins Properties, Inc. REIT		1,004,165		10,423
Douglas Emmett, Inc. REIT		587,200		15,819
Hudson Pacific Properties, Inc. REIT		405,156		11,494
Mack-Cali Realty Corp. REIT		473,164		8,721
Paramount Group, Inc. REIT		240,613		4,129
				116,614

	Shares		Value (000)
Regional Malls (18.5%)
General Growth Properties, Inc. REIT		1,193,255	$	30,619
Macerich Co. (The) REIT		105,686		7,884
Simon Property Group, Inc. REIT		664,563		114,983
WP GLIMCHER, Inc. REIT		877,840		11,877
				165,363
Retail Free Standing (2.7%)
National Retail Properties, Inc. REIT		277,391		9,711
Realty Income Corp. REIT		96,660		4,291
STORE Capital Corp. REIT		488,521		9,819
				23,821
Self Storage (5.9%)
CubeSmart REIT		116,829		2,706
Public Storage REIT		239,919		44,234
Sovran Self Storage, Inc. REIT		70,668		6,141
				53,081
Shopping Centers (8.8%)
Acadia Realty Trust REIT		103,547		3,014
DDR Corp. REIT		109,706		1,696
Equity One, Inc. REIT		79,559		1,857
Federal Realty Investment Trust REIT		21,205		2,716
Kimco Realty Corp. REIT		902,034		20,332
Regency Centers Corp. REIT		472,743		27,883
Tanger Factory Outlet Centers, Inc. REIT		570,639		18,089
Urban Edge Properties REIT		176,301		3,665
				79,252
Total Common Stocks (Cost $671,563)				894,278
Short-Term Investment (0.4%)
Investment Company (0.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $3,539)		3,538,876		3,539
Total Investments (100.2%) (Cost $675,102)				897,817
Liabilities in Excess of Other Assets (–0.2%)				(2,168	)
Net Assets (100.0%)			$	895,649

(a)  Non-income producing security.

(b)  Security has been deemed illiquid at June 30, 2015.

(c)  Restricted security valued at fair value and not registered under the Securities Act of 1933. BRCP REIT I, LP was acquired between 5/03 - 5/08 and has a cost basis of approximately $45,000. BRCP REIT II, LP was acquired between 10/06 - 4/11 and has a current cost basis of approximately $8,180,000. Cabot Industrial Value Fund II, LP was acquired between 11/05 - 2/10 and has a current cost basis of approximately $7,000,000. Exeter Industrial Value Fund, LP was acquired between 11/07 - 4/11 and has a current cost basis of approximately $4,866,000. At June 30, 2015, these securities had an aggregate market value of approximately $18,536,000, representing 2.1% of net assets.

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

U.S. Real Estate Portfolio

(d)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $18,536,000, representing 2.1% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Apartments		18.8	%
Regional Malls		18.4
Office		13.0
Lodging/Resorts		12.5
Other*		9.4
Shopping Centers		8.8
Diversified		6.7
Health Care		6.5
Self Storage		5.9
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $671,563)	$	894,278
Investment in Security of Affiliated Issuer, at Value (Cost $3,539)		3,539
Total Investments in Securities, at Value (Cost $675,102)		897,817
Foreign Currency, at Value (Cost $1)		1
Dividends Receivable		3,259
Receivable for Portfolio Shares Sold		1,540
Receivable for Investments Sold		639
Receivable from Affiliate		—	@
Other Assets		128
Total Assets		903,384
Liabilities:
Payable for Portfolio Shares Redeemed		4,138
Payable for Advisory Fees		1,880
Payable for Investments Purchased		1,313
Payable for Sub Transfer Agency Fees — Class I		134
Payable for Sub Transfer Agency Fees — Class A		66
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Administration Fees		61
Payable for Directors' Fees and Expenses		24
Payable for Shareholder Services Fees — Class A		19
Payable for Distribution and Shareholder Services Fees — Class L		3
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Professional Fees		22
Payable for Transfer Agency Fees — Class I		4
Payable for Transfer Agency Fees — Class A		3
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Custodian Fees		6
Other Liabilities		61
Total Liabilities		7,735
Net Assets	$	895,649
Net Assets Consist of:
Paid-in-Capital	$	575,268
Accumulated Undistributed Net Investment Income		9,366
Accumulated Net Realized Gain		88,300
Unrealized Appreciation (Depreciation) on:
Investments		222,715
Foreign Currency Translations		(—	@)
Net Assets	$	895,649

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	633,192
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		32,857,181
Net Asset Value, Offering and Redemption Price Per Share	$	19.27
CLASS A:
Net Assets	$	92,400
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,902,752
Net Asset Value, Redemption Price Per Share	$	18.85
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.04
Maximum Offering Price Per Share	$	19.89
CLASS L:
Net Assets	$	4,174
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		221,877
Net Asset Value, Offering and Redemption Price Per Share	$	18.81
CLASS C:
Net Assets	$	23
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,226
Net Asset Value, Offering and Redemption Price Per Share	$	18.81
CLASS IS:
Net Assets	$	165,860
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		8,603,159
Net Asset Value, Offering and Redemption Price Per Share	$	19.28

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

U.S. Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	16,393
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		16,394
Expenses:
Advisory Fees (Note B)		3,954
Sub Transfer Agency Fees — Class I		311
Sub Transfer Agency Fees — Class A		97
Sub Transfer Agency Fees — Class L		3
Administration Fees (Note C)		410
Shareholder Services Fees — Class A (Note D)		133
Distribution and Shareholder Services Fees — Class L (Note D)		18
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Shareholder Reporting Fees		69
Professional Fees		41
Registration Fees		24
Transfer Agency Fees — Class I (Note E)		13
Transfer Agency Fees — Class A (Note E)		6
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		20
Directors' Fees and Expenses		13
Pricing Fees		2
Other Expenses		9
Expenses Before Non Operating Expenses		5,125
Investment Related Expenses		28
Total Expenses		5,153
Reimbursement of Class Specific Expenses — Class A (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		5,147
Net Investment Income		11,247
Realized Gain:
Investments Sold		67,168
Change in Unrealized Appreciation (Depreciation):
Investments		(130,367	)
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		(130,367	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(63,199	)
Net Decrease in Net Assets Resulting from Operations	$	(51,952	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	11,247		$	18,544
Net Realized Gain		67,168			56,530
Net Change in Unrealized Appreciation (Depreciation)		(130,367	)		190,135
Net Increase (Decrease) in Net Assets Resulting from Operations		(51,952	)		265,209
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(2,368	)		(15,986	)
Net Realized Gain		—			(33,514	)
Class A:
Net Investment Income		(249	)		(1,569	)
Net Realized Gain		—			(3,982	)
Class L:
Net Investment Income		(5	)		(45	)
Net Realized Gain		—			(176	)
Class IS:
Net Investment Income		(548	)		(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		(3,170	)		(55,272	)
Capital Share Transactions:(1)
Class I:
Subscribed		72,474			190,489
Distributions Reinvested		2,344			39,540
Redeemed		(362,562	)		(265,506	)
Class A:
Subscribed		13,602			33,259
Distributions Reinvested		248			5,518
Redeemed		(23,014	)		(55,752	)
Class L:
Subscribed		164			213
Distributions Reinvested		5			219
Redeemed		(656	)		(964	)
Class C:
Subscribed		24	*		—
Class IS:
Subscribed		198,403			—
Redeemed		(10,944	)		—
Net Decrease in Net Assets Resulting from Capital Share Transactions		(109,912	)		(52,984	)
Total Increase (Decrease) in Net Assets		(165,034	)		156,953
Net Assets:
Beginning of Period		1,060,683			903,730
End of Period (Including Accumulated Undistributed Net Investment Income of $9,366 and $1,289)	$	895,649		$	1,060,683

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed	$	3,427		$	10,099
Shares Issued on Distributions Reinvested		110			2,019
Shares Redeemed		(16,993	)		(14,030	)
Net Decrease in Class I Shares Outstanding		(13,456	)		(1,912	)
Class A:
Shares Subscribed		663			1,789
Shares Issued on Distributions Reinvested		12			288
Shares Redeemed		(1,133	)		(2,966	)
Net Decrease in Class A Shares Outstanding		(458	)		(889	)
Class L:
Shares Subscribed		8			11
Shares Issued on Distributions Reinvested		—	@@		11
Shares Redeemed		(32	)		(52	)
Net Decrease in Class L Shares Outstanding		(24	)		(30	)
Class C:
Shares Subscribed		1	*		—
Class IS:
Shares Subscribed		9,130			—
Shares Redeemed		(527	)		—
Net Increase in Class IS Shares Outstanding		8,603			—

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

U.S. Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	20.48		$	16.55		$	16.93		$	14.99		$	14.33		$	11.18
Income (Loss) from Investment Operations:
Net Investment Income†		0.22			0.36			0.27			0.24			0.11			0.30
Net Realized and Unrealized Gain (Loss)		(1.36	)		4.66			0.14			2.19			0.69			3.02
Total from Investment Operations		(1.14	)		5.02			0.41			2.43			0.80			3.32
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.35	)		(0.20	)		(0.20	)		(0.14	)		(0.17	)
Net Realized Gain		—			(0.74	)		(0.59	)		(0.29	)		—			—
Total Distributions		(0.07	)		(1.09	)		(0.79	)		(0.49	)		(0.14	)		(0.17	)
Net Asset Value, End of Period	$	19.27		$	20.48		$	16.55		$	16.93		$	14.99		$	14.33
Total Return++		(5.62	)%#		30.74	%		2.45	%		16.26	%		5.57	%		29.86	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	633,192		$	948,311		$	797,933		$	826,420		$	773,138		$	855,474
Ratio of Expenses to Average Net Assets (1)		0.98	%+*		0.95	%+		1.01	%+		0.98	%+		1.01	%+		0.99	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.97	%+*		0.94	%+		1.00	%+		0.97	%+		1.00	%+		0.98	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.15	%+*		1.90	%+		1.51	%+		2.45	%+		0.76	%+		2.34	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		14	%#		25	%		24	%		22	%		21	%		41	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			1.03	%		N/A			1.03	%		N/A
Net Investment Income to Average Net Assets		N/A			N/A			1.49	%		N/A			0.74	%		N/A

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

U.S. Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	20.04		$	16.21		$	16.60		$	14.70		$	14.07		$	10.99
Income (Loss) from Investment Operations:
Net Investment Income†		0.19			0.29			0.23			0.19			0.08			0.26
Net Realized and Unrealized Gain (Loss)		(1.33	)		4.56			0.12			2.16			0.66			2.96
Total from Investment Operations		(1.14	)		4.85			0.35			2.35			0.74			3.22
Distributions from and/or in Excess of:
Net Investment Income		(0.05	)		(0.28	)		(0.15	)		(0.16	)		(0.11	)		(0.14	)
Net Realized Gain		—			(0.74	)		(0.59	)		(0.29	)		—			—
Total Distributions		(0.05	)		(1.02	)		(0.74	)		(0.45	)		(0.11	)		(0.14	)
Net Asset Value, End of Period	$	18.85		$	20.04		$	16.21		$	16.60		$	14.70		$	14.07
Total Return++		(5.73	)%#		30.28	%		2.14	%		16.02	%		5.26	%		29.51	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	92,400		$	107,441		$	101,325		$	92,240		$	92,047		$	89,321
Ratio of Expenses to Average Net Assets (1)		1.33	%+*		1.31	%+		1.28	%+^		1.23	%+		1.26	%+		1.24	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.32	%+*		1.30	%+		1.27	%+^		1.22	%+		1.25	%+		1.23	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.87	%+*		1.54	%+		1.35	%+		2.20	%+		0.54	%+		2.09	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		14	%#		25	%		24	%		22	%		21	%		41	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.33	%*		N/A			1.29	%		N/A			1.28	%		N/A
Net Investment Income to Average Net Assets		1.87	%*		N/A			1.34	%		N/A			0.52	%		N/A

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.35% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.25% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

U.S. Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from November 11, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	20.03		$	16.20		$	16.59		$	14.69		$	14.52
Income (Loss) from Investment Operations:
Net Investment Income†		0.14			0.20			0.13			0.10			0.06
Net Realized and Unrealized Gain (Loss)		(1.34	)		4.56			0.13			2.16			0.11
Total from Investment Operations		(1.20	)		4.76			0.26			2.26			0.17
Distributions from and/or in Excess of:
Net Investment Income		(0.02	)		(0.19	)		(0.06	)		(0.07	)		—
Net Realized Gain		—			(0.74	)		(0.59	)		(0.29	)		—
Total Distributions		(0.02	)		(0.93	)		(0.65	)		(0.36	)		—
Net Asset Value, End of Period	$	18.81		$	20.03		$	16.20		$	16.59		$	14.69
Total Return++		(6.00	)%#		29.68	%		1.62	%		15.44	%		1.17	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,174		$	4,919		$	4,462		$	4,975		$	5,879
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.79	%+		1.78	%+^^		1.73	%+		1.75	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.80	%+*		1.78	%+		1.77	%+^^		1.72	%+		N/A
Ratio of Net Investment Income to Average Net Assets (1)		1.40	%+*		1.06	%+		0.73	%+		1.70	%+		3.33	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		14	%#		25	%		24	%		22	%		21	%*
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			1.79	%		N/A			1.91	%+*
Net Investment Income to Average Net Assets		N/A			N/A			0.72	%		N/A			3.17	%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.75% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

U.S. Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	19.73
Income (Loss) from Investment Operations:
Net Investment Income†		0.08
Net Realized and Unrealized Loss		(1.00	)
Total from Investment Operations		(0.92	)
Net Asset Value, End of Period	$	18.81
Total Return++		(4.66	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	23
Ratios of Expenses to Average Net Assets (1)		2.10	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.37	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		14	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		10.74	%*
Net Investment Loss to Average Net Assets		(6.27	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

U.S. Real Estate Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	20.48		$	16.55		$	17.13
Income (Loss) from Investment Operations:
Net Investment Income†		0.28			0.38			0.03
Net Realized and Unrealized Gain (Loss)		(1.41	)		4.65			0.01
Total from Investment Operations		(1.13	)		5.03			0.04
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.36	)		(0.11	)
Net Realized Gain		—			(0.74	)		(0.51	)
Total Distributions		(0.07	)		(1.10	)		(0.62	)
Net Asset Value, End of Period	$	19.28		$	20.48		$	16.55
Total Return++		(5.55	)%#		30.82	%		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	165,860		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		0.89	%+*		0.89	%+		0.90	%*^^
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.89	%+*		0.88	%+		0.89	%*^^
Ratio of Net Investment Income to Average Net Assets (1)		2.68	%+*		1.96	%+		0.52	%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		N/A
Portfolio Turnover Rate		14	%#		25	%		24	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		0.89	%*		20.21	%		6.19	%*
Net Investment Income (Loss) to Average Net Assets		2.68	% *		(17.36	)%		(4.77	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.93% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the U.S. Real Estate Portfolio. The Portfolio seeks to provide above average current income and long-term capital appreciation by investing primarily in equity securities of companies in the U.S. real estate industry, including real estate investment trusts ("REITs"). The Portfolio focuses on REITs as well as real estate operating companies ("REOCs") that invest in a variety of property types and regions. The Portfolio has capital subscription commitments to certain investee companies for this same purpose, the details of which are disclosed in the Unfunded Commitments note.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between

the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

The Portfolio invests a significant portion of its assets in securities of REITs. The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Portfolio.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Apartments	$	168,855	$	—	$	—	$	168,855
Diversified		60,515		—		—		60,515
Health Care		57,910		—		—		57,910
Industrial		19,180		—		13,271		32,451
Lodging/Resorts		112,346		—		—		112,346
Manufactured Homes		12,745		—		—		12,745

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Mixed Industrial/Office	$	11,325	$	—	$	—	$	11,325
Office		111,349		—		5,265		116,614
Regional Malls		165,363		—		—		165,363
Retail Free Standing		23,821		—		—		23,821
Self Storage		53,081		—		—		53,081
Shopping Centers		79,252		—		—		79,252
Total Common Stocks		875,742		—		18,536		894,278
Short-Term Investment
Investment Company		3,539		—		—		3,539
Total Assets	$	879,281	$	—	$	18,536	$	897,817

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, the Portfolio did not have any investments transfer between investment levels.

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

	Common Stocks (000)
Beginning Balance	$	37,224
Purchases		—
Sales		(19,800	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		(1,944	)
Change in unrealized appreciation (depreciation)		(9,051	)
Realized gains (losses)		12,107
Ending Balance	$	18,536
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	594

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input
Industrial
Common Stocks	$	13,271	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and significant market changes between last capital statement and valuation date, as applicable	Adjusted Capital Balance
Office
Common Stocks	$	5,265	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and significant market changes between last capital statement and valuation date, as applicable	Adjusted Capital Balance

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Unfunded Commitments: Subject to the terms of a Subscription Agreement between the Portfolio and BRCP REIT I, LLC, the Portfolio has made a subscription commitment of $7,000,000 for which it will receive 7,000,000 shares of common stock. As of June 30, 2015, BRCP REIT I, LLC has drawn down approximately $6,101,000 which represents 87.2% of the commitment.

Subject to the terms of a Subscription Agreement between the Portfolio and BRCP REIT II, LLC, the Portfolio has made a subscription commitment of $9,000,000 for which it will receive 9,000,000 shares of common stock. As of June 30, 2015, BRCP REIT II, LLC has drawn down approximately $8,364,000 which represents 92.9% of the commitment.

Subject to the terms of a Subscription Agreement between the Portfolio and Exeter Industrial Value Fund LP, the Portfolio has made a subscription commitment of $8,500,000 for which it will receive 8,500,000 shares of common stock. As of June 30, 2015, Exeter Industrial Value Fund LP has drawn down approximately $7,905,000 which represents 93.0% of the commitment.

Subject to the terms of a Subscription Agreement between the Portfolio and Cabot Industrial Value Fund II, LP, the Portfolio has made a subscription commitment of $7,500,000 for which it will receive 15,000 shares of common stock. As of June 30, 2015, Cabot Industrial Value Fund II, LP has drawn down approximately $7,000,000 which represents 93.3% of the commitment.

5.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid quarterly. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement,

paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.77% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.93% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $5,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $142,136,000 and $214,452,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio

(the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	9,090	$	96,111	$	101,662	$	1	$	3,539

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall,sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	17,600	$	37,672	$	19,641	$	23,617

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to basis adjustments on partnerships, differing treatments of gains (losses) related to REIT adjustments, a dividend redesignation and equalization debits, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	(133	)	$	(409	)	$	542

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	229	$	23,192

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $242,983,000 and the aggregate gross unrealized depreciation

is approximately $20,268,000 resulting in net unrealized appreciation of approximately $222,715,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 43.8%, 50.6% and 100.0% for Class I, Class A and Class IS shares, respectively.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSREASAN
1262699 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Small Company Growth Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	9
Statement of Operations	11
Statements of Changes in Net Assets	12
Financial Highlights	14
Notes to Financial Statements	18
U.S. Privacy Policy	29
Director and Officer Information	32

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Small Company Growth Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Small Company Growth Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Small Company Growth Portfolio Class I	$	1,000.00	$	1,075.10	$	1,019.59	$	5.40	$	5.26		1.05	%
Small Company Growth Portfolio Class A		1,000.00		1,073.20		1,017.90		7.15		6.95		1.39
Small Company Growth Portfolio Class L		1,000.00		1,070.50		1,015.37		9.75		9.49		1.90
Small Company Growth Portfolio Class IS		1,000.00		1,075.70		1,019.93		5.04		4.91		0.98

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the actual days in the period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three-year period, but below its peer group average for the one- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that the Portfolio's management fee and total expense ratio were higher than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were acceptable.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Small Company Growth Portfolio

	Shares		Value (000)
Common Stocks (90.6%)
Air Freight & Logistics (3.0%)
XPO Logistics, Inc. (a)		1,334,051	$	60,272
Biotechnology (3.6%)
ACADIA Pharmaceuticals, Inc. (a)		131,032		5,488
Agios Pharmaceuticals, Inc. (a)(b)		108,441		12,052
Alnylam Pharmaceuticals, Inc. (a)		85,186		10,211
Clovis Oncology, Inc. (a)		83,749		7,360
Insmed, Inc. (a)		217,530		5,312
Intrexon Corp. (a)(b)		317,478		15,493
Ironwood Pharmaceuticals, Inc. (a)		765,948		9,238
Spark Therapeutics, Inc. (a)(b)		108,998		6,569
ZIOPHARM Oncology, Inc. (a)(b)		51,495		618
				72,341
Capital Markets (7.1%)
Capitol Acquisition Corp. II (Units) (a)(c)		628,188		7,366
Financial Engines, Inc. (b)		918,111		39,001
Greenhill & Co., Inc.		467,249		19,311
WisdomTree Investments, Inc. (b)		3,515,451		77,217
				142,895
Chemicals (0.9%)
Platform Specialty Products Corp. (a)		726,639		18,587
Electrical Equipment (2.3%)
Babcock & Wilcox Co. (The)		1,406,594		46,136
Electronic Equipment, Instruments & Components (0.8%)
Cognex Corp.		190,213		9,149
FARO Technologies, Inc. (a)		157,904		7,374
				16,523
Health Care Equipment & Supplies (0.4%)
Sientra, Inc. (a)		279,524		7,052
Health Care Providers & Services (1.4%)
HealthEquity, Inc. (a)		861,170		27,601
Health Care Technology (8.8%)
athenahealth, Inc. (a)		459,673		52,669
Castlight Health, Inc., Class B (a)(b)		2,386,990		19,430
HMS Holdings Corp. (a)		1,245,799		21,391
Medidata Solutions, Inc. (a)		1,011,217		54,929
Press Ganey Holdings, Inc. (a)		471,885		13,529
Veeva Systems, Inc., Class A (a)		554,001		15,529
				177,477
Hotels, Restaurants & Leisure (6.0%)
Fiesta Restaurant Group, Inc. (a)		796,826		39,841
Habit Restaurants, Inc. (The) (a)(b)		749,139		23,441
Krispy Kreme Doughnuts, Inc. (a)		991,606		19,098
Wingstop, Inc. (a)		117,689		3,342
Zoe's Kitchen, Inc. (a)(b)		852,161		34,888
				120,610
Internet & Catalog Retail (7.7%)
Blue Nile, Inc. (a)		680,076		20,667
Etsy, Inc. (a)(b)		1,779,617		25,004

	Shares		Value (000)
Jumei International Holding Ltd. ADR (China) (a)(b)		456,469	$	10,426
MakeMyTrip Ltd. (India) (a)		783,872		15,427
Ocado Group PLC (United Kingdom) (a)		4,065,452		28,483
Qunar Cayman Islands Ltd. ADR (China) (a)(b)		216,823		9,291
Wayfair, Inc., Class A (a)(b)		766,599		28,855
zulily, Inc., Class A (a)(b)		1,372,513		17,897
				156,050
Internet Software & Services (22.1%)
Actua Corp. (a)		451,203		6,434
Angie's List, Inc. (a)(b)		1,213,808		7,477
Autohome, Inc. ADR (China) (a)		528,133		26,692
Benefitfocus, Inc. (a)(b)		804,224		35,265
Coupons.com, Inc. (a)(b)		948,845		10,238
Criteo SA ADR (France) (a)		1,368,845		65,253
Dealertrack Technologies, Inc. (a)		1,022,594		64,209
Everyday Health, Inc. (a)		615,962		7,872
GrubHub, Inc. (a)		1,773,604		60,427
Just Eat PLC (United Kingdom) (a)		4,045,501		25,858
Marketo, Inc. (a)		658,404		18,475
New Relic, Inc. (a)(b)		309,072		10,876
OPOWER, Inc. (a)(b)		743,704		8,560
Shutterstock, Inc. (a)(b)		291,671		17,103
Twitter, Inc. (a)		1,506,009		54,548
Youku Tudou, Inc. ADR (China) (a)		681,729		16,723
Zillow Group, Inc., Class A (a)(b)		105,626		9,162
				445,172
Machinery (2.4%)
Manitowoc Co., Inc. (The)		2,486,450		48,734
Media (0.5%)
Legend Pictures LLC Ltd. (a)(d)(e)(f) (acquisition cost — $5,829; acquired 3/8/12)		5,452		10,855
Multi-Utilities (0.0%)
AET&D Holdings No. 1 Ltd. (Australia) (a)(d)(e)		6,682,555		—
Pharmaceuticals (1.3%)
Impax Laboratories, Inc. (a)		587,956		26,999
Professional Services (5.5%)
Advisory Board Co. (The) (a)		730,424		39,932
CEB, Inc.		462,679		40,281
WageWorks, Inc. (a)		739,224		29,902
				110,115
Semiconductors & Semiconductor Equipment (0.9%)
Tessera Technologies, Inc.		491,214		18,656
Software (9.1%)
Ellie Mae, Inc. (a)		502,829		35,092
FireEye, Inc. (a)		234,629		11,476
FleetMatics Group PLC (a)		1,139,869		53,380
Guidewire Software, Inc. (a)		733,974		38,849
Solera Holdings, Inc.		397,167		17,698
Xero Ltd. (Australia) (a)		549,863		6,726
Zendesk, Inc. (a)		871,212		19,350
				182,571

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Small Company Growth Portfolio

	Shares		Value (000)
Specialty Retail (6.8%)
Citi Trends, Inc. (a)		496,381	$	12,013
Five Below, Inc. (a)		1,628,910		64,391
Restoration Hardware Holdings, Inc. (a)		627,546		61,267
				137,671
Total Common Stocks (Cost $1,372,583)				1,826,317
Preferred Stocks (6.9%)
Health Care Technology (0.5%)
Grand Rounds, Inc. Series B (a)(d)(e)(f) (acquisition cost — $3,362; acquired 7/3/14)		3,269,139		9,121
Hotels, Restaurants & Leisure (1.6%)
Blue Bottle Coffee, Inc. Series B (a)(d)(e)(f) (acquisition cost — $13,714; acquired 1/24/14)		947,792		31,581
Internet & Catalog Retail (2.9%)
Flipkart Online Services Pvt Ltd. Series D (a)(d)(e)(f) (acquisition cost — $9,579; acquired 10/4/13)		417,464		59,380
Internet Software & Services (0.4%)
Doximity, Inc. Series C (a)(d)(e)(f) (acquisition cost — $8,482; acquired 4/10/14)		1,759,434		7,266
Mode Media Corporation Series M-1 (a)(d)(e)(f) (acquisition cost — $5,449; acquired 3/19/08)		361,920		420
Mode Media Corporation Escrow Series M-1 (a)(d)(e)(f) (acquisition cost — $506; acquired 3/19/08)		51,702		27
				7,713
Software (1.5%)
DOMO, Inc. (a)(d)(e)(f) (acquisition cost — $10,559; acquired 1/31/14 — 2/7/14)		2,554,715		21,540
Lookout, Inc. Series F (a)(d)(e)(f) (acquisition cost — $13,476; acquired 6/17/14)		1,179,743		9,497
				31,037
Tobacco (0.0%)
NJOY, Inc. Series D (a)(d)(e)(f) (acquisition cost — $6,363; acquired 2/14/14)		375,918		361
Total Preferred Stocks (Cost $71,490)				139,193
Convertible Preferred Stock (0.0%)
Internet Software & Services (0.0%)
Youku Tudou, Inc., Class A (China) (a)(e)(f) (acquisition cost — $—@; acquired 9/16/10) (Cost $—@)		1		—	@

	Face Amount (000)		Value (000)
Promissory Notes (0.1%)
Internet Software & Services (0.1%)
Mode Media Corporation 9.00%, 12/3/19 (a)(d)(e)(f) (acquisition cost — $2,301; acquired 3/19/08)	$	793	$	695
Mode Media Corporation Escrow 9.00%, 12/3/19 (a)(d)(e)(f) (acquisition cost — $42; acquired 3/19/08)		29		11
Total Promissory Notes (Cost $2,343)				706
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016 @ CNY 6.70		258,514,365		563
USD/CNY November 2015 @ CNY 6.65		326,873,064		130
Total Call Options Purchased (Cost $2,077)				693
	Shares
Short-Term Investments (13.3%)
Securities held as Collateral on Loaned Securities (10.6%)
Investment Company (7.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		151,208,135		151,208
	Face Amount (000)
Repurchase Agreements (3.1%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $49,648; fully collateralized by various U.S. Government obligations; 0.88% — 2.00% due 2/28/17 — 10/31/21; valued at $50,641)	$	49,648		49,648
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $5,516; fully collateralized by various U.S. Government agency securities; 2.35% — 5.50% due 12/22/15 — 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $5,627)		5,516		5,516
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $7,444; fully collateralized by various U.S. Government obligations; Zero Coupon — 0.25% due 5/15/16 — 2/15/24; valued at $7,592)		7,444		7,444
				62,608
Total Securities held as Collateral on Loaned Securities (Cost $213,816)				213,816

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Small Company Growth Portfolio

	Shares		Value (000)
Investment Company (2.7%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $55,337)		55,336,792	$	55,337
Total Short-Term Investments (Cost $269,153)				269,153
Total Investments (110.9%) (Cost $1,717,646) Including $215,488 of Securities Loaned				2,236,062
Liabilities in Excess of Other Assets (-10.9%)				(220,267	)
Net Assets (100.0%)			$	2,015,795

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2015.

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

(d)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $150,754,000, representing 7.5% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(e)  Security has been deemed illiquid at June 30, 2015.

(f)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $150,754,000 and represents 7.5% of net assets.

@  Value is less than $500.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Internet Software & Services		22.4	%
Other**		20.3
Internet & Catalog Retail		10.7
Software		10.6
Health Care Technology		9.2
Hotels, Restaurants & Leisure		7.5
Capital Markets		7.1
Specialty Retail		6.8
Professional Services		5.4
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $1,511,101)	$	2,029,517
Investment in Security of Affiliated Issuer, at Value (Cost $206,545)		206,545
Total Investments in Securities, at Value (Cost $1,717,646)		2,236,062
Foreign Currency, at Value (Cost $0)		—	@
Cash		3,871
Receivable for Portfolio Shares Sold		1,135
Interest Receivable		148
Dividends Receivable		64
Receivable from Affiliate		8
Other Assets		136
Total Assets		2,241,424
Liabilities:
Collateral on Securities Loaned, at Value		217,687
Payable for Advisory Fees		4,207
Payable for Portfolio Shares Redeemed		2,112
Due to Broker		810
Payable for Sub Transfer Agency Fees — Class I		479
Payable for Sub Transfer Agency Fees — Class A		79
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Administration Fees		132
Payable for Shareholder Services Fees — Class A		37
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Professional Fees		27
Payable for Directors' Fees and Expenses		13
Payable for Transfer Agency Fees — Class I		4
Payable for Transfer Agency Fees — Class A		3
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		37
Total Liabilities		225,629
Net Assets	$	2,015,795
Net Assets Consist Of:
Paid-in-Capital	$	1,420,919
Accumulated Net Investment Loss		(6,137	)
Accumulated Net Realized Gain		82,597
Unrealized Appreciation (Depreciation) on:
Investments		518,416
Foreign Currency Translations		(—	@)
Net Assets	$	2,015,795

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	1,079,565
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		60,829,627
Net Asset Value, Offering and Redemption Price Per Share	$	17.75
CLASS A:
Net Assets	$	178,841
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,185,354
Net Asset Value, Redemption Price Per Share	$	15.99
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.89
Maximum Offering Price Per Share	$	16.88
CLASS L:
Net Assets	$	2,393
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		152,962
Net Asset Value, Offering and Redemption Price Per Share	$	15.64
CLASS IS:
Net Assets	$	754,996
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		42,490,135
Net Asset Value, Offering and Redemption Price Per Share	$	17.77
(1) Including: Securities on Loan, at Value:	$	215,488

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Small Company Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Income from Securities Loaned — Net	$	3,610
Dividends from Securities of Unaffiliated Issuers		2,888
Dividends from Security of Affiliated Issuer (Note G)		56
Total Investment Income		6,554
Expenses:
Advisory Fees (Note B)		8,623
Sub Transfer Agency Fees — Class I		768
Sub Transfer Agency Fees — Class A		140
Sub Transfer Agency Fees — Class L		3
Administration Fees (Note C)		790
Shareholder Services Fees — Class A (Note D)		225
Distribution and Shareholder Services Fees — Class L (Note D)		9
Shareholder Reporting Fees		82
Registration Fees		67
Professional Fees		51
Custodian Fees (Note F)		49
Directors' Fees and Expenses		25
Transfer Agency Fees — Class I (Note E)		10
Transfer Agency Fees — Class A (Note E)		7
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		4
Other Expenses		32
Total Expenses		10,887
Reimbursement of Class Specific Expenses — Class I (Note B)		(403	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(2	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(35	)
Waiver of Advisory Fees (Note B)		(29	)
Net Expenses		10,417
Net Investment Loss		(3,863	)
Realized Gain (Loss):
Investments Sold		83,617
Foreign Currency Transactions		(14	)
Net Realized Gain		83,603
Change in Unrealized Appreciation (Depreciation):
Investments		63,804
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		63,804
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		147,407
Net Increase in Net Assets Resulting from Operations	$	143,544

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Small Company Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(3,863	)	$	(7,453	)
Net Realized Gain		83,603			214,347
Net Change in Unrealized Appreciation (Depreciation)		63,804			(471,647	)
Net Increase (Decrease) in Net Assets Resulting from Operations		143,544			(264,753	)
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(132,988	)
Class A:
Net Realized Gain		—			(23,704	)
Class L:
Net Realized Gain		—			(300	)
Class IS:
Net Realized Gain		—			(72,948	)
Total Distributions		—			(229,940	)
Capital Share Transactions:(1)
Class I:
Subscribed		60,003			390,498
Distributions Reinvested		—			116,535
Redeemed		(215,474	)		(1,037,599	)
Class A:
Subscribed		8,096			28,385
Distributions Reinvested		—			23,620
Redeemed		(28,521	)		(94,284	)
Class L:
Subscribed		9			988
Distributions Reinvested		—			298
Redeemed		(150	)		(910	)
Class IS:
Subscribed		167,289			758,371
Distributions Reinvested		—			70,105
Redeemed		(136,400	)		(172,236	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(145,148	)		83,771
Redemption Fees		25			123
Total Decrease in Net Assets		(1,579	)		(410,799	)
Net Assets:
Beginning of Period		2,017,374			2,428,173
End of Period (Including Accumulated Net Investment Loss of $(6,137) and $(2,274))	$	2,015,795		$	2,017,374

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Small Company Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		3,536			20,776
Shares Issued on Distributions Reinvested		—			7,237
Shares Redeemed		(12,831	)		(56,087	)
Net Decrease in Class I Shares Outstanding		(9,295	)		(28,074	)
Class A:
Shares Subscribed		531			1,637
Shares Issued on Distributions Reinvested		—			1,623
Shares Redeemed		(1,860	)		(5,758	)
Net Decrease in Class A Shares Outstanding		(1,329	)		(2,498	)
Class L:
Shares Subscribed		1			57
Shares Issued on Distributions Reinvested		—			21
Shares Redeemed		(10	)		(57	)
Net Increase (Decrease) in Class L Shares Outstanding		(9	)		21
Class IS:
Shares Subscribed		9,847			40,139
Shares Issued on Distributions Reinvested		—			4,388
Shares Redeemed		(8,050	)		(9,935	)
Net Increase in Class IS Shares Outstanding		1,797			34,592

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Small Company Growth Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	16.50		$	20.55		$	14.16		$	12.64		$	14.17		$	11.14
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.03	)		(0.06	)		(0.09	)		(0.03	)		(0.04	)		0.01
Net Realized and Unrealized Gain (Loss)		1.28			(2.04	)		8.77			2.19			(1.25	)		3.02
Total from Investment Operations		1.25			(2.10	)		8.68			2.16			(1.29	)		3.03
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.95	)		(2.29	)		(0.64	)		(0.24	)		—
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	17.75		$	16.50		$	20.55		$	14.16		$	12.64		$	14.17
Total Return++		7.51	%#		(9.68	)%		62.26	%		17.10	%		(9.12	)%		27.20	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,079,565		$	1,156,812		$	2,017,558		$	1,143,640		$	1,074,392		$	1,227,782
Ratio of Expenses to Average Net Assets (1)		1.05	%+*		1.05	%+		1.04	%+		1.05	%+		1.05	%+		1.05	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.05	%+		1.05	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.38	)%+*		(0.34	)%+		(0.49	)%+		(0.20	)%+		(0.29	)%+		0.10	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		19	%#		53	%		43	%		22	%		26	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.13	%*		1.13	%		1.08	%		1.12	%		1.10	%		1.12	%+
Net Investment Income (Loss) to Average Net Assets		(0.46	)%*		(0.42	)%		(0.53	)%		(0.27	)%		(0.34	)%		0.03	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Small Company Growth Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	14.89		$	18.83		$	13.13		$	11.80		$	13.27		$	10.46
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.06	)		(0.11	)		(0.13	)		(0.06	)		(0.07	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		1.16			(1.88	)		8.12			2.03			(1.16	)		2.83
Total from Investment Operations		1.10			(1.99	)		7.99			1.97			(1.23	)		2.81
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.95	)		(2.29	)		(0.64	)		(0.24	)		—
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	15.99		$	14.89		$	18.83		$	13.13		$	11.80		$	13.27
Total Return++		7.32	%#		(9.98	)%		61.88	%		16.70	%		(9.28	)%		26.86	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	178,841		$	186,307		$	282,632		$	156,824		$	282,988		$	530,123
Ratio of Expenses to Average Net Assets (1)		1.39	%+*		1.38	%+		1.31	%+^		1.30	%+		1.30	%+		1.30	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			1.30	%+		1.30	%+
Ratio of Net Investment Loss to Average Net Assets (1)		(0.73	)%+*		(0.67	)%+		(0.75	)%+		(0.45	)%+		(0.54	)%+		(0.15	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		19	%#		53	%		43	%		22	%		26	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.40	%*		N/A			1.35	%		1.37	%		1.35	%		1.37	%+
Net Investment Loss to Average Net Assets		(0.74	)%*		N/A			(0.79	)%		(0.52	)%		(0.59	)%		(0.22	)%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.40% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.30% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Small Company Growth Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from November 11, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	14.60		$	18.60		$	13.06		$	11.79		$	12.47
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.09	)		(0.19	)		(0.21	)		(0.12	)		(0.01	)
Net Realized and Unrealized Gain (Loss)		1.13			(1.86	)		8.04			2.03			(0.43	)
Total from Investment Operations		1.04			(2.05	)		7.83			1.91			(0.44	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.95	)		(2.29	)		(0.64	)		(0.24	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		(0.00	)‡		0.00	‡
Net Asset Value, End of Period	$	15.64		$	14.60		$	18.60		$	13.06		$	11.79
Total Return++		7.05	%#		(10.43	)%		60.97	%		16.21	%		(3.54	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,393		$	2,370		$	2,632		$	1,696		$	1,657
Ratio of Expenses to Average Net Assets (1)		1.90	%+*		1.90	%+		1.83	%+^^		1.80	%+		1.80	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.23	)%+*		(1.16	)%+		(1.27	)%+		(0.95	)%+		(0.77	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§*
Portfolio Turnover Rate		19	%#		53	%		43	%		22	%		26	%*
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.07	%*		2.02	%		1.92	%		1.87	%		1.85	%*
Net Investment Loss to Average Net Assets		(1.40	)%*		(1.28	)%		(1.36	)%		(1.02	)%		(0.82	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.90% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.80% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Small Company Growth Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30,2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	16.51		$	20.55		$	19.51
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		1.29			(2.06	)		3.15
Total from Investment Operations		1.26			(2.09	)		3.13
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.95	)		(2.09	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	17.77		$	16.51		$	20.55
Total Return++		7.57	%#		(9.63	)%		16.50	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	754,996		$	671,885		$	125,351
Ratio of Expenses to Average Net Assets (1)		0.98	%+*		0.97	%+		0.97	%+^^*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.32	)%+*		(0.17	)%+		(0.30	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		19	%#		53	%		43	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.98	%		0.99	%*
Net Investment Loss to Average Net Assets		N/A			(0.18	)%		(0.32	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.98% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Small Company Growth Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of small capitalization companies. The Portfolio holds promissory notes it has made to certain investee companies for this same purpose, the details of which are disclosed in the Portfolio of Investments.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class IS. The Portfolio's Class A shares are currently closed to new investors and the Portfolio suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. The Portfolio's Class I and Class IS shares are closed to new investors with certain exceptions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an

official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors") or quotes from a broker or dealer; (4) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)			Total (000)
Assets:
Common Stocks
Air Freight & Logistics	$	60,272	$	—		$	—		$	60,272
Biotechnology		72,341		—			—			72,341
Capital Markets		135,529		7,366			—			142,895
Chemicals		18,587		—			—			18,587
Electrical Equipment		46,136		—			—			46,136
Electronic Equipment, Instruments & Components		16,523		—			—			16,523
Health Care Equipment & Supplies		7,052		—			—			7,052
Health Care Providers & Services		27,601		—			—			27,601
Health Care Technology		177,477		—			—			177,477
Hotels, Restaurants & Leisure		120,610		—			—			120,610
Internet & Catalog Retail		156,050		—			—			156,050
Internet Software & Services		445,172		—			—			445,172
Machinery		48,734		—			—			48,734
Media		—		—			10,855			10,855
Multi-Utilities		—		—			—	†		—	†
Pharmaceuticals		26,999		—			—			26,999
Professional Services		110,115		—			—			110,115
Semiconductors & Semiconductor Equipment		18,656		—			—			18,656
Software		182,571		—			—			182,571
Specialty Retail		137,671		—			—			137,671
Total Common Stocks		1,808,096		7,366			10,855	†		1,826,317	†
Preferred Stocks		—		—			139,193			139,193
Convertible Preferred Stock		—		—	@		—			—	@
Promissory Notes		—		—			706			706
Call Options Purchased		—		693			—			693
Short-Term Investments
Investment Company		206,545		—			—			206,545
Repurchase Agreements		—		62,608			—			62,608
Total Short-Term Investments		206,545		62,608			—			269,153
Total Assets	$	2,014,641	$	70,667		$	150,754	†	$	2,236,062	†

@  Value is less than $500.

†  Includes one security which is valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $54,342,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

At June 30, 2015, the Fund held a security that transferred from Level 3 to Level 2. This security was valued using significant unobservable inputs at December 31, 2014 and was valued using other significant observable inputs at June 30, 2015.

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

	Common Stocks (000)			Preferred Stocks (000)		Convertible Preferred Stock (000)			Promissory Notes (000)
Beginning Balance	$	11,405	†	$	100,162	$	—	@	$	706
Purchases		—			—		—			—
Sales		—			—		—			—
Amortization of discount		—			—		—			(13	)
Transfers in		—			—		—			—
Transfers out		—			—		(—	@)		—
Corporate actions		—			—		—			—
Change in unrealized appreciation (depreciation)		(550	)		39,031		—	@		13
Realized gains (losses)		—			—		—			—
Ending Balance	$	10,855	†	$	139,193	$	—		$	706
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	(550	)	$	39,031	$	—	@	$	13

@  Value is less than $500.

†  Includes one security which is valued at zero.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Health Care Technology
Preferred Stock	$	9,121	Market Transaction Method	Issuance Price of Pending Financing	$	2.79		$	2.79		$	2.79		Increase
Hotels, Restaurants & Leisure
Preferred Stock	$	31,581	Market Transaction Method	Issuance Price of Financing	$	33.32		$	33.32		$	33.32		Increase
Internet & Catalog Retail
Preferred Stock	$	59,380	Market Transaction Method	Issuance Price of Financing	$	119.76		$	119.76		$	119.76		Increase
				Issuance Price of Pending Financing	$	142.24		$	142.24		$	142.24		Increase
Internet Software & Services
Preferred Stocks	$	7,266	Market Transaction Method	Precedent Transaction of Preferred Stock	$	4.82		$	4.82		$	4.82		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		21.5	%		23.5	%		22.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		12.3	x		19.6	x		19.6	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
	$	420	Market Transaction Method	Precedent Transaction	$	0.99		$	0.99		$	0.99		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.5	%	Decrease
				Perpetual Growth Rate		2.0	%		3.0	%		2.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.5	x		6.3	x		3.8	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
Preferred Stock — Escrow	$	27		Discount for Escrow		54.8	%		54.8	%		54.8	%	Decrease
Promissory Note	$	695	Market Transaction	Valuation at Issuance as a Percentage of Principal		100.0	%		100.0	%		100	%	Increase
				Cost of Debt		14.1	%		14.1	%		14.1	%	Decrease
				Valuation as a Percentage of Principal		87.6	%		87.6	%		87.6	%	Increase
Promissory Note — Escrow	$	11	Market Transaction	Valuation as a Percentage of Principal		39.6	%		39.6	%		39.6	%	Increase

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Media
Common Stock	$	10,855	Market Transaction Method	Pending Precedent Transaction	$	2,119.29		$	2,119.29		$	2,119.29		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		14.5	%		16.5	%		15.5	%	Decrease
				Perpetual Growth Rate		3.0	%		5.0	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		3.2	x		8.8	x		6.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
Software
Preferred Stocks	$	21,540	Market Transaction Method	Issuance Price of Financing	$	8.43		$	8.43		$	8.43		Increase
	$	9,497	Market Transaction Method	Precedent Transaction of Preferred Stock	$	11.42		$	11.42		$	11.42		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		18.5	%		20.5	%		19.5%		Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		16.2	x		28.7	x		23.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
Tobacco
Preferred Stock	$	361	Market Transaction Method	Pending Transaction	$	0.96		$	0.96		$	0.96		Increase

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by

the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an

additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative

instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	693	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(1,165	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(1,520	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	693	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received(e) (000)			Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	693	$	—	$	(693	)	$	0

(e) In some instances, the actual collateral received may be more than the amount shown here due to overcollateralization.

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	718,335,000

6.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities

during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	215,488	(f)	$	—	$	(215,488	)(g)(h)	$	0

(f) Represents market value of loaned securities at period end.

(g) The Portfolio received cash collateral of approximately $217,687,000, of which approximately $213,816,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $3,871,000, which is not reflected in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $141,000 in the form of U.S. Government obligations, which the Portfolio cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(h) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

9.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

10.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

11.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of

such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Next $500 million			Over $1.5 billion
	0.92	%		0.85	%		0.80	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.87% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 1.90% for Class L shares and 0.98% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $29,000 of advisory fees were waived and approximately $406,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A and Class L shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other

than long-term U.S. Government securities and short-term investments, were approximately $361,179,000 and $534,066,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investments in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $35,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	204,216	$	562,715	$	560,386	$	56	$	206,545

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	229,940	$	1,519	$	240,517

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, a net operating loss, basis adjustments on certain equity securities designated as passive foreign investment companies and partnerships and equalization debits, resulted in the following

reclassifications among the components of net assets at December 31, 2014:

Accumulated Net Investment Loss (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	5,510	$	(36,802	)	$	31,292

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	2,371

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $600,965,000 and the aggregate gross unrealized depreciation is approximately $82,549,000 resulting in net unrealized appreciation of approximately $518,416,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	2,229	$	—

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 47.2%, 55.7%, 11.7% and 86.2% for Class I, Class A, Class L and Class IS shares, respectively.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

32

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

  IFISCGSAN
1259840 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	9
Statement of Operations	11
Statements of Changes in Net Assets	12
Financial Highlights	14
Notes to Financial Statements	19
U.S. Privacy Policy	29
Director and Officer Information	32

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Emerging Markets Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Emerging Markets Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Emerging Markets Portfolio Class I	$	1,000.00	$	1,047.90	$	1,018.60	$	6.35	*	$	6.26	*		1.25	%
Emerging Markets Portfolio Class A		1,000.00		1,045.90		1,016.91		8.07	*		7.95	*		1.59
Emerging Markets Portfolio Class L		1,000.00		1,043.00		1,014.38		10.64	*		10.49	*		2.10
Emerging Markets Portfolio Class C		1,000.00		963.30		1,004.43		3.86	**		3.94	**		2.35
Emerging Markets Portfolio Class IS		1,000.00		1,047.90		1,018.94		5.99	*		5.91	*		1.18

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the five-year period but below its peer group average for the one- and three-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that the Portfolio's contractual management fee was higher than its peer group average, while its total expense ratio was higher but close to its peer group average. The Board also noted that the Portfolio's actual management fee was lower than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Emerging Markets Portfolio

	Shares		Value (000)
Common Stocks (96.8%)
Argentina (0.4%)
YPF SA ADR		156,750	$	4,300
Austria (2.1%)
Erste Group Bank AG (a)(b)		500,696		14,220
Vienna Insurance Group AG Wiener Versicherung Gruppe (b)		204,121		7,003
				21,223
Brazil (6.5%)
Banco Bradesco SA (Preference)		1,116,598		10,235
BRF SA		983,796		20,783
CCR SA		857,646		4,113
Itau Unibanco Holding SA (Preference)		1,168,932		12,866
MercadoLibre, Inc. (b)		50,480		7,153
Raia Drogasil SA		505,312		6,514
Ultrapar Participacoes SA		269,373		5,692
				67,356
Chile (0.5%)
SACI Falabella		752,889		5,259
China (17.4%)
BAIC Motor Corp., Ltd. H Shares (a)(b)(c)(d)		309,500		372
Bank of China Ltd. H Shares (c)		46,046,000		29,939
China Construction Bank Corp. H Shares (c)		21,101,750		19,274
China Life Insurance Co., Ltd. H Shares (c)		2,711,000		11,804
China Machinery Engineering Corp. H Shares (c)		979,000		1,056
China Mengniu Dairy Co., Ltd. (c)		1,303,000		6,497
China Mobile Ltd. (c)		1,598,000		20,461
China Overseas Land & Investment Ltd. (c)		1,852,000		6,534
China Pacific Insurance Group Co., Ltd. H Shares (c)		1,742,400		8,362
China Taiping Insurance Holdings Co., Ltd. (a)(c)		777,800		2,794
Chongqing Changan Automobile Co., Ltd. B Shares		722,202		1,847
CSPC Pharmaceutical Group Ltd. (c)		2,780,000		2,747
Huadian Power International Corp., Ltd. H Shares (c)		3,594,000		3,983
Huatai Securities Co., Ltd. H Shares (a)(c)(d)		826,800		2,336
JD.com, Inc. ADR (a)		148,577		5,066
Nan Ya Plastics Corp.		1,054,000		2,473
NetEase, Inc. ADR		19,188		2,780
Qihoo 360 Technology Co., Ltd. ADR (a)		31,107		2,106
Shenzhen International Holdings Ltd. (c)		1,781,000		3,111
Sihuan Pharmaceutical Holdings Group Ltd. (c)(e)		8,310,000		4,491
TAL Education Group ADR (a)		101,482		3,582
Tencent Holdings Ltd. (c)		1,774,000		35,404
Tsingtao Brewery Co., Ltd. H Shares (b)(c)		524,000		3,181
				180,200

	Shares		Value (000)
Colombia (0.8%)
Cemex Latam Holdings SA (a)		649,704	$	3,182
Grupo de Inversiones Suramericana SA		224,647		3,192
Grupo de Inversiones Suramericana SA (Preference)		161,171		2,252
				8,626
Czech Republic (1.1%)
Komercni Banka AS		50,502		11,195
Egypt (0.5%)
Commercial International Bank Egypt SAE		731,724		5,433
Hong Kong (2.1%)
AIA Group Ltd.		823,600		5,392
Samsonite International SA		4,587,900		15,862
				21,254
India (10.0%)
Ashok Leyland Ltd.		10,884,010		12,400
Bharat Petroleum Corp., Ltd.		526,816		7,275
Glenmark Pharmaceuticals Ltd.		620,142		9,681
HDFC Bank Ltd. (a)		636,432		12,402
ICICI Bank Ltd.		642,517		3,108
Idea Cellular Ltd.		1,298,385		3,592
IndusInd Bank Ltd. (a)		766,979		10,865
Marico Ltd.		1,067,615		7,539
Maruti Suzuki India Ltd.		163,655		10,767
Oil & Natural Gas Corp., Ltd.		261,881		1,273
Shree Cement Ltd.		45,066		8,026
Shriram Transport Finance Co., Ltd.		607,831		8,146
Sun Pharmaceutical Industries Ltd.		365,307		5,017
Tata Consultancy Services Ltd.		95,437		3,823
				103,914
Indonesia (2.4%)
AKR Corporindo Tbk PT		5,115,800		2,273
Kalbe Farma Tbk PT		37,953,800		4,768
Link Net Tbk PT (a)		9,425,200		3,588
Matahari Department Store Tbk PT		6,432,000		7,984
Surya Citra Media Tbk PT		11,461,200		2,472
XL Axiata Tbk PT (a)		13,741,300		3,798
				24,883
Korea, Republic of (12.2%)
Amorepacific Corp.		17,071		6,397
Cosmax, Inc.		22,506		4,066
Coway Co., Ltd.		116,858		9,575
Hotel Shilla Co., Ltd. (b)		61,314		6,129
KB Financial Group, Inc.		258,397		8,548
Kia Motors Corp.		135,787		5,515
Korea Aerospace Industries Ltd.		51,869		3,697
LG Chem Ltd.		22,673		5,661
Lotte Chemical Corp.		21,979		5,694
NAVER Corp.		15,016		8,535
Nexon Co., Ltd.		349,900		4,815
Samsung Electronics Co., Ltd.		26,081		29,648
Samsung Electronics Co., Ltd. (Preference)		7,342		6,536

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

	Shares		Value (000)
Korea, Republic of (cont'd)
Samsung Life Insurance Co., Ltd.		60,684	$	5,848
Shinhan Financial Group Co., Ltd.		25,323		943
SK Hynix, Inc.		288,162		10,928
SK Telecom Co., Ltd.		15,208		3,408
				125,943
Laos (0.3%)
Kolao Holdings (b)		143,640		2,878
Kolao Holdings GDR		1		—	@
				2,878
Malaysia (0.8%)
Astro Malaysia Holdings Bhd		4,885,300		3,988
IHH Healthcare Bhd (a)		2,924,400		4,387
				8,375
Mexico (6.6%)
Alfa SAB de CV		5,113,304		9,799
America Movil SAB de CV, Class L ADR		328,095		6,992
Cemex SAB de CV ADR (a)		1,571,116		14,391
El Puerto de Liverpool SAB de CV		334,962		3,868
Fomento Economico Mexicano SAB de CV ADR		210,387		18,743
Grupo Financiero Banorte SAB de CV Series O		1,097,894		6,037
Grupo Financiero Inbursa SAB de CV Series O		1,931,321		4,380
Mexichem SAB de CV		1,578,599		4,560
				68,770
Pakistan (0.7%)
United Bank Ltd.		4,266,800		7,159
Panama (0.3%)
Copa Holdings SA, Class A (b)		39,756		3,283
Peru (1.1%)
Credicorp Ltd.		82,060		11,400
Philippines (3.9%)
BDO Unibank, Inc.		1,730,600		4,161
DMCI Holdings, Inc.		10,903,800		3,192
International Container Terminal Services, Inc.		1,718,080		4,199
LT Group, Inc.		13,732,100		4,239
Metro Pacific Investments Corp.		58,917,800		6,181
Metropolitan Bank & Trust Co.		4,503,427		9,388
SM Investments Corp.		464,860		9,227
				40,587
Poland (3.6%)
Bank Pekao SA		176,807		8,462
Bank Zachodni WBK SA (a)		44,377		4,028
CCC SA		94,837		4,389
Jeronimo Martins SGPS SA		690,481		8,852
PKP Cargo SA		227,969		5,019
Polski Koncern Naftowy Orlen SA		324,460		6,371
				37,121
Qatar (0.1%)
Ooredoo QSC		43,705		1,044

	Shares		Value (000)
Russia (1.8%)
Mail.ru Group Ltd. GDR (a)		250,536	$	5,224
NovaTek OAO (Registered GDR)		46,269		4,710
X5 Retail Group N.V. GDR (a)		204,380		3,403
Yandex N.V., Class A (a)		323,914		4,930
				18,267
South Africa (7.2%)
Life Healthcare Group Holdings Ltd.		1,892,866		5,839
Mondi PLC		448,009		9,715
MTN Group Ltd.		687,686		12,930
Naspers Ltd., Class N		121,331		18,899
Sasol Ltd.		216,132		7,994
Steinhoff International Holdings Ltd. (b)		1,609,038		10,183
Vodacom Group Ltd. (b)		746,015		8,505
				74,065
Switzerland (0.8%)
Coca-Cola HBC AG (a)		408,476		8,780
Taiwan (9.3%)
Advanced Semiconductor Engineering, Inc.		3,920,000		5,311
Catcher Technology Co., Ltd.		636,000		7,957
Chailease Holding Co., Ltd.		2,849,405		6,871
Delta Electronics, Inc.		806,000		4,127
Eclat Textile Co., Ltd.		374,867		6,148
Fubon Financial Holding Co., Ltd.		4,542,490		9,039
Ginko International Co., Ltd.		115,000		1,448
Hermes Microvision, Inc.		85,155		5,547
Largan Precision Co., Ltd.		83,000		9,482
Pegatron Corp.		1,106,000		3,237
Taiwan Mobile Co., Ltd.		1,127,000		3,762
Taiwan Semiconductor Manufacturing Co., Ltd.		5,491,205		25,005
Uni-President Enterprises Corp.		4,708,549		8,348
				96,282
Thailand (3.6%)
Advanced Info Service PCL (Foreign)		1,121,400		7,969
DKSH Holding AG (a)		82,245		5,947
Indorama Ventures PCL (Foreign)		5,812,100		4,775
Land and Houses PCL (Foreign)		12,507,640		3,277
Minor International PCL (Foreign)		4,664,770		4,143
PTT PCL (Foreign)		707,800		7,523
Total Access Communication PCL (Foreign)		996,500		2,456
Total Access Communication PCL NVDR		556,700		1,372
				37,462
United States (0.7%)
Yum! Brands, Inc.		74,622		6,722
Total Common Stocks (Cost $828,571)				1,001,781

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

	Shares		Value (000)
Investment Company (0.5%)
Thailand (0.5%)
BTS Rail Mass Transit Growth Infrastructure Fund (Foreign) (Units) (f) (Cost $5,971)		16,179,736	$	4,886
Short-Term Investments (5.6%)
Securities held as Collateral on Loaned Securities (3.3%)
Investment Company (2.8%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G)		29,128,663		29,129
	Face Amount (000)
Repurchase Agreements (0.5%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $2,659; fully collateralized by a U.S. Government obligation; 2.75% due 5/31/17; valued at $2,713)	$	2,659		2,659
Merrill Lynch & Co., Inc., (0.14%, dated 6/30/15, due 7/1/15; proceeds $2,659; fully collateralized by a U.S. Government obligation; Zero Coupon due 7/2/15; valued at $2,713)		2,659		2,659
				5,318
Total Securities held as Collateral on Loaned Securities (Cost $34,447)				34,447

	Shares		Value (000)
Investment Company (2.3%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $23,746)		23,746,153	$	23,746
Total Short-Term Investments (Cost $58,193)				58,193
Total Investments (102.9%) (Cost $892,735) Including $34,910 of Securities Loaned (g)				1,064,860
Liabilities in Excess of Other Assets (-2.9%)				(29,799	)
Net Assets (100.0%)			$	1,035,061

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2015.

(c)  Security trades on the Hong Kong exchange.

(d)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(e)  Security has been deemed illiquid at June 30, 2015.

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

(g)  Securities are available for collateral in connection with open foreign currency forward exchange contracts.

@  Value is less than $500.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

NVDR  Non-Voting Depositary Receipt.

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2015:

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Appreciation (Depreciation) (000)
State Street Bank and Trust Co.	JPY	555,116	$	4,536	7/16/15	USD	4,493	$	4,493	$	(43	)
State Street Bank and Trust Co.	JPY	16,642		136	7/16/15	USD	135		135		(1	)
UBS AG	EUR	25,992		28,985	7/23/15	USD	29,225		29,225		240
			$	33,657				$	33,853	$	196

EUR  —  Euro

JPY  —  Japanese Yen

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		67.8	%
Banks		18.8
Wireless Telecommunication Services		7.0
Internet Software & Services		6.4
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

***  Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $196,000.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $839,860)	$	1,011,985
Investment in Security of Affiliated Issuer, at Value (Cost $52,875)		52,875
Total Investments in Securities, at Value (Cost $892,735)		1,064,860
Foreign Currency, at Value (Cost $489)		490
Cash		1,476
Dividends Receivable		5,749
Receivable for Investments Sold		3,136
Receivable for Portfolio Shares Sold		512
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		240
Tax Reclaim Receivable		91
Receivable from Affiliate		3
Other Assets		138
Total Assets		1,076,695
Liabilities:
Collateral on Securities Loaned, at Value		35,923
Payable for Advisory Fees		2,623
Deferred Capital Gain Country Tax		1,232
Payable for Investments Purchased		1,056
Payable for Custodian Fees		237
Payable for Sub Transfer Agency Fees — Class I		179
Payable for Sub Transfer Agency Fees — Class A		11
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Portfolio Shares Redeemed		82
Payable for Directors' Fees and Expenses		81
Payable for Administration Fees		68
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		44
Payable for Professional Fees		19
Payable for Shareholder Services Fees — Class A		5
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		72
Total Liabilities		41,634
Net Assets	$	1,035,061
Net Assets Consist Of:
Paid-in-Capital	$	897,324
Accumulated Undistributed Net Investment Income		3,483
Accumulated Net Realized Loss		(36,761	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $1,232 of Deferred Capital Gain Country Tax)		170,893
Foreign Currency Forward Exchange Contracts		196
Foreign Currency Translations		(74	)
Net Assets	$	1,035,061

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	660,952
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		28,501,547
Net Asset Value, Offering and Redemption Price Per Share	$	23.19
CLASS A:
Net Assets	$	24,432
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,082,934
Net Asset Value, Redemption Price Per Share	$	22.56
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.25
Maximum Offering Price Per Share	$	23.81
CLASS L:
Net Assets	$	277
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		12,434
Net Asset Value, Offering and Redemption Price Per Share	$	22.31
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		432
Net Asset Value, Offering and Redemption Price Per Share	$	22.31
CLASS IS:
Net Assets	$	349,390
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		15,059,609
Net Asset Value, Offering and Redemption Price Per Share	$	23.20
(1) Including: Securities on Loan, at Value:	$	34,910

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,846 of Foreign Taxes Withheld)	$	12,850
Income from Securities Loaned — Net		77
Dividends from Security of Affiliated Issuer (Note G)		29
Interest from Securities of Unaffiliated Issuers (Net of $—@ of Foreign Taxes Withheld)		—	@
Total Investment Income		12,956
Expenses:
Advisory Fees (Note B)		6,353
Custodian Fees (Note F)		468
Administration Fees (Note C)		416
Sub Transfer Agency Fees — Class I		303
Sub Transfer Agency Fees — Class A		21
Sub Transfer Agency Fees — Class L		—	@
Professional Fees		57
Shareholder Services Fees — Class A (Note D)		33
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Shareholder Reporting Fees		30
Registration Fees		27
Directors' Fees and Expenses		13
Transfer Agency Fees — Class I (Note E)		6
Transfer Agency Fees — Class A (Note E)		2
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		7
Other Expenses		18
Total Expenses		7,757
Waiver of Advisory Fees (Note B)		(1,252	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(74	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(18	)
Net Expenses		6,410
Net Investment Income		6,546
Realized Gain (Loss):
Investments Sold (Net of $150 of Capital Gain Country Tax)		(27,055	)
Foreign Currency Forward Exchange Contracts		2,825
Foreign Currency Transactions		(1,162	)
Net Realized Loss		(25,392	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Decrease in Deferred Capital Gain Country Tax of $1,067)		66,895
Foreign Currency Forward Exchange Contracts		(743	)
Foreign Currency Translations		189
Net Change in Unrealized Appreciation (Depreciation)		66,341
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		40,949
Net Increase in Net Assets Resulting from Operations	$	47,495

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Emerging Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	6,546		$	8,096
Net Realized Gain (Loss)		(25,392	)		42,856
Net Change in Unrealized Appreciation (Depreciation)		66,341			(97,002	)
Net Increase (Decrease) in Net Assets Resulting from Operations		47,495			(46,050	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(5,547	)
Net Realized Gain		—			(32,704	)
Class A:
Net Investment Income		—			(129	)
Net Realized Gain		—			(1,451	)
Class L:
Net Investment Income		—			(1	)
Net Realized Gain		—			(15	)
Class IS:
Net Investment Income		—			(3,017	)
Net Realized Gain		—			(16,464	)
Total Distributions		—			(59,328	)
Capital Share Transactions:(1)
Class I:
Subscribed		45,683			93,404
Distributions Reinvested		—			38,190
Redeemed		(59,791	)		(533,963	)
Class A:
Subscribed		2,250			10,567
Distributions Reinvested		—			1,559
Redeemed		(5,793	)		(18,172	)
Class L:
Subscribed		61			127
Distributions Reinvested		—			16
Redeemed		(3	)		(101	)
Class C:
Subscribed		10	*		—
Class IS:
Subscribed		26,005			354,909
Distributions Reinvested		—			19,481
Redeemed		(17,340	)		(28,889	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(8,918	)		(62,872	)
Redemption Fees		7			33
Total Increase (Decrease) in Net Assets		38,584			(168,217	)
Net Assets:
Beginning of Period		996,477			1,164,694
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $3,483 and $(3,063), respectively)	$	1,035,061		$	996,477

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		1,971			3,832
Shares Issued on Distributions Reinvested		—			1,753
Shares Redeemed		(2,589	)		(22,273	)
Net Decrease in Class I Shares Outstanding		(618	)		(16,688	)
Class A:
Shares Subscribed		99			438
Shares Issued on Distributions Reinvested		—			73
Shares Redeemed		(254	)		(766	)
Net Decrease in Class A Shares Outstanding		(155	)		(255	)
Class L:
Shares Subscribed		3			5
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(—	@@)		(5	)
Net Increase in Class L Shares Outstanding		3			1
Class C:
Shares Subscribed		—	@@*		—
Class IS:
Shares Subscribed		1,132			14,962
Shares Issued on Distributions Reinvested		—			895
Shares Redeemed		(756	)		(1,174	)
Net Increase in Class IS Shares Outstanding		376			14,683

*  For the period April 30, 2015 through June 30, 2015.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	22.13		$	24.64		$	25.94		$	21.73		$	27.14		$	23.10
Income (Loss) from Investment Operations:
Net Investment Income†		0.14			0.17			0.20			0.19			0.22			0.10
Net Realized and Unrealized Gain (Loss)		0.92			(1.30	)		(0.44	)		4.19			(5.22	)		4.15
Total from Investment Operations		1.06			(1.13	)		(0.24	)		4.38			(5.00	)		4.25
Distributions from and/or in Excess of:
Net Investment Income		—			(0.20	)		(0.20	)		(0.17	)		—			(0.21	)
Net Realized Gain		—			(1.18	)		(0.86	)		—			(0.41	)		—
Total Distributions		—			(1.38	)		(1.06	)		(0.17	)		(0.41	)		(0.21	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	23.19		$	22.13		$	24.64		$	25.94		$	21.73		$	27.14
Total Return++		4.79	%#		(4.47	)%		(0.80	)%		20.19	%		(18.41	)%		18.49	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	660,952		$	644,537		$	1,128,618		$	1,278,837		$	1,198,857		$	2,031,778
Ratio of Expenses to Average Net Assets (1)		1.25	%+*		1.25	%+		1.24	%+		1.28	%+^		1.48	%+		1.47	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.24	%+		N/A			N/A			1.47	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.24	%+*		0.68	%+		0.79	%+		0.80	%+^		0.86	%+		0.40	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		21	%#		43	%		49	%		47	%		60	%		59	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.51	%*		1.52	%		1.51	%		1.49	%		N/A			N/A
Net Investment Income to Average Net Assets		0.98	%*		0.41	%		0.52	%		0.59	%		N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective March 1, 2012, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.25% for Class I shares. Prior to March 1, 2012, the maximum ratio was 1.65% for Class I shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	21.57		$	24.02		$	25.31		$	21.20		$	26.56		$	22.61
Income (Loss) from Investment Operations:
Net Investment Income†		0.09			0.11			0.12			0.14			0.15			0.04
Net Realized and Unrealized Gain (Loss)		0.90			(1.28	)		(0.42	)		4.07			(5.10	)		4.06
Total from Investment Operations		0.99			(1.17	)		(0.30	)		4.21			(4.95	)		4.10
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.13	)		(0.10	)		—			(0.15	)
Net Realized Gain		—			(1.18	)		(0.86	)		—			(0.41	)		—
Total Distributions		—			(1.28	)		(0.99	)		(0.10	)		(0.41	)		(0.15	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	22.56		$	21.57		$	24.02		$	25.31		$	21.20		$	26.56
Total Return++		4.59	%#		(4.77	)%		(1.07	)%		19.87	%		(18.63	)%		18.20	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	24,432		$	26,701		$	35,863		$	40,824		$	46,521		$	113,434
Ratio of Expenses to Average Net Assets (1)		1.59	%+*		1.57	%+		1.52	%+^^		1.53	%+^		1.73	%+		1.72	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.52	%+^^		N/A			N/A			1.72	%+
Ratio of Net Investment Income to Average Net Assets (1)		0.83	%+*		0.45	%+		0.49	%+		0.61	%+^		0.61	%+		0.15	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		21	%#		43	%		49	%		47	%		60	%		59	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.84	%*		1.82	%		1.78	%		1.74	%		N/A			N/A
Net Investment Income to Average Net Assets		0.58	%*		0.20	%		0.23	%		0.40	%		N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.60% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.50% for Class A shares.

^  Effective March 1, 2012, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.50% for Class A shares. Prior to March 1, 2012, the maximum ratio was 1.90% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	21.39		$	23.91		$	25.27		$	23.85
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			(0.05	)		(0.05	)		0.04
Net Realized and Unrealized Gain (Loss)		0.87			(1.23	)		(0.37	)		1.44
Total from Investment Operations		0.92			(1.28	)		(0.42	)		1.48
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		(0.08	)		(0.06	)
Net Realized Gain		—			(1.18	)		(0.86	)		—
Total Distributions		—			(1.24	)		(0.94	)		(0.06	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	22.31		$	21.39		$	23.91		$	25.27
Total Return++		4.30	%#		(5.26	)%		(1.56	)%		6.20	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	277		$	210		$	203		$	11
Ratio of Expenses to Average Net Assets (1)		2.10	%+*		2.10	%+		2.03	%+^^		1.99	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			2.03	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.45	%+*		(0.21	)%+		(0.18	)%+		0.27	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%*
Portfolio Turnover Rate		21	%#		43	%		49	%		47	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.80	%*		2.97	%		2.54	%		2.28	%*

Net Investment Loss to Average Net Assets (0.25 )%* (1.08 )% (0.69 )% (0.02 )%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.00% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	23.16
Income (Loss) from Investment Operations:
Net Investment Income†		0.08
Net Realized and Unrealized Loss		(0.93	)
Total from Investment Operations		(0.85	)
Net Asset Value, End of Period	$	22.31
Total Return++		(3.67	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	10
Ratios of Expenses to Average Net Assets (1)		2.35	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.03	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		21	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		16.53	%*
Net Investment Loss to Average Net Assets		(12.15	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	22.14		$	24.64		$	24.92
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.15			0.22			(0.01	)
Net Realized and Unrealized Gain		0.91			(1.32	)		0.46
Total from Investment Operations		1.06			(1.10	)		0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.22	)		(0.14	)
Net Realized Gain		—			(1.18	)		(0.59	)
Total Distributions		—			(1.40	)		(0.73	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	23.20		$	22.14		$	24.64
Total Return++		4.79	%#		(4.36	)%		1.85	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	349,390		$	325,029		$	10
Ratio of Expenses to Average Net Assets (1)		1.18	%+*		1.18	%+		1.17	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.17	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.33	%+*		0.89	%+		(0.21	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		21	%#		43	%		49	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.42	%*		1.42	%		6.65	%*
Net Investment Income (Loss) to Average Net Assets		1.09	%*		0.65	%		(5.69	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.18% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Emerging Markets Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last

reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	3,697	$	—	$	—	$	3,697
Airlines		3,283		—		—		3,283
Automobiles		7,734		10,767		—		18,501
Banks		170,776		23,267		—		194,043
Beverages		34,943		—		—		34,943
Capital Markets		2,336		—		—		2,336
Chemicals		18,388		4,775		—		23,163
Construction & Engineering		1,056		—		—		1,056
Construction Materials		25,599		—		—		25,599
Consumer Finance		8,146		—		—		8,146
Diversified Consumer Services		3,582		—		—		3,582
Diversified Financial Services		27,535		—		—		27,535
Diversified Telecommunication Services		8,430		—		—		8,430

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Electronic Equipment, Instruments & Components	$	13,609	$	—		$	—	$	13,609
Food & Staples Retailing		18,769		—			—		18,769
Food Products		35,628		—			—		35,628
Health Care Equipment & Supplies		1,448		—			—		1,448
Health Care Providers & Services		10,226		—			—		10,226
Hotels, Restaurants & Leisure		6,722		4,143			—		10,865
Household Durables		19,758		—			—		19,758
Independent Power Producers & Energy Traders		3,983		—			—		3,983
Industrial Conglomerates		22,218		—			—		22,218
Information Technology Services		3,823		—			—		3,823
Insurance		41,203		—			—		41,203
Internet & Catalog Retail		5,066		—			—		5,066
Internet Software & Services		66,132		—			—		66,132
Machinery		12,400		—			—		12,400
Media		25,359		—			—		25,359
Multi-line Retail		17,111		—			—		17,111
Oil, Gas & Consumable Fuels		37,615		7,523			—		45,138
Paper & Forest Products		9,715		—			—		9,715
Personal Products		18,002		—			—		18,002
Pharmaceuticals		22,213		4,491			—		26,704
Professional Services		5,947		—			—		5,947
Real Estate Management & Development		6,534		3,277			—		9,811
Road & Rail		5,019		—			—		5,019
Semiconductors & Semiconductor Equipment		46,791		—			—		46,791
Software		4,815		—			—		4,815
Specialty Retail		9,007		—	@		—		9,007
Tech Hardware, Storage & Peripherals		47,378		—			—		47,378
Textiles, Apparel & Luxury Goods		26,399		—			—		26,399
Trading Companies & Distributors		2,273		—			—		2,273
Transportation Infrastructure		11,423		—			—		11,423
Wireless Telecommunication Services		61,022		10,425			—		71,447
Total Common Stocks		933,113		68,668			—		1,001,781

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Investment Company	$	—	$	4,886		$	—	$	4,886
Short-Term Investments
Investment Company		52,875		—			—		52,875
Repurchase Agreements		—		5,318			—		5,318
Short-Term Investments		52,875		5,318			—		58,193
Foreign Currency Forward Exchange Contract		—		240			—		240
Total Assets		985,988		79,112			—		1,065,100
Liabilities:
Foreign Currency Forward Exchange Contracts		—		(44	)		—		(44	)
Total	$	985,988	$	79,068		$	—	$	1,065,056

@  Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $724,545,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement,

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of

unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser and/or Sub-Advisers seek to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the

contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following tables set forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contract	Unrealized Appreciation on Foreign Currency Forward Exchange Contract	Currency Risk	$	240
	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	(44	)

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	2,825
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(743	)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(a) (000)		Liabilities(a) (000)
Foreign Currency Forward Exchange Contracts	$	240	$	(44	)

(a) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature

in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
UBS AG	$	240	$	—	$	—	$	240
Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Pledged (000)		Net Amount (not less than $0) (000)
State Street Bank and Trust Co.	$	44	$	—	$	—	$	44

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	34,652,000

6.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

compensation to the lending agent, and is recorded as "Income from Securities Loaned–Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	34,910	(b)	$	—	$	(34,910	)(c)(d)	$	0

(b) Represents market value of loaned securities at period end.

(c) The Portfolio received cash collateral of approximately $35,923,000, of which approximately $34,447,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $1,476,000, which is not reflected in the Portfolio of Investments.

(d) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Redemption Fees: The Portfolio will assess a 2% redemption fee, on Class I shares, Class A shares, Class L shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

8.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

9.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net

investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Next $1.5 billion			Over $2.5 billion
	1.25	%		1.20	%		1.15	%		1.00	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.98% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.25% for Class I shares, 1.60% for Class A shares, 2.10% for Class L shares, 2.35% for Class C shares and 1.18% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

appropriate. For the six months ended June 30, 2015, approximately $1,252,000 of advisory fees were waived and approximately $77,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder

Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $213,604,000 and $224,643,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $18,000 relating to the Portfolio's investment in the Liquidity Funds.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	58,143	$	144,596	$	149,864	$	29	$	52,875

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generalyl each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	8,694	$	50,634	$	9,542	$	40,664

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies and foreign taxes paid on capital gains, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	4,292	$	(4,292	)	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	1,796	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $227,139,000 and the aggregate gross unrealized depreciation is approximately $55,014,000 resulting in net unrealized appreciation of approximately $172,125,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	6,173

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 65.1%, 82.2% and 91.8% for Class I, Class A and Class IS shares, respectively.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

32

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMSAN
1262677 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Domestic Debt Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	9
Statement of Operations	11
Statements of Changes in Net Assets	12
Financial Highlights	13
Notes to Financial Statements	17
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Emerging Markets Domestic Debt Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Emerging Markets Domestic Debt Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Domestic Debt Portfolio Class I	$	1,000.00	$	938.10	$	1,020.58	$	4.08	$	4.26		0.85	%
Emerging Markets Domestic Debt Portfolio Class A		1,000.00		936.60		1,018.89		5.71		5.96		1.19
Emerging Markets Domestic Debt Portfolio Class L		1,000.00		935.10		1,017.65		6.91		7.20		1.44
Emerging Markets Domestic Debt Portfolio Class IS		1,000.00		938.10		1,020.78		3.89		4.06		0.81

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was below its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the contractual management fee was higher but close to its peer group average. The Board also noted that the actual management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Emerging Markets Domestic Debt Portfolio

	Face Amount (000)		Value (000)
Fixed Income Securities (89.6%)
Brazil (14.1%)
Sovereign (14.1%)
Brazil Letras do Tesouro Nacional, Zero Coupon, 1/1/19	BRL	536	$	113
Brazil Notas do Tesouro Nacional, Series F, 10.00%, 1/1/17 - 1/1/25		1,893		544
				657
Colombia (5.7%)
Sovereign (5.7%)
Colombia Government International Bond, 4.38%, 3/21/23	COP	364,000		127
Colombian TES, 10.00%, 7/24/24		305,000		138
				265
Hungary (4.2%)
Sovereign (4.2%)
Hungary Government Bond, 5.50%, 6/24/25	HUF	12,500		50
6.00%, 11/24/23		35,820		147
				197
Indonesia (7.9%)
Sovereign (7.9%)
Deutsche Bank AG, Indonesia Government Bond, Credit Linked Notes, 11.00%, 12/15/20 (a)(b)	IDR	1,100,000		92
Indonesia Treasury Bond, 9.00%, 3/15/29		3,487,000		277
				369
Malaysia (8.0%)
Sovereign (8.0%)
Malaysia Government Bond, 3.39%, 3/15/17	MYR	408		109
3.81%, 2/15/17		333		89
4.16%, 7/15/21		215		58
4.18%, 7/15/24		175		47
4.50%, 4/15/30		245		67
				370
Mexico (11.3%)
Sovereign (11.3%)
Mexican Bonos, 6.50%, 6/10/21	MXN	3,200		213
8.50%, 11/18/38		410		32
10.00%, 12/5/24		2,550		208
Series M 8.00%, 6/11/20		1,050		75
				528
Peru (1.1%)
Sovereign (1.1%)
Peruvian Government International Bond (Units), 5.70%, 8/12/24 (a)(c)	PEN	170		51

	Face Amount (000)		Value (000)
Poland (8.8%)
Sovereign (8.8%)
Poland Government Bond, 4.00%, 10/25/23	PLN	160	$	45
5.75%, 10/25/21 - 9/23/22		1,175		363
				408
Romania (0.8%)
Sovereign (0.8%)
Romania Government Bond,
4.75%, 2/24/25	RON	85		22
5.85%, 4/26/23		50		14
				36
Russia (4.5%)
Sovereign (4.5%)
Russian Federal Bond - OFZ, 6.20%, 1/31/18	RUB	5,172		85
6.80%, 12/11/19		1,100		17
7.00%, 8/16/23		7,397		107
				209
South Africa (10.0%)
Sovereign (10.0%)
South Africa Government Bond, 6.75%, 3/31/21	ZAR	1,170		91
8.00%, 1/31/30		4,070		316
10.50%, 12/21/26		600		58
				465
Thailand (4.7%)
Sovereign (4.7%)
Thailand Government Bond, 3.63%, 6/16/23	THB	7,098		221
Turkey (8.5%)
Sovereign (8.5%)
Turkey Government Bond, 7.10%, 3/8/23	TRY	365		121
9.00%, 3/8/17 - 7/24/24		516		192
10.40%, 3/20/24		210		84
				397
Total Fixed Income Securities (Cost $4,782)				4,173
	No. of Warrants
Warrants (0.1%)
Venezuela (0.1%)
Venezuela Government International Bond, Oil-Linked Payment Obligation, expires 4/15/20 (b)(d) (Cost $—)		495		5

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Domestic Debt Portfolio

	Shares		Value (000)
Short-Term Investment (4.6%)
Investment Company (4.6%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $212)		212,393	$	212
Total Investments (94.3%) (Cost $4,994) (e)				4,390
Other Assets in Excess of Liabilities (5.7%)				264
Net Assets (100.0%)			$	4,654

(a)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(b)  Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on June 30, 2015.

(c)  Consists of one or more classes of securities traded together as a unit.

(d)  Security has been deemed illiquid at June 30, 2015.

(e)  Securities are available for collateral in connection with open foreign currency forward exchange contracts.

OFZ  Obilgatsyi Federal'novo Zaima (Russian Federal Loan Obligation)

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2015:

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Appreciation (Depreciation) (000)
JPMorgan Chase Bank NA	BRL	747	$	240	7/2/15	USD	241	$	241	$	1
JPMorgan Chase Bank NA	BRL	507		163	7/2/15	USD	158		158		(5	)
JPMorgan Chase Bank NA	BRL	240		77	7/2/15	USD	77		77		—	@
JPMorgan Chase Bank NA	PHP	1,000		22	7/2/15	USD	22		22		(—	@)
JPMorgan Chase Bank NA	USD	164		164	7/2/15	BRL	507		164		(—	@)
JPMorgan Chase Bank NA	USD	77		77	7/2/15	BRL	240		77		(—	@)
JPMorgan Chase Bank NA	USD	238		238	7/2/15	BRL	747		240		2
JPMorgan Chase Bank NA	USD	22		22	7/2/15	PHP	1,000		22		(—	@)
JPMorgan Chase Bank NA	CLP	31,900		50	7/6/15	USD	50		50		—	@
JPMorgan Chase Bank NA	HUF	8,000		29	7/6/15	USD	29		29		—	@
JPMorgan Chase Bank NA	HUF	4,346		16	7/6/15	USD	16		16		—	@
JPMorgan Chase Bank NA	HUF	5,000		18	7/6/15	USD	18		18		—	@
JPMorgan Chase Bank NA	MYR	289		76	7/6/15	USD	77		77		1
JPMorgan Chase Bank NA	MYR	91		24	7/6/15	USD	24		24		—	@
JPMorgan Chase Bank NA	USD	29		29	7/6/15	CLP	18,500		29		(—	@)
JPMorgan Chase Bank NA	USD	22		22	7/6/15	CLP	13,400		21		(1	)
JPMorgan Chase Bank NA	USD	29		29	7/6/15	HUF	8,160		29		(—	@)
JPMorgan Chase Bank NA	USD	49		49	7/6/15	MYR	180		48		(1	)
JPMorgan Chase Bank NA	USD	54		54	7/6/15	MYR	200		53		(1	)
JPMorgan Chase Bank NA	USD	28		28	7/6/15	RUB	1,550		28		(—	@)
JPMorgan Chase Bank NA	USD	24		24	7/6/15	ZAR	290		24		—	@
JPMorgan Chase Bank NA	USD	21		21	7/6/15	ZAR	270		22		1
JPMorgan Chase Bank NA	ZAR	560		46	7/6/15	USD	46		46		—	@
JPMorgan Chase Bank NA	ZAR	632		52	7/6/15	USD	51		51		(1	)
JPMorgan Chase Bank NA	ZAR	200		16	7/6/15	USD	16		16		(—	@)
JPMorgan Chase Bank NA	PLN	130		35	7/8/15	USD	35		35		—	@
JPMorgan Chase Bank NA	PLN	194		51	7/8/15	USD	52		52		1
JPMorgan Chase Bank NA	USD	124		124	7/8/15	PLN	459		122		(2	)
JPMorgan Chase Bank NA	USD	78		78	7/8/15	THB	2,650		78		(—	@)
JPMorgan Chase Bank NA	RON	62		16	7/13/15	USD	16		16		—	@
JPMorgan Chase Bank NA	TRY	117		43	7/13/15	USD	42		42		(1	)
JPMorgan Chase Bank NA	USD	30		30	7/13/15	COP	76,700		29		(1	)
JPMorgan Chase Bank NA	USD	7		7	7/13/15	COP	19,000		7		(—	@)
JPMorgan Chase Bank NA	USD	7		7	7/13/15	RON	27		7		(—	@)
JPMorgan Chase Bank NA	USD	53		53	7/13/15	RON	210		53		(—	@)
JPMorgan Chase Bank NA	USD	38		38	7/13/15	RON	150		37		(1	)
JPMorgan Chase Bank NA	USD	78		78	7/13/15	TRY	215		80		2
JPMorgan Chase Bank NA	USD	50		50	7/22/15	NGN	10,000		50		—	@
JPMorgan Chase Bank NA	IDR	668,900		50	7/24/15	USD	50		50		—	@
JPMorgan Chase Bank NA	MXN	1,471		93	7/27/15	USD	95		95		2
JPMorgan Chase Bank NA	USD	22		22	7/31/15	PHP	1,000		22		(—	@)
JPMorgan Chase Bank NA	USD	50		50	8/3/15	CLP	31,900		50		(—	@)
JPMorgan Chase Bank NA	USD	77		77	8/3/15	MYR	289		76		(1	)
JPMorgan Chase Bank NA	BRL	747		237	8/4/15	USD	235		235		(2	)
			$	2,725				$	2,718	$	(7	)

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Domestic Debt Portfolio

@  Value is less than $500.

BRL  —  Brazilian Real

CLP  —  Chilean Peso

COP  —  Colombian Peso

HUF  —  Hungarian Forint

IDR  —  Indonesian Rupiah

MXN  —  Mexican Peso

MYR  —  Malaysian Ringgit

NGN  —  Nigerian Naira

PEN  —  Peruvian Nuevo Sol

PHP  —  Philippine Peso

PLN  —  Polish Zloty

RON  —  Romanian New Leu

RUB  —  Russian Ruble

THB  —  Thai Baht

TRY  —  Turkish Lira

ZAR  —  South African Rand

USD  —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Sovereign		95.1	%
Other*		4.9
Total Investments		100.0	%**

*  Industries and/or investment types representing less than 5% of total investments.

**  Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $7,000.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Domestic Debt Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $4,782)	$	4,178
Investment in Security of Affiliated Issuer, at Value (Cost $212)		212
Total Investments in Securities, at Value (Cost $4,994)		4,390
Foreign Currency, at Value (Cost $77)		78
Interest Receivable		132
Due from Adviser		58
Tax Reclaim Receivable		43
Receivable for Investments Sold		23
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		10
Receivable for Variation Margin on Futures Contracts		2
Receivable from Affiliate		—	@
Receivable for Portfolio Shares Sold		—	@
Other Assets		47
Total Assets		4,783
Liabilities:
Payable for Investments Purchased		46
Payable for Professional Fees		37
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		17
Payable for Directors' Fees and Expenses		8
Payable for Portfolio Shares Redeemed		6
Payable for Custodian Fees		3
Payable for Sub Transfer Agency Fees — Class I		1
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Administration Fees		—	@
Other Liabilities		9
Total Liabilities		129
Net Assets	$	4,654
Net Assets Consist Of:
Paid-in-Capital	$	11,970
Accumulated Net Investment Loss		(1,583	)
Accumulated Net Realized Loss		(5,113	)
Unrealized Appreciation (Depreciation) on:
Investments		(604	)
Foreign Currency Forward Exchange Contracts		(7	)
Foreign Currency Translations		(9	)
Net Assets	$	4,654

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Domestic Debt Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	2,757
Shares Outstanding $0.003 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		293,454
Net Asset Value, Offering and Redemption Price Per Share	$	9.40
CLASS A:
Net Assets	$	1,043
Shares Outstanding $0.003 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		108,599
Net Asset Value, Redemption Price Per Share	$	9.61
Maximum Sales Load		4.25	%
Maximum Sales Charge	$	0.43
Maximum Offering Price Per Share	$	10.04
CLASS L:
Net Assets	$	845
Shares Outstanding $0.003 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		90,135
Net Asset Value, Offering and Redemption Price Per Share	$	9.37
CLASS IS:
Net Assets	$	9
Shares Outstanding $0.003 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		907
Net Asset Value, Offering and Redemption Price Per Share	$	9.40

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Domestic Debt Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers (Net of $4 of Foreign Taxes Withheld)	$	208
Dividends from Securities of Unaffiliated Issuers		1
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		209
Expenses:
Professional Fees		61
Advisory Fees (Note B)		31
Custodian Fees (Note F)		19
Registration Fees		16
Shareholder Reporting Fees		10
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class L (Note D)		2
Administration Fees (Note C)		3
Sub Transfer Agency Fees — Class I		1
Sub Transfer Agency Fees — Class A		1
Sub Transfer Agency Fees — Class L		—	@
Pricing Fees		2
Directors' Fees and Expenses		1
Other Expenses		8
Total Expenses		160
Expenses Reimbursed by Adviser (Note B)		(86	)
Waiver of Advisory Fees (Note B)		(31	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		39
Net Investment Income		170
Realized Gain (Loss):
Investments Sold		(1,923	)
Foreign Currency Forward Exchange Contracts		18
Foreign Currency Transactions		(19	)
Futures Contracts		(2	)
Net Realized Loss		(1,926	)
Change in Unrealized Appreciation (Depreciation):
Investments		1,147
Foreign Currency Forward Exchange Contracts		(10	)
Foreign Currency Translations		16
Net Change in Unrealized Appreciation (Depreciation)		1,153
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(773	)
Net Decrease in Net Assets Resulting from Operations	$	(603	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Emerging Markets Domestic Debt Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	170		$	1,116
Net Realized Loss		(1,926	)		(3,381	)
Net Change in Unrealized Appreciation (Depreciation)		1,153			1,002
Net Decrease in Net Assets Resulting from Operations		(603	)		(1,263	)
Capital Share Transactions:(1)
Class I:
Subscribed		275			722
Redeemed		(8,239	)		(14,209	)
Class A:
Subscribed		1			169
Redeemed		(361	)		(4,554	)
Class L:
Subscribed		—			54
Redeemed		(109	)		(1,974	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(8,433	)		(19,792	)
Redemption Fees		—	@		—
Total Decrease in Net Assets		(9,036	)		(21,055	)
Net Assets:
Beginning of Period		13,690			34,745
End of Period (Including Accumulated Net Investment Loss of $(1,583) and $(1,753))	$	4,654		$	13,690
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		28			67
Shares Redeemed		(852	)		(1,336	)
Net Decrease in Class I Shares Outstanding		(824	)		(1,269	)
Class A:
Shares Subscribed		—			15
Shares Redeemed		(35	)		(420	)
Net Decrease in Class A Shares Outstanding		(35	)		(405	)
Class L:
Shares Subscribed		—			5
Shares Redeemed		(11	)		(181	)
Net Decrease in Class L Shares Outstanding		(11	)		(176	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Domestic Debt Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	10.01		$	10.75		$	12.71		$	11.23		$	12.44		$	12.15
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.60			0.61			0.65			0.64			0.87
Net Realized and Unrealized Gain (Loss)		(0.81	)		(1.34	)		(2.18	)		1.22			(1.07	)		0.92
Total from Investment Operations		(0.61	)		(0.74	)		(1.57	)		1.87			(0.43	)		1.79
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.20	)		(0.39	)		(0.64	)		(0.93	)
Net Realized Gain		—			—			(0.12	)		(0.00	)‡		(0.14	)		(0.57	)
Paid-in-Capital		—			—			(0.07	)		—			—			—
Total Distributions		—			—			(0.39	)		(0.39	)		(0.78	)		(1.50	)
Redemption Fees		0.00	‡		—			0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	9.40		$	10.01		$	10.75		$	12.71		$	11.23		$	12.44
Total Return++		(6.19	)%#		(6.79	)%		(12.54	)%		16.89	%		(3.66	)%		15.07	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,757		$	11,195		$	25,669		$	48,641		$	69,557		$	28,864
Ratio of Expenses to Average Net Assets (1)		0.85	%+*		0.85	%+		0.84	%+		0.84	%+		0.83	%+		0.84	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.84	%+
Ratio of Net Investment Income to Average Net Assets (1)		4.14	%+*		5.59	%+		5.08	%+		5.40	%+		5.21	%+		7.12	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%		0.02	%		0.01	%
Portfolio Turnover Rate		62	%#		102	%		117	%		84	%		85	%		109	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.73	%*		2.05	%		1.39	%		1.18	%		1.19	%		1.29	%+
Net Investment Income to Average Net Assets		1.26	%*		4.39	%		4.53	%		5.06	%		4.85	%		6.67	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Domestic Debt Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	10.26		$	11.05		$	13.06		$	11.54		$	12.76		$	12.42
Income (Loss) from Investment Operations:
Net Investment Income†		0.21			0.57			0.60			0.64			0.63			0.86
Net Realized and Unrealized Gain (Loss)		(0.86	)		(1.36	)		(2.24	)		1.25			(1.10	)		0.94
Total from Investment Operations		(0.65	)		(0.79	)		(1.64	)		1.89			(0.47	)		1.80
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.18	)		(0.37	)		(0.61	)		(0.89	)
Net Realized Gain		—			—			(0.12	)		(0.00	)‡		(0.14	)		(0.57	)
Paid-in-Capital		—			—			(0.07	)		—			—			—
Total Distributions		—			—			(0.37	)		(0.37	)		(0.75	)		(1.46	)
Redemption Fees		0.00	‡		—			0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	9.61		$	10.26		$	11.05		$	13.06		$	11.54		$	12.76
Total Return++		(6.34	)%#		(7.15	)%		(12.76	)%		16.56	%		(3.90	)%		14.88	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,043		$	1,473		$	6,065		$	5,712		$	6,784		$	6,792
Ratio of Expenses to Average Net Assets (1)		1.19	%+*		1.20	%+		1.13	%+^^		1.09	%+		1.08	%+		1.09	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.09	%+
Ratio of Net Investment Income to Average Net Assets (1)		4.23	%+*		5.12	%+		4.91	%+		5.15	%+		4.96	%+		6.87	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.01	%		0.02	%		0.01	%
Portfolio Turnover Rate		62	%#		102	%		117	%		84	%		85	%		109	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.27	%*		2.40	%		1.72	%		1.43	%		1.44	%		1.54	%+
Net Investment Income to Average Net Assets		1.15	%*		3.92	%		4.32	%		4.81	%		4.60	%		6.42	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.20% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.10% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Domestic Debt Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	10.02		$	10.82		$	12.80		$	11.33		$	12.54		$	12.24
Income (Loss) from Investment Operations:
Net Investment Income†		0.19			0.52			0.55			0.57			0.55			0.79
Net Realized and Unrealized Gain (Loss)		(0.84	)		(1.32	)		(2.19	)		1.22			(1.07	)		0.92
Total from Investment Operations		(0.65	)		(0.80	)		(1.64	)		1.79			(0.52	)		1.71
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.15	)		(0.32	)		(0.55	)		(0.84	)
Net Realized Gain		—			—			(0.12	)		(0.00	)‡		(0.14	)		(0.57	)
Paid-in-Capital		—			—			(0.07	)		—			—			—
Total Distributions		—			—			(0.34	)		(0.32	)		(0.69	)		(1.41	)
Redemption Fees		0.00	‡		—			0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	9.37		$	10.02		$	10.82		$	12.80		$	11.33		$	12.54
Total Return++		(6.49	)%#		(7.39	)%		(13.00	)%		15.99	%		(4.34	)%		14.18	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	845		$	1,013		$	3,001		$	4,648		$	4,965		$	4,668
Ratio of Expenses to Average Net Assets (1)		1.44	%+*		1.45	%+		1.40	%+^^		1.59	%+		1.58	%+		1.59	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.59	%+
Ratio of Net Investment Income to Average Net Assets (1)		3.97	%+*		4.85	%+		4.55	%+		4.65	%+		4.46	%+		6.37	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.01	%		0.02	%		0.01	%
Portfolio Turnover Rate		62	%#		102	%		117	%		84	%		85	%		109	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.42	%*		2.66	%		1.95	%		1.93	%		1.94	%		2.04	%+
Net Investment Income to Average Net Assets		0.99	%*		3.64	%		4.00	%		4.31	%		4.10	%		5.92	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.45% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.35% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Domestic Debt Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	10.02		$	10.75		$	11.02
Income (Loss) from Investment Operations:
Net Investment Income†		0.23			0.63			0.19
Net Realized and Unrealized Loss		(0.85	)		(1.36	)		(0.33	)
Total from Investment Operations		(0.62	)		(0.73	)		(0.14	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.06	)
Paid-in-Capital		—			—			(0.07	)
Total Distributions		—			—			(0.13	)
Redemption Fees		—			—			0.00	‡
Net Asset Value, End of Period	$	9.40		$	10.02		$	10.75
Total Return++		(6.19	)%#		(6.79	)%		(1.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	9		$	9		$	10
Ratio of Expenses to Average Net Assets (1)		0.81	%+*		0.82	%+		0.82	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		4.75	%+*		5.82	%+		5.55	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§*
Portfolio Turnover Rate		62	%#		102	%		117	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		21.02	%		21.78	%		6.94	%*
Net Investment Loss to Average Net Assets		(15.46	)%		(15.14	)%		(0.57	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.82% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Emerging Markets Domestic Debt Portfolio. The Portfolio seeks high total return by investing primarily in fixed income securities of government and government-related issuers and, to a lesser extent, of corporate issuers in emerging market countries.

The Portfolio offers four classes of shares — Class I, Class A, Class L, and Class IS. On April 30, 2015, the Portfolio suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (2) an equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (3) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales price. In cases where a secu-

rity is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) futures are valued at the latest price published by the commodities exchange on which they trade; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

The Portfolio holds a significant portion of its investments in securities which are traded by a small number of market makers who may also be utilized by the Portfolio to provide pricing information used to value such investments. The amounts realized upon disposition of these securities may differ from the value reflected on the Statement of Assets and Liabilities.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement"

("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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Fixed Income Securities
Sovereign	$	—	$	4,173		$	—	$	4,173
Warrants		—		5			—		5
Short-Term Investment
Investment Company		212		—			—		212
Foreign Currency Forward Exchange Contracts		—		10			—		10
Total Assets		212		4,188			—		4,400
Liabilities:
Foreign Currency Forward Exchange Contracts		—		(17	)		—		(17	)
Total	$	212	$	4,171		$	—	$	4,383

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, the Portfolio did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities

are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and

possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Portfolio's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular

futures contract at any particular time. There is also the risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a broker with which the Portfolio has open positions in the futures contract.

As of June 30, 2015, the Portfolio did not have any open futures contracts.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following tables set forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	10
	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	(17	)

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	18
Interest Rate Risk	Futures Contracts		(2	)
	Total	$	16
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk Foreign Currency Forward	Exchange Contracts	$	(10	)

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(a) (000)		Liabilities(a) (000)
Foreign Currency Forward Exchange Contracts	$	10	$	(17	)

(a) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Received (000)		Net Amount (not less than $0) (000)
JPMorgan Chase Bank NA	$	10	$	(10	)	$	—	$	0
Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Pledged (000)		Net Amount (not less than $0) (000)
JPMorgan Chase Bank NA	$	17	$	(10	)	$	—	$	7

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	3,804,000
Futures Contracts:
Average monthly original value	$	120,000

6.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

7.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

8.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid quarterly. Net realized capital gains, if any, are distributed at least annually.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.75	%		0.70	%		0.65	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.45% for Class L shares and 0.82% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $31,000 of advisory fees were

waived and approximately $90,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser, and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A and Class L shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $4,764,000 and $13,056,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	32	$	8,528	$	8,348	$	—	@	$	212

@ Amount is less than $500.

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded

with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-In- Capital (000)
$	—	$	—	$	958	$	557	$	295

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses)

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Net Investment Loss (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(1,916	)	$	2,314	$	(398	)

At December 31, 2014, the Portfolio had no distributable earnings on a tax basis.

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $5,000 and the aggregate gross unrealized depreciation is approximately $609,000 resulting in net unrealized depreciation of approximately $604,000.

At December 31, 2014, the Portfolio had available unused short-term capital losses of approximately $870,000 and long-term capital losses of approximately $2,211,000 that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	1,467	$	—

I. Other: Settlement and registration of foreign securities transactions may be subject to significant risks not normally associated with investments in the United States. In certain markets, including Russia, ownership of shares is defined according to entries in the issuer's share register. In Russia,

currently no central registration system exists and the share registrars may not be subject to effective state supervision. It is possible that a Portfolio could lose its share registration through fraud, negligence or even mere oversight. In addition, shares being delivered for sales and cash being paid for purchases may be delivered before the exchange is complete. This may subject the Portfolio to further risk of loss in the event of a counterparty's failure to complete the transaction.

At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 18.5%, 11.1% and 21.4% for Class I, Class A and Class L shares, respectively.

J. Subsequent Event: The Board of Directors of the Fund approved a proposed Plan and Agreement of Reorganization of the Portfolio and MSIF Emerging Markets External Debt Portfolio ("MSIF Emerging External Debt"), in which substantially all of the assets and liabilities of the Portfolio will be transferred to MSIF Emerging Markets External Debt in exchange for shares of MSIF Emerging Markets External Debt. This Reorganization is expected to be consummated on or about September 28, 2015.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

  IFIEMDSAN
1262682 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Growth Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	29
Director and Officer Information	32

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Growth Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Growth Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Growth Portfolio Class I	$	1,000.00	$	1,086.00	$	1,021.92	$	3.00	*	$	2.91	*		0.58	%
Growth Portfolio Class A		1,000.00		1,084.60		1,020.33		4.65	*		4.51	*		0.90
Growth Portfolio Class L		1,000.00		1,081.60		1,017.75		7.33	*		7.10	*		1.42
Growth Portfolio Class C		1,000.00		1,002.00		1,005.53		2.83	**		2.83	**		1.69
Growth Portfolio Class IS		1,000.00		1,086.40		1,022.17		2.74	*		2.66	*		0.53

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three- and five-year periods but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Growth Portfolio

	Shares		Value (000)
Common Stocks (93.5%)
Automobiles (4.4%)
Tesla Motors, Inc. (a)		584,668	$	156,843
Biotechnology (1.7%)
Alexion Pharmaceuticals, Inc. (a)		93,324		16,870
Alnylam Pharmaceuticals, Inc. (a)		154,412		18,509
Regeneron Pharmaceuticals, Inc. (a)		47,011		23,982
				59,361
Chemicals (1.5%)
Monsanto Co.		491,872		52,429
Diversified Financial Services (3.9%)
McGraw Hill Financial, Inc.		983,425		98,785
MSCI, Inc.		633,546		38,995
				137,780
Electrical Equipment (0.4%)
SolarCity Corp. (a)(b)		301,032		16,120
Food & Staples Retailing (1.4%)
Walgreens Boots Alliance, Inc.		600,414		50,699
Food Products (4.4%)
Keurig Green Mountain, Inc.		758,421		58,118
Mead Johnson Nutrition Co.		1,116,398		100,721
				158,839
Health Care Equipment & Supplies (3.7%)
Intuitive Surgical, Inc. (a)		270,583		131,097
Health Care Technology (0.7%)
athenahealth, Inc. (a)		223,951		25,660
Hotels, Restaurants & Leisure (2.4%)
Starbucks Corp.		1,594,035		85,464
Information Technology Services (4.4%)
Mastercard, Inc., Class A		981,483		91,749
Visa, Inc., Class A		989,214		66,426
				158,175
Internet & Catalog Retail (14.3%)
Amazon.com, Inc. (a)		683,191		296,566
JD.com, Inc. ADR (China) (a)		1,298,263		44,271
Netflix, Inc. (a)		93,463		61,400
Priceline Group, Inc. (The) (a)		96,149		110,703
				512,940
Internet Software & Services (20.8%)
Alibaba Group Holding Ltd. ADR (China) (a)		530,440		43,639
eBay, Inc. (a)		581,250		35,015
Facebook, Inc., Class A (a)		3,248,939		278,645
Google, Inc., Class C (a)		307,675		160,148
LinkedIn Corp., Class A (a)		509,910		105,363
Twitter, Inc. (a)		3,361,137		121,740
				744,550
Life Sciences Tools & Services (5.4%)
Illumina, Inc. (a)		888,828		194,084

	Shares		Value (000)
Media (2.3%)
Legend Pictures LLC Ltd. (a)(c)(d)(e) (acquisition cost — $20,782; acquired 10/15/14)		9,806	$	19,524
Naspers Ltd., Class N (South Africa)		405,285		63,128
				82,652
Pharmaceuticals (8.7%)
Allergan PLC (a)		177,689		53,922
Valeant Pharmaceuticals International, Inc. (Canada) (a)		676,211		150,220
Zoetis, Inc.		2,205,988		106,373
				310,515
Semiconductors & Semiconductor Equipment (0.9%)
ARM Holdings PLC ADR (United Kingdom)		656,769		32,359
Software (7.7%)
FireEye, Inc. (a)		643,228		31,460
Salesforce.com, Inc. (a)		1,664,534		115,902
Splunk, Inc. (a)		553,019		38,501
Workday, Inc., Class A (a)		1,162,188		88,780
				274,643
Tech Hardware, Storage & Peripherals (3.3%)
Apple, Inc.		951,697		119,367
Textiles, Apparel & Luxury Goods (1.2%)
Michael Kors Holdings Ltd. (a)		996,373		41,937
Total Common Stocks (Cost $1,888,204)				3,345,514
Preferred Stocks (2.2%)
Internet & Catalog Retail (2.0%)
Airbnb, Inc. Series D (a)(c)(d)(e) (acquisition cost — $20,639; acquired 4/16/14)		506,928		42,926
Flipkart Online Services Pvt Ltd. Series F (a)(c)(d)(e) (acquisition cost — $15,000; acquired 8/18/14)		207,900		29,572
				72,498
Internet Software & Services (0.2%)
Dropbox, Inc. Series C (a)(c)(d)(e) (acquisition cost — $7,182; acquired 1/30/14)		375,979		6,960
Total Preferred Stocks (Cost $42,821)				79,458
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016 @ CNY 6.70		476,779,214		1,039
USD/CNY November 2015 @ CNY 6.65		542,337,450		215
Total Call Options Purchased (Cost $3,633)				1,254

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Growth Portfolio

	Shares		Value (000)
Short-Term Investments (4.7%)
Securities held as Collateral on Loaned Securities (0.3%)
Investment Company (0.2%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		6,665,253	$	6,665
	Face Amount (000)
Repurchase Agreements (0.1%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $2,189; fully collateralized by various U.S. Government obligations; 0.88% - 2.00% due 2/28/17 - 10/31/21; valued at $2,232)	$	2,189		2,189
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $243; fully collateralized by various U.S. Government agency securities; 2.35% - 5.50% due 12/22/15 - 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $248)		243		243
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $328; fully collateralized by various U.S. Government obligations; Zero Coupon - 0.25% due 5/15/16 - 2/15/24; valued at $335)		328		328
				2,760
Total Securities held as Collateral on Loaned Securities (Cost $9,425)				9,425
	Shares
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $158,367)		158,367,236		158,367
Total Short-Term Investments (Cost $167,792)				167,792
Total Investments (100.4%) (Cost $2,102,450) Including $9,428 of Securities Loaned				3,594,018
Liabilities in Excess of Other Assets (-0.4%)				(16,045	)
Net Assets (100.0%)			$	3,577,973

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2015.

(c)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $98,982,000, representing 2.8% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(d)  Security has been deemed illiquid at June 30, 2015.

(e)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $98,982,000 and represents 2.8% of net assets.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		41.0	%
Internet Software & Services		21.0
Internet & Catalog Retail		16.3
Pharmaceuticals		8.7
Software		7.6
Life Sciences Tools & Services		5.4
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $1,937,418)	$	3,428,986
Investment in Security of Affiliated Issuer, at Value (Cost $165,032)		165,032
Total Investments in Securities, at Value (Cost $2,102,450)		3,594,018
Cash		171
Receivable for Portfolio Shares Sold		1,820
Dividends Receivable		920
Tax Reclaim Receivable		493
Receivable from Affiliate		25
Other Assets		275
Total Assets		3,597,722
Liabilities:
Collateral on Securities Loaned, at Value		9,596
Payable for Portfolio Shares Redeemed		4,631
Payable for Advisory Fees		3,862
Due to Broker		1,460
Payable for Shareholder Services Fees — Class A		337
Payable for Distribution and Shareholder Services Fees — Class L		58
Payable for Distribution and Shareholder Services Fees — Class C		1
Payable for Administration Fees		239
Payable for Transfer Agency Fees — Class I		6
Payable for Transfer Agency Fees — Class A		58
Payable for Transfer Agency Fees — Class L		4
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Directors' Fees and Expenses		62
Payable for Custodian Fees		28
Payable for Professional Fees		25
Payable for Sub Transfer Agency Fees — Class I		238
Payable for Sub Transfer Agency Fees — Class A*		(829	)
Payable for Sub Transfer Agency Fees — Class L*		(74	)
Other Liabilities		47
Total Liabilities		19,749
Net Assets	$	3,577,973
Net Assets Consist Of:
Paid-in-Capital	$	1,909,920
Accumulated Net Investment Loss		(4,579	)
Accumulated Net Realized Gain		181,064
Unrealized Appreciation (Depreciation) on:
Investments		1,491,568
Net Assets	$	3,577,973

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	831,908
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,721,074
Net Asset Value, Offering and Redemption Price Per Share	$	42.18
CLASS A:
Net Assets	$	1,614,449
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		39,216,959
Net Asset Value, Redemption Price Per Share	$	41.17
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	2.28
Maximum Offering Price Per Share	$	43.45
CLASS L:
Net Assets	$	92,603
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,290,535
Net Asset Value, Offering and Redemption Price Per Share	$	40.43
CLASS C:
Net Assets	$	1,599
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		39,578
Net Asset Value, Offering and Redemption Price Per Share	$	40.41
CLASS IS:
Net Assets	$	1,037,414
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		24,544,664
Net Asset Value, Offering and Redemption Price Per Share	$	42.27
(1) Including: Securities on Loan, at Value:	$	9,428

*  Under accrual of sub transfer agent expenses.

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	9,249
Income from Securities Loaned — Net		476
Dividends from Security of Affiliated Issuer (Note G)		96
Total Investment Income		9,821
Expenses:
Advisory Fees (Note B)		7,701
Shareholder Services Fees — Class A (Note D)		2,011
Distribution and Shareholder Services Fees — Class L (Note D)		349
Distribution and Shareholder Services Fees — Class C (Note D)		1
Administration Fees (Note C)		1,420
Sub Transfer Agency Fees — Class I		184
Sub Transfer Agency Fees — Class A		780
Sub Transfer Agency Fees — Class L		62
Transfer Agency Fees — Class I (Note E)		15
Transfer Agency Fees — Class A (Note E)		138
Transfer Agency Fees — Class L (Note E)		11
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Reporting Fees		147
Professional Fees		75
Custodian Fees (Note F)		53
Registration Fees		49
Directors' Fees and Expenses		19
Pricing Fees		2
Other Expenses		34
Total Expenses		13,052
Rebate from Morgan Stanley Affiliate (Note G)		(59	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(10	)
Net Expenses		12,983
Net Investment Loss		(3,162	)
Realized Gain (Loss):
Investments Sold		152,482
Foreign Currency Transactions		(5	)
Net Realized Gain		152,477
Change in Unrealized Appreciation (Depreciation):
Investments		138,331
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		290,808
Net Increase in Net Assets Resulting from Operations	$	287,646

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(3,162	)	$	(6,166	)
Net Realized Gain		152,477			202,492
Net Change in Unrealized Appreciation (Depreciation)		138,331			77,968
Net Increase in Net Assets Resulting from Operations		287,646			274,294
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(90	)
Net Realized Gain		—			(37,793	)
Class A:
Net Realized Gain		—			(75,475	)
Class L:
Net Investment Income		—			(24	)
Net Realized Gain		—			(4,426	)
Class IS:
Net Investment Income		—			(171	)
Net Realized Gain		—			(45,091	)
Total Distributions		—			(163,070	)
Capital Share Transactions:(1)
Class I:
Subscribed		58,676			456,631
Issued due to a tax-free reorganization		—			505,818
Distributions Reinvested		—			37,259
Redeemed		(89,107	)		(1,255,645	)
Class A:
Subscribed		69,836			152,431
Issued due to a tax-free reorganization		—			1,369,843
Distributions Reinvested		—			73,132
Redeemed		(134,254	)		(316,404	)
Class L:
Subscribed		2,182			6,137
Issued due to a tax-free reorganization		—			88,416
Distributions Reinvested		—			4,351
Redeemed		(6,675	)		(13,153	)
Class C:
Subscribed		1,611	*		—
Redeemed		(5	)*		—
Class IS:
Subscribed		63,543			1,034,151
Distributions Reinvested		—			41,376
Redeemed		(74,203	)		(92,318	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(108,396	)		2,092,025
Total Increase in Net Assets		179,250			2,203,249
Net Assets:
Beginning of Period		3,398,723			1,195,474
End of Period (Including Accumulated Net Investment Loss of $(4,579) and $(1,417))	$	3,577,973		$	3,398,723

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,434			11,865
Shares Issued due to a tax-free reorganization		—			13,594
Shares Issued on Distributions Reinvested		—			999
Shares Redeemed		(2,163	)		(31,791	)
Net Decrease in Class I Shares Outstanding		(729	)		(5,333	)
Class A:
Shares Subscribed		1,728			3,977
Shares Issued due to a tax-free reorganization		—			37,592
Shares Issued on Distributions Reinvested		—			2,008
Shares Redeemed		(3,315	)		(8,231	)
Net Increase (Decrease) in Class A Shares Outstanding		(1,587	)		35,346
Class L:
Shares Subscribed		55			163
Shares Issued due to a tax-free reorganization		—			2,453
Shares Issued on Distributions Reinvested		—			121
Shares Redeemed		(167	)		(348	)
Net Increase (Decrease) in Class L Shares Outstanding		(112	)		2,389
Class C:
Shares Subscribed		40	*		—
Shares Redeemed		(—	@@)*		—
Net Increase in Class C Shares Outstanding		40			—
Class IS:
Shares Subscribed		1,569			26,014
Shares Issued on Distributions Reinvested		—			1,108
Shares Redeemed		(1,802	)		(2,345	)
Net Increase (Decrease) in Class IS Shares Outstanding		(233	)		24,777

*  For the period April 30, 2015 through June 30, 2015.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Growth Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	38.86		$	38.38		$	27.05		$	23.46		$	24.24		$	19.69
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.01	)		(0.03	)		0.02			0.16			0.01			0.06
Net Realized and Unrealized Gain (Loss)		3.33			2.43			13.02			3.52			(0.73	)		4.49
Total from Investment Operations		3.32			2.40			13.04			3.68			(0.72	)		4.55
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		(0.13	)		(0.05	)		(0.06	)		(0.00	)‡
Net Realized Gain		—			(1.92	)		(1.58	)		(0.04	)		—			—
Total Distributions		—			(1.92	)		(1.71	)		(0.09	)		(0.06	)		(0.00	)‡
Net Asset Value, End of Period	$	42.18		$	38.86		$	38.38		$	27.05		$	23.46		$	24.24
Total Return++		8.60	%#		6.42	%		48.60	%		15.66	%		(3.01	)%		23.11	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	831,908		$	794,648		$	989,649		$	661,073		$	622,193		$	704,410
Ratio of Expenses to Average Net Assets (1)		0.58	%+*		0.69	%+^		0.70	%+		0.72	%+		0.71	%+		0.73	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.73	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.03	)%+*		(0.08	)%+		0.08	%+		0.59	%+		0.05	%+		0.27	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		12	%#		44	%		31	%		49	%		26	%		35	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			0.71	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			N/A			0.07	%		N/A			N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective April 7, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.70% for Class I shares. Prior to April 7, 2014, the maximum ratio was 0.80% for Class I shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Growth Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	37.98		$	37.61		$	26.53		$	23.03		$	23.82		$	19.40
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.07	)		(0.13	)		(0.06	)		0.09			(0.05	)		0.00	‡
Net Realized and Unrealized Gain (Loss)		3.26			2.42			12.78			3.45			(0.73	)		4.42
Total from Investment Operations		3.19			2.29			12.72			3.54			(0.78	)		4.42
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.06	)		—			(0.01	)		(0.00	)‡
Net Realized Gain		—			(1.92	)		(1.58	)		(0.04	)		—			—
Total Distributions		—			(1.92	)		(1.64	)		(0.04	)		(0.01	)		(0.00	)‡
Net Asset Value, End of Period	$	41.17		$	37.98		$	37.61		$	26.53		$	23.03		$	23.82
Total Return++		8.46	%#		6.25	%		48.22	%		15.36	%		(3.27	)%		22.79	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,614,449		$	1,549,756		$	205,286		$	138,416		$	135,777		$	136,585
Ratio of Expenses to Average Net Assets (1)		0.90	%+*		0.83	%+^		0.95	%+^		0.97	%+		0.96	%+		0.98	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.98	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.34	)%+*		(0.34	)%+		(0.18	)%+		0.34	%+		(0.20	)%+		0.02	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		12	%#		44	%		31	%		49	%		26	%		35	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			0.96	%		N/A			N/A			N/A
Net Investment Loss to Average Net Assets		N/A			N/A			(0.19	)%		N/A			N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective April 7, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratios of 1.05% for Class A shares. Prior to April 7, 2014 the maximum ratio was 1.15% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.05% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Growth Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	37.40		$	37.26		$	26.43		$	27.60
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.17	)		(0.31	)		(0.38	)		0.03
Net Realized and Unrealized Gain (Loss)		3.20			2.38			12.84			(1.16	)
Total from Investment Operations		3.03			2.07			12.46			(1.13	)
Distributions from and/or in Excess of:
Net Investment Income —		(0.01	)		(0.05	)		(0.00	)		‡
Net Realized Gain		—			(1.92	)		(1.58	)		(0.04	)
Total Distributions		—			(1.93	)		(1.63	)		(0.04	)
Net Asset Value, End of Period	$	40.43		$	37.40		$	37.26		$	26.43
Total Return++		8.16	%#		5.72	%		47.44	%		(4.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	92,603		$	89,854		$	528		$	10
Ratio of Expenses to Average Net Assets (1)		1.42	%+*		1.29	%+^^		1.60	%+^^		1.51	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.87	)%+*		(0.82	)%+		(1.09	)%+		0.20	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*		0.01	%		0.00	%§*
Portfolio Turnover Rate		12	%#		44	%		31	%		49	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.44	%*		N/A			1.72	%		N/A
Net Investment Loss to Average Net Assets		(0.89	)%*		N/A			(1.21	)%		N/A

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective April 7, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.55% for Class L shares. Prior to April 7, 2014, the maximum ratio was 1.65% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.55% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Growth Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015 to June 30, 2015^ (unaudited)
Net Asset Value, Beginning of Period	$	40.33
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.09	)
Net Realized and Unrealized Gain		0.17
Total from Investment Operations		0.08
Net Asset Value, End of Period	$	40.41
Total Return++		0.20	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	1,599
Ratios of Expenses to Average Net Assets		1.69	%+*
Ratio of Net Investment Loss to Average Net Assets		(1.28	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		12	%#

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Growth Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	38.92		$	38.40		$	34.45
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.00	‡		(0.05	)		(0.02	)
Net Realized and Unrealized Gain		3.35			2.50			5.55
Total from Investment Operations		3.35			2.45			5.53
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		—
Net Realized Gain		—			(1.92	)		(1.58	)
Total Distributions		—			(1.93	)		(1.58	)
Net Asset Value, End of Period	$	42.27		$	38.92		$	38.40
Total Return++		8.64	%#		6.60	%		16.20	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	1,037,414		$	964,465		$	11
Ratio of Expenses to Average Net Assets (1)		0.53	%+*		0.54	%+^^		0.60	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.02	%+*		(0.12	)%+		(0.16	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%*
Portfolio Turnover Rate		12	%#		44	%		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		N/A			0.55	%		5.60	%*
Net Investment Loss to Average Net Assets		N/A			(0.13	)%		(5.16	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective April 7, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.67% for Class IS shares. Prior to April 7, 2014, the maximum ratio was 0.73% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Growth Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in growth oriented equity securities of large capitalization companies. Under normal market conditions, the Portfolio seeks to achieve its investment objective by investing primarily in established and emerging companies, with capitalizations within the range of companies included in the Russell 1000® Growth Index.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

On April 7, 2014, the Portfolio acquired the net assets of Morgan Stanley Focus Growth Fund ("Focus Growth Fund"), an open-end investment company, based on the respective valuations as of the close of business on April 4, 2014, pursuant to a Plan of Reorganization approved by the shareholders of Focus Growth Fund on February 28, 2014 ("Reorganization"). The purpose of the transaction was to combine two portfolios managed by Morgan Stanley Investment Management Inc., (the "Adviser") with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of 13,593,596 Class I shares of the Portfolio at a net asset value of $37.21 for 9,863,136 Class I shares of Focus Growth Fund; 37,591,749 Class A shares of the Portfolio at a net asset value of $36.44 for 27,362,441 Class A shares and 679,411 Class B shares of Focus Growth Fund; 2,453,264 Class L shares of the Portfolio at a net asset value of $36.04 for 2,096,775 Class L shares of Focus Growth Fund; The net assets of Focus Growth Fund before the Reorganization were approximately $1,964,077,000, including unrealized appreciation of approximately $782,409,000 at April 4, 2014. The investment portfolio of Focus Growth Fund, with a fair value of approximately $1,972,049,000 and identified cost of approximately $1,189,640,000 on April 4, 2014, was the principal asset acquired by the Portfolio. For financial reporting purposes, assets received and shares issued by the Portfolio were recorded at fair value; however, the cost basis of the in-

vestments received from Focus Growth Fund was carried forward to align ongoing reporting of the Portfolio's realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Immediately prior to the Reorganization, the net assets of the Portfolio were approximately $1,262,454,000. Immediately after the Reorganization, the net assets of the Portfolio were approximately $3,226,531,000.

Upon closing of the Reorganization, shareholders of Focus Growth Fund received shares of the Portfolio as follows:

Focus Growth Fund	MSIF Growth Portfolio
Class I	Class I
Class A	Class A
Class B	Class A
Class L	Class L

Assuming the acquisition had been completed on January 1, 2014, the beginning of the annual reporting period of the Portfolio, the Portfolio's pro forma results of operations for the period ended December 31, 2014, are as follows:

Net investment income (loss)(1)	$	4,381,000
Net realized gain and unrealized gain(2)	$	300,743,000
Net increase (decrease) in net assets resulting from operations	$	305,124,000

(1) Approximately $(6,166,000) as reported, plus approximately $5,451,000 Focus Growth Fund prior to the Reorganization, plus approximately $5,096,000 of estimated pro-forma eliminated expenses.

(2) Approximately $280,460,000 as reported, plus approximately $20,283,000 Focus Growth Fund prior to the Reorganization.

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Focus Growth Fund that have been included in the Portfolio's Statement of Operations since April 7, 2014.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors") or quotes from a broker or dealer; (4) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities'

market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Automobiles	$	156,843	$	—	$	—	$	156,843
Biotechnology		59,361		—		—		59,361
Chemicals		52,429		—		—		52,429
Diversified Financial Services		137,780		—		—		137,780
Electrical Equipment		16,120		—		—		16,120
Food & Staples Retailing		50,699		—		—		50,699
Food Products		158,839		—		—		158,839
Health Care Equipment & Supplies		131,097		—		—		131,097
Health Care Technology		25,660		—		—		25,660
Hotels, Restaurants & Leisure		85,464		—		—		85,464
Information Technology Services		158,175		—		—		158,175
Internet & Catalog Retail		512,940		—		—		512,940
Internet Software & Services		744,550		—		—		744,550
Life Sciences Tools & Services		194,084		—		—		194,084
Media		63,128		—		19,524		82,652
Pharmaceuticals		310,515		—		—		310,515
Semiconductors & Semiconductor Equipment		32,359		—		—		32,359
Software		274,643		—		—		274,643
Tech Hardware, Storage & Peripherals		119,367		—		—		119,367
Textiles, Apparel & Luxury Goods		41,937		—		—		41,937
Total Common Stocks		3,325,990		—		19,524		3,345,514
Preferred Stocks		—		—		79,458		79,458
Call Options Purchased		—		1,254		—		1,254
Short-Term Investments
Investment Company		165,032		—		—		165,032
Repurchase Agreements		—		2,760		—		2,760
Total Short-Term Investments		165,032		2,760		—		167,792
Total Assets	$	3,491,022	$	4,014	$	98,982	$	3,594,018

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $63,128,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

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

	Common Stock (000)			Preferred Stocks (000)
Beginning Balance	$	20,513		$	57,634
Purchases		—			—
Sales		—			—
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—			—
Change in unrealized appreciation (depreciation)		(989	)		21,824
Realized gains (losses)		—			—
Ending Balance	$	19,524		$	79,458

Net change in unrealized appreciation
(depreciation) from investments still
held as of June 30, 2015  $  (989)  $  21,824

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Internet & Catalog Retail
Preferred Stocks	$	42,926	Market Transaction Method	Pending Precedent Transaction	$	93.38		$	93.38		$	93.38		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		15.0	%		17.0	%		16.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		10.2	x		15.5	x		15.5	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
	$	29,572	Market Transaction Method	Issuance Price of Financing	$	119.76		$	119.76		$	119.76		Increase
				Issuance Price of Pending Financing	$	142.24		$	142.24		$	142.24		Increase
Internet Software & Services
Preferred Stock	$	6,960	Market Transaction Method	Third Party Tender Offer/ Series C Preferred	$	19.10		$	19.10		$	19.10		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		16.0	%		18.0	%		17.0	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		6.9	x		13.5	x		12.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Media
Common Stock	$	19,524	Market Transaction Method	Pending Precedent Transaction	$	2,119.29		$	2,119.29		$	2,119.29		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		14.5	%		16.5	%		15.5	%	Decrease
				Perpetual Growth Rate		3.0	%		5.0	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		3.2	x		8.8	x		6.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those

associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	1,254	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(1,743	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(2,678	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Statement of Assets and Liabilities	Gross Amounts of Assets and Liabilities Presented in the
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	1,254	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received(e) (000)			Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	1,254	$	—	$	(1,254	)	$	0

(e) In some instances, the actual collateral received may be more than the amount shown here due to overcollateralization.

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	1,143,004,000

6.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned-Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	9,428	(f)	$	—	$	(9,428	)(g)(h)	$	0

(f) Represents market value of loaned securities at period end.

(g) The Portfolio received cash collateral of approximately $9,596,000, of which approximately $9,425,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $171,000, which is not reflected in the Portfolio of Investments.

(h) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

9.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Next $1 billion			Next $1 billion			Over $3 billion
	0.50	%		0.45	%		0.40	%		0.35	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.43% of the Portfolio's average daily net assets.

Pursuant to the Reorganization, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.70% for Class I, 1.05% for Class A, 1.55% for Class L, 1.80% for Class C and 0.67% for Class IS. In addition, the Adviser has agreed to reimburse 0.01% of expenses of the Class A shares to the extent that total annual operating expenses of the Class A shares exceed 0.96%. The fee waivers and/or expense

reimbursements will continue for at least two years from the date of the Reorganization or until such time as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. Following the two-year period from the date of the Reorganization, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.80% for Class I, 1.15% for Class A, 1.65% for Class L, 1.90% for Class C and 0.73% for Class IS. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $10,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $406,585,000 and $530,417,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of advisory and administration fees paid by the Portfolio due to its investments in the Liquidity Funds. For the six months

ended June 30, 2015, advisory fees paid were reduced by approximately $59,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	167,796	$	399,770	$	402,534	$	96	$	165,032

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in ''Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	3,224	$	159,845	$	11,998	$	37,925

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	4,767	$	(4,891	)	$	124

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	30,636

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,569,940,000 and the aggregate gross unrealized depreciation is approximately $78,372,000 resulting in net unrealized appreciation of approximately $1,491,568,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfo-

lio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Specified Ordinary Losses (000)		Capital Losses (000)
$	1,278	$	—

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 11.1% and 73.3% for Class I and Class IS shares, respectively.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

32

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWSAN
1260914 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Franchise Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	7
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	10
Notes to Financial Statements	14
U.S. Privacy Policy	20
Director and Officer Information	23

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Franchise Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Franchise Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Franchise Portfolio Class I	$	1,000.00	$	1,035.50	$	1,020.03	$	4.85	*	$	4.81	*		0.96	%
Global Franchise Portfolio Class A		1,000.00		1,034.60		1,018.60		6.31	*		6.26	*		1.25
Global Franchise Portfolio Class L		1,000.00		1,031.70		1,016.31		8.61	*		8.55	*		1.71
Global Franchise Portfolio Class IS		1,000.00		976.70		1,003.35		0.76	**		0.77	**		0.93

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 30/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one- and five-year periods but below its peer group average for the three-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee was higher but close to its peer group average and its total expense ratio was lower than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Franchise Portfolio

	Shares		Value (000)
Common Stocks (97.4%)
France (8.2%)
LVMH Moet Hennessy Louis Vuitton SE		32,106	$	5,625
Pernod Ricard SA		117,679		13,592
Publicis Groupe SA		100,656		7,442
Sanofi		181,964		17,901
				44,560
Germany (2.0%)
SAP SE		155,076		10,823
Italy (0.8%)
Davide Campari-Milano SpA		601,030		4,573
Japan (1.9%)
Japan Tobacco, Inc.		288,300		10,272
Netherlands (0.5%)
Reed Elsevier N.V.		118,334		2,807
Switzerland (8.9%)
Nestle SA (Registered)		675,883		48,796
United Kingdom (30.1%)
British American Tobacco PLC		925,371		49,654
Diageo PLC		745,722		21,571
Experian PLC		688,360		12,536
Imperial Tobacco Group PLC		51,718		2,492
Reckitt Benckiser Group PLC		433,645		37,393
Reed Elsevier PLC		166,924		2,715
Unilever PLC		888,422		38,109
				164,470
United States (45.0%)
3M Co.		66,351		10,238
Accenture PLC, Class A		267,134		25,853
Intuit, Inc.		68,470		6,900
Mead Johnson Nutrition Co.		29,817		2,690
Microsoft Corp.		813,446		35,914
Mondelez International, Inc., Class A		530,325		21,817
Moody's Corp.		55,019		5,940
NIKE, Inc., Class B		111,119		12,003
Philip Morris International, Inc.		221,185		17,732
Procter & Gamble Co. (The)		301,491		23,589
Time Warner, Inc.		293,421		25,648
Twenty-First Century Fox, Inc., Class B		483,927		15,592
Visa, Inc., Class A		330,331		22,182
Walt Disney Co. (The)		168,261		19,205
				245,303
Total Common Stocks (Cost $420,188)				531,604
Short-Term Investment (1.9%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $10,602)		10,602,460		10,602
Total Investments (99.3%) (Cost $430,790)				542,206
Other Assets in Excess of Liabilities (0.7%)				3,614
Net Assets (100.0%)			$	545,820

Portfolio Composition

Classification	Percentage of Total Investments
Tobacco		14.8	%
Other*		13.8
Media		13.5
Food Products		13.5
Household Products		11.3
Software		9.9
Information Technology Services		8.9
Beverages		7.3
Personal Products		7.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Franchise Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $420,188)	$	531,604
Investment in Security of Affiliated Issuer, at Value (Cost $10,602)		10,602
Total Investments in Securities, at Value (Cost $430,790)		542,206
Foreign Currency, at Value (Cost $18)		18
Receivable for Portfolio Shares Sold		4,996
Dividends Receivable		760
Tax Reclaim Receivable		728
Receivable for Investments Sold		668
Receivable from Affiliate		—	@
Other Assets		106
Total Assets		549,482
Liabilities:
Payable for Portfolio Shares Redeemed		2,359
Payable for Advisory Fees		1,121
Payable for Sub Transfer Agency Fees — Class I		33
Payable for Sub Transfer Agency Fees — Class A		10
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Administration Fees		37
Payable for Shareholder Services Fees — Class A		15
Payable for Distribution and Shareholder Services Fees — Class L		6
Payable for Custodian Fees		16
Payable for Professional Fees		12
Payable for Directors' Fees and Expenses		10
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Other Liabilities		41
Total Liabilities		3,662
Net Assets	$	545,820
Net Assets Consist Of:
Paid-in-Capital	$	419,047
Accumulated Undistributed Net Investment Income		6,740
Accumulated Net Realized Gain		8,631
Unrealized Appreciation (Depreciation) on:
Investments		111,416
Foreign Currency Translations		(14	)
Net Assets	$	545,820
CLASS I:
Net Assets	$	465,064
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		22,151,451
Net Asset Value, Offering and Redemption Price Per Share	$	20.99
CLASS A:
Net Assets	$	71,589
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,474,132
Net Asset Value, Redemption Price Per Share	$	20.61
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.14
Maximum Offering Price Per Share	$	21.75
CLASS L:
Net Assets	$	9,157
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		446,626
Net Asset Value, Offering and Redemption Price Per Share	$	20.50
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		465
Net Asset Value, Offering and Redemption Price Per Share	$	20.99

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Franchise Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $425 of Foreign Taxes Withheld)	$	8,291
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		8,292
Expenses:
Advisory Fees (Note B)		2,266
Administration Fees (Note C)		228
Shareholder Services Fees — Class A (Note D)		83
Distribution and Shareholder Services Fees — Class L (Note D)		35
Sub Transfer Agency Fees — Class I		84
Sub Transfer Agency Fees — Class A		24
Sub Transfer Agency Fees — Class L		1
Professional Fees		43
Custodian Fees (Note F)		40
Registration Fees		19
Shareholder Reporting Fees		13
Directors' Fees and Expenses		8
Transfer Agency Fees — Class I (Note E)		5
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class IS (Note E)		—	@
Pricing Fees		3
Other Expenses		14
Total Expenses		2,868
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		2,868
Net Investment Income		5,424
Realized Gain:
Investments Sold		8,252
Foreign Currency Transactions		161
Net Realized Gain		8,413
Change in Unrealized Appreciation (Depreciation):
Investments		6,975
Foreign Currency Translations		56
Net Change in Unrealized Appreciation (Depreciation)		7,031
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		15,444
Net Increase in Net Assets Resulting from Operations	$	20,868

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Franchise Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	5,424		$	11,259
Net Realized Gain		8,413			29,627
Net Change in Unrealized Appreciation (Depreciation)		7,031			(13,194	)
Net Increase in Net Assets Resulting from Operations		20,868			27,692
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(8,695	)
Net Realized Gain		—			(25,999	)
Class A:
Net Investment Income		—			(1,011	)
Net Realized Gain		—			(3,789	)
Class L:
Net Investment Income		—			(94	)
Net Realized Gain		—			(502	)
Total Distributions		—			(40,090	)
Capital Share Transactions:(1)
Class I:
Subscribed		18,072			122,018
Distributions Reinvested		—			33,162
Redeemed		(86,662	)		(199,802	)
Class A:
Subscribed		10,290			6,952
Distributions Reinvested		—			4,753
Redeemed		(5,135	)		(28,751	)
Class L:
Subscribed		193			670
Distributions Reinvested		—			595
Redeemed		(658	)		(865	)
Class IS:
Subscribed		10	*		—
Net Decrease in Net Assets Resulting from Capital Share Transactions		(63,890	)		(61,268	)
Total Decrease in Net Assets		(43,022	)		(73,666	)
Net Assets:
Beginning of Period		588,842			662,508
End of Period (Including Accumulated Undistributed Net Investment Income of $6,740 and $1,316)	$	545,820		$	588,842
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		867			5,784
Shares Issued on Distributions Reinvested		—			1,659
Shares Redeemed		(4,125	)		(9,484	)
Net Decrease in Class I Shares Outstanding		(3,258	)		(2,041	)
Class A:
Shares Subscribed		486			334
Shares Issued on Distributions Reinvested		—			241
Shares Redeemed		(250	)		(1,404	)
Net Increase (Decrease) in Class A Shares Outstanding		236			(829	)
Class L:
Shares Subscribed		10			33
Shares Issued on Distributions Reinvested		—			30
Shares Redeemed		(32	)		(41	)
Net Increase (Decrease) in Class L Shares Outstanding		(22	)		22
Class IS:
Shares Subscribed		—	@@*		—

*  For the period June 1, 2015 through June 30, 2015.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Franchise Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	20.27		$	20.77		$	18.13		$	16.24		$	15.29		$	13.81
Income from Investment Operations:
Net Investment Income†		0.20			0.41			0.36			0.40			0.31			0.32
Net Realized and Unrealized Gain		0.52			0.57			3.17			2.11			1.11			1.62
Total from Investment Operations		0.72			0.98			3.53			2.51			1.42			1.94
Distributions from and/or in Excess of:
Net Investment Income		—			(0.37	)		(0.35	)		(0.32	)		(0.30	)		(0.46	)
Net Realized Gain		—			(1.11	)		(0.54	)		(0.30	)		(0.17	)		—
Total Distributions		—			(1.48	)		(0.89	)		(0.62	)		(0.47	)		(0.46	)
Net Asset Value, End of Period	$	20.99		$	20.27		$	20.77		$	18.13		$	16.24		$	15.29
Total Return++		3.55	%#		4.82	%		19.71	%		15.38	%		9.38	%		14.07	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	465,064		$	515,012		$	570,261		$	404,762		$	211,677		$	89,666
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		0.97	%+		0.95	%+		0.98	%+		1.00	%+		1.00	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.00	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.95	%+*		1.94	%+		1.79	%+		2.21	%+		1.87	%+		2.19	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		7	%#		33	%		24	%		34	%		30	%		74	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			N/A			N/A			1.01	%		1.08	%+
Net Investment Income to Average Net Assets		N/A			N/A			N/A			N/A			1.86	%		2.11	%+

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Franchise Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	19.92		$	20.44		$	17.86		$	16.01		$	15.10		$	13.65
Income from Investment Operations:
Net Investment Income†		0.17			0.34			0.28			0.35			0.26			0.28
Net Realized and Unrealized Gain		0.52			0.55			3.14			2.09			1.09			1.59
Total from Investment Operations		0.69			0.89			3.42			2.44			1.35			1.87
Distributions from and/or in Excess of:
Net Investment Income		—			(0.30	)		(0.30	)		(0.29	)		(0.27	)		(0.42	)
Net Realized Gain		—			(1.11	)		(0.54	)		(0.30	)		(0.17	)		—
Total Distributions		—			(1.41	)		(0.84	)		(0.59	)		(0.44	)		(0.42	)
Net Asset Value, End of Period	$	20.61		$	19.92		$	20.44		$	17.86		$	16.01		$	15.10
Total Return++		3.46	%#		4.45	%		19.42	%		15.14	%		8.98	%		13.83	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	71,589		$	64,515		$	83,135		$	35,901		$	15,327		$	9,653
Ratio of Expenses to Average Net Assets (1)		1.25	%+*		1.27	%+		1.20	%+^		1.23	%+		1.25	%+		1.25	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.25	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.64	%+*		1.64	%+		1.42	%		1.99	%+		1.62	%+		1.94	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		7	%#		33	%		24	%		34	%		30	%		74	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			N/A			N/A			1.26	%		1.33	%+
Net Investment Income to Average Net Assets		N/A			N/A			N/A			N/A			1.61	%		1.86	%+

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.35% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.25% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Franchise Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	19.87		$	20.39		$	17.83		$	18.13
Income from Investment Operations:
Net Investment Income†		0.12			0.25			0.20			0.10
Net Realized and Unrealized Gain		0.51			0.55			3.11			0.16
Total from Investment Operations		0.63			0.80			3.31			0.26
Distributions from and/or in Excess of:
Net Investment Income		—			(0.21	)		(0.21	)		(0.26	)
Net Realized Gain		—			(1.11	)		(0.54	)		(0.30	)
Total Distributions		—			(1.32	)		(0.75	)		(0.56	)
Net Asset Value, End of Period	$	20.50		$	19.87		$	20.39		$	17.83
Total Return++		3.17	%#		4.00	%		18.78	%		1.36	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9,157		$	9,315		$	9,112		$	4,525
Ratio of Expenses to Average Net Assets (1)		1.71	%+*		1.72	%+		1.70	%+^^		1.73	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.22	%+*		1.19	%+		1.03	%+		0.84	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		7	%#		33	%		24	%		34	%#

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.75% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Franchise Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from May 29, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	21.49
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.51	)
Total from Investment Operations		(0.50	)
Net Asset Value, End of Period	$	20.99
Total Return++		(2.33	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10
Ratio of Expenses to Average Net Assets (1)		0.93	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		0.67	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		7	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		14.78	%*
Net Investment Loss to Average Net Assets		(13.18	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective June 1, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.95% for Class IS Shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Franchise Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek long-term capital appreciation by investing primarily in equity securities of issuers located throughout the world that they believe have, among other things, resilient business franchises and growth potential.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class IS. The Portfolio's Class A shares are currently closed to new investors with certain exceptions. The Portfolio suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. On May 29, 2015, the Portfolio commenced offering Class IS shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available,

including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services,

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	39,736	$	—	$	—	$	39,736
Diversified Financial Services		5,940		—		—		5,940
Food Products		73,303		—		—		73,303
Household Products		60,982		—		—		60,982
Industrial Conglomerates		10,238		—		—		10,238
Information Technology Services		48,035		—		—		48,035
Media		73,409		—		—		73,409
Personal Products		38,109		—		—		38,109
Pharmaceuticals		17,901		—		—		17,901

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Professional Services	$	12,536	$	—	$	—	$	12,536
Software		53,637		—		—		53,637
Textiles, Apparel & Luxury Goods		17,628		—		—		17,628
Tobacco		80,150		—		—		80,150
Total Common Stocks		531,604		—		—		531,604
Short-Term Investment
Investment Company		10,602		—		—		10,602
Total Assets	$	542,206	$	—	$	—	$	542,206

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $286,300,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from

certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

4.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

5.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

6.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.79% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares and 0.95% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, less than $500 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A and Class L shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $41,156,000 and $100,008,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	11,760	$	70,209	$	71,367	$	1	$	10,602

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall,sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	9,800	$	30,290	$	12,961	$	14,274

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(142	)	$	142	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	1,318	$	3,303

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $112,601,000 and the aggregate gross unrealized depreciation is approximately $1,185,000 resulting in net unrealized appreciation of approximately $111,416,000.

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended December 31, 2014, the Portfolio

utilized capital loss carryforwards for U.S. Federal income tax purposes of approximately $274,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 36.1% and 35.9% for Class I and Class A shares, respectively.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGFSAN
1259821 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Equity Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in International Equity Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

International Equity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
International Equity Portfolio Class I	$	1,000.00	$	1,072.40	$	1,020.08	$	4.88	*	$	4.76	*		0.95	%
International Equity Portfolio Class A		1,000.00		1,070.00		1,018.35		6.67	*		6.51	*		1.30
International Equity Portfolio Class L		1,000.00		1,067.60		1,015.87		9.23	*		9.00	*		1.80
International Equity Portfolio Class C		1,000.00		973.70		1004.93		3.38	**		3.43	**		2.05
International Equity Portfolio Class IS		1,000.00		1,073.00		1,020.28		4.68	*		4.56	*		0.91

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three- and five-year periods but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's contractual management fee was higher but close to its peer group average. The Board also noted that while the Portfolio's actual management fee was lower than its peer group average, the total expense ratio was higher but close to its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

International Equity Portfolio

	Shares		Value (000)
Common Stocks (98.5%)
Australia (1.2%)
Santos Ltd.		6,045,432	$	36,522
WorleyParsons Ltd.		2,636,733		21,178
				57,700
Belgium (1.4%)
KBC Groep N.V.		1,067,741		71,351
Canada (1.8%)
Barrick Gold Corp.		5,126,497		54,795
Turquoise Hill Resources Ltd. (a)		8,699,736		33,085
				87,880
China (1.0%)
China Petroleum & Chemical Corp. H Shares (b)		54,668,000		47,181
France (7.2%)
AXA SA		1,567,949		39,558
LVMH Moet Hennessy Louis Vuitton SE		121,348		21,260
Pernod Ricard SA (c)		431,226		49,806
Publicis Groupe SA		950,486		70,276
Sanofi		1,474,542		145,057
Vallourec SA (c)		1,378,238		28,149
				354,106
Germany (7.8%)
BASF SE		431,915		37,953
Bayer AG (Registered)		749,727		104,939
Continental AG		434,108		102,722
HeidelbergCement AG		894,177		70,907
SAP SE		931,584		65,015
				381,536
Hong Kong (0.7%)
AIA Group Ltd.		5,342,900		34,980
Ireland (1.6%)
CRH PLC		2,785,412		78,627
Italy (0.4%)
Eni SpA		1,192,191		21,160
Japan (19.5%)
Hitachi Ltd.		12,274,000		80,914
Hoya Corp.		910,100		36,490
Inpex Corp.		5,280,600		60,040
Japan Tobacco, Inc.		3,378,700		120,381
Keyence Corp.		55,510		29,963
Kyocera Corp.		511,600		26,599
Lawson, Inc.		605,600		41,467
Mitsubishi Estate Co., Ltd.		2,654,000		57,174
MS&AD Insurance Group Holdings, Inc.		1,047,800		32,645
NGK Spark Plug Co., Ltd.		2,375,600		65,900
Nitto Denko Corp.		220,500		18,125
NTT DoCoMo, Inc.		2,302,200		44,093
Sekisui House Ltd.		2,855,100		45,351
Sompo Japan Nipponkoa Holdings, Inc.		2,313,800		84,916
Sumco Corp. (c)		1,973,700		24,723

	Shares		Value (000)
Sumitomo Mitsui Financial Group, Inc.		1,098,351	$	48,992
Sumitomo Mitsui Trust Holdings, Inc.		1,532,999		7,022
Toyota Motor Corp.		1,905,000		127,685
				952,480
Netherlands (5.7%)
Akzo Nobel N.V.		677,848		49,324
Reed Elsevier N.V.		1,261,429		29,919
Unilever N.V. CVA		4,750,722		197,845
				277,088
Sweden (1.2%)
Nordea Bank AB		4,610,277		57,504
Switzerland (15.3%)
Credit Suisse Group AG (Registered) (a)		3,811,824		104,780
Nestle SA (Registered)		3,100,830		223,869
Novartis AG (Registered)		1,752,378		172,717
Roche Holding AG (Genusschein)		516,643		144,778
Swisscom AG (Registered)		71,113		39,856
Zurich Insurance Group AG (a)		207,820		63,260
				749,260
United Kingdom (33.7%)
Admiral Group PLC		1,698,492		37,016
Aggreko PLC		376,916		8,522
Aviva PLC		4,138,364		32,024
BG Group PLC		2,960,819		49,290
BHP Billiton PLC		933,964		18,329
British American Tobacco PLC		4,223,895		226,647
BT Group PLC		10,906,781		77,152
Bunzl PLC		648,248		17,703
Diageo PLC		4,672,786		135,168
Experian PLC		3,390,181		61,738
GlaxoSmithKline PLC (a)		4,964,979		103,171
Glencore PLC (a)		10,774,448		43,221
HSBC Holdings PLC		7,345,998		65,803
Imperial Tobacco Group PLC		280,228		13,504
Lloyds Banking Group PLC		50,228,689		67,273
Meggitt PLC		8,745,976		64,093
Prudential PLC		5,667,968		136,481
Reckitt Benckiser Group PLC		2,656,272		229,051
Reed Elsevier PLC		1,836,446		29,865
Smiths Group PLC		3,312,233		58,757
Travis Perkins PLC		1,061,977		35,208
Weir Group PLC (The)		2,331,822		62,176
Wolseley PLC		1,219,356		77,844
				1,650,036
Total Common Stocks (Cost $3,981,452)				4,820,889
Short-Term Investments (2.8%)
Securities held as Collateral on Loaned Securities (1.2%)
Investment Company (0.8%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		40,465,814		40,466

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

International Equity Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (0.4%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $13,287; fully collateralized by various U.S. Government obligations; 0.88% — 2.00% due 2/28/17 — 10/31/21; valued at $13,552)	$	13,287	$	13,287
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $1,476; fully collateralized by various U.S. Government agency securities; 2.35% — 5.50% due 12/22/15 — 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $1,506)		1,476		1,476
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $1,992; fully collateralized by various U.S. Government obligations; Zero Coupon — 0.25% due 5/15/16 — 2/15/24; valued at $2,032)		1,992		1,992
				16,755
Total Securities held as Collateral on Loaned Securities (Cost $57,221)				57,221

	Shares		Value (000)
Investment Company (1.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $79,471)		79,470,759	$	79,471
Total Short-Term Investments (Cost $136,692)				136,692
Total Investments (101.3%) (Cost $4,118,144) Including $55,722 of Securities Loaned (d)				4,957,581
Liabilities in Excess of Other Assets (-1.3%)				(64,402	)
Net Assets (100.0%)			$	4,893,179

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  All or a portion of this security was on loan at June 30, 2015.

(d)  Securities are available for collateral in connection with an open foreign currency forward exchange contract.

CVA  Certificaten Van Aandelen.

Foreign Currency Forward Exchange Contract:

The Portfolio had the following foreign currency forward exchange contract open at June 30, 2015:

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Depreciation (000)
Commonwealth Bank of Australia	JPY	50,500,000	$	412,685	7/13/15	USD	401,926	$	401,926	$	(10,759	)

JPY  —  Japanese Yen

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		54.5	%
Pharmaceuticals		13.7
Insurance		9.4
Food Products		8.6
Tobacco		7.3
Banks		6.5
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

***  Does not include an open foreign currency forward exchange contract with unrealized depreciation of approximately $10,759,000.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $3,998,207)	$	4,837,644
Investment in Security of Affiliated Issuer, at Value (Cost $119,937)		119,937
Total Investments in Securities, at Value (Cost $4,118,144)		4,957,581
Foreign Currency, at Value (Cost $5,331)		5,290
Cash		1,036
Tax Reclaim Receivable		12,042
Dividends Receivable		8,938
Receivable for Portfolio Shares Sold		2,897
Receivable for Investments Sold		6
Receivable from Affiliate		1
Other Assets		357
Total Assets		4,988,148
Liabilities:
Collateral on Securities Loaned, at Value		58,257
Payable for Portfolio Shares Redeemed		13,888
Unrealized Depreciation on Foreign Currency Forward Exchange Contract		10,759
Payable for Advisory Fees		9,739
Payable for Sub Transfer Agency Fees — Class I		655
Payable for Sub Transfer Agency Fees — Class A		394
Payable for Sub Transfer Agency Fees — Class L		6
Payable for Administration Fees		333
Payable for Shareholder Services Fees — Class A		319
Payable for Distribution and Shareholder Services Fees — Class L		7
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Directors' Fees and Expenses		231
Payable for Custodian Fees		181
Payable for Professional Fees		11
Payable for Transfer Agency Fees — Class I		6
Payable for Transfer Agency Fees — Class A		3
Payable for Transfer Agency Fees — Class L		1
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		179
Total Liabilities		94,969
Net Assets	$	4,893,179
Net Assets Consist Of:
Paid-in-Capital	$	3,972,601
Accumulated Undistributed Net Investment Income		109,416
Accumulated Net Realized Loss		(17,326	)
Unrealized Appreciation (Depreciation) on:
Investments		839,437
Foreign Currency Forward Exchange Contracts		(10,759	)
Foreign Currency Translations		(190	)
Net Assets	$	4,893,179

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	2,505,131
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		151,016,211
Net Asset Value, Offering and Redemption Price Per Share	$	16.59
CLASS A:
Net Assets	$	1,483,811
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		90,726,358
Net Asset Value, Redemption Price Per Share	$	16.35
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.91
Maximum Offering Price Per Share	$	17.26
CLASS L:
Net Assets	$	10,233
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		629,239
Net Asset Value, Offering and Redemption Price Per Share	$	16.26
CLASS C:
Net Assets	$	159
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		9,795
Net Asset Value, Offering and Redemption Price Per Share	$	16.26
CLASS IS:
Net Assets	$	893,845
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		53,859,248
Net Asset Value, Offering and Redemption Price Per Share	$	16.60
(1) Including: Securities on Loan, at Value:	$	55,722

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Equity Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $8,069 of Foreign Taxes Withheld)	$	94,351
Income from Securities Loaned — Net		1,371
Dividends from Security of Affiliated Issuer (Note G)		5
Total Investment Income		95,727
Expenses:
Advisory Fees (Note B)		20,269
Sub Transfer Agency Fees — Class I		1,420
Sub Transfer Agency Fees — Class A		1,166
Sub Transfer Agency Fees — Class L		11
Administration Fees (Note C)		2,027
Shareholder Services Fees — Class A (Note D)		1,976
Distribution and Shareholder Services Fees — Class L (Note D)		38
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Custodian Fees (Note F)		360
Shareholder Reporting Fees		130
Registration Fees		66
Directors' Fees and Expenses		64
Professional Fees		55
Transfer Agency Fees — Class I (Note E)		13
Transfer Agency Fees — Class A (Note E)		8
Transfer Agency Fees — Class L (Note E)		2
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		4
Other Expenses		48
Expenses Before Non Operating Expenses		27,658
Bank Overdraft Expense		4
Total Expenses		27,662
Reimbursement of Class Specific Expenses — Class I (Note B)		(893	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(56	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(4	)
Waiver of Advisory Fees (Note B)		(3	)
Net Expenses		26,701
Net Investment Income		69,026
Realized Gain (Loss):
Investments Sold		12,139
Foreign Currency Forward Exchange Contracts		19,170
Foreign Currency Transactions		(1,029	)
Net Realized Gain		30,280
Change in Unrealized Appreciation (Depreciation):
Investments		267,356
Foreign Currency Forward Exchange Contracts		(10,284	)
Foreign Currency Translations		820
Net Change in Unrealized Appreciation (Depreciation)		257,892
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		288,172
Net Increase in Net Assets Resulting from Operations	$	357,198

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Equity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	69,026		$	118,533
Net Realized Gain		30,280			136,668
Net Change in Unrealized Appreciation (Depreciation)		257,892			(564,577	)
Net Increase (Decrease) in Net Assets Resulting from Operations		357,198			(309,376	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(81,485	)
Class A:
Net Investment Income		—			(41,518	)
Class L:
Net Investment Income		—			(213	)
Class IS:
Net Investment Income		—			(21,067	)
Total Distributions		—			(144,283	)
Capital Share Transactions:(1)
Class I:
Subscribed		137,877			349,891
Distributions Reinvested		—			78,325
Redeemed		(439,021	)		(1,249,623	)
Class A:
Subscribed		43,891			279,033
Distributions Reinvested		—			41,456
Redeemed		(247,896	)		(112,593	)
Class L:
Subscribed		796			598
Distributions Reinvested		—			210
Redeemed		(979	)		(2,194	)
Class C:
Subscribed		164	*		—
Class IS:
Subscribed		149,111			542,518
Distributions Reinvested		—			19,267
Redeemed		(29,541	)		(71,791	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(385,598	)		(124,903	)
Redemption Fees		39			49
Total Decrease in Net Assets		(28,361	)		(578,513	)
Net Assets:
Beginning of Period		4,921,540			5,500,053
End of Period (Including Accumulated Undistributed Net Investment Income of $109,416 and $40,390)	$	4,893,179		$	4,921,540

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Equity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		8,324			20,963
Shares Issued on Distributions Reinvested		—			4,997
Shares Redeemed		(26,662	)		(74,124	)
Net Decrease in Class I Shares Outstanding		(18,338	)		(48,164	)
Class A:
Shares Subscribed		2,828			17,653
Shares Issued on Distributions Reinvested		—			2,679
Shares Redeemed		(15,277	)		(7,071	)
Net Increase (Decrease) in Class A Shares Outstanding		(12,449	)		13,261
Class L:
Shares Subscribed		49			37
Shares Issued on Distributions Reinvested		—			13
Shares Redeemed		(61	)		(132	)
Net Decrease in Class L Shares Outstanding		(12	)		(82	)
Class C:
Shares Subscribed		10	*		—
Class IS:
Shares Subscribed		9,404			32,435
Shares Issued on Distributions Reinvested		—			1,231
Shares Redeemed		(1,767	)		(4,240	)
Net Increase in Class IS Shares Outstanding		7,637			29,426

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Equity Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	15.47		$	16.98		$	14.35		$	12.25		$	13.61		$	13.02
Income (Loss) from Investment Operations:
Net Investment Income†		0.23			0.39			0.32			0.31			0.32			0.26
Net Realized and Unrealized Gain (Loss)		0.89			(1.42	)		2.59			2.09			(1.37	)		0.53
Total from Investment Operations		1.12			(1.03	)		2.91			2.40			(1.05	)		0.79
Distributions from and/or in Excess of:
Net Investment Income		—			(0.48	)		(0.28	)		(0.30	)		(0.31	)		(0.20	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	16.59		$	15.47		$	16.98		$	14.35		$	12.25		$	13.61
Total Return++		7.24	%#		(6.08	)%		20.39	%		19.60	%		(7.63	)%		6.08	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,505,131		$	2,620,040		$	3,694,164		$	3,631,307		$	2,959,403		$	3,372,029
Ratio of Expenses to Average Net Assets (1)		0.95	%+*		0.95	%+		0.94	%+		0.95	%+		0.95	%+		0.95	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.95	%+*		0.95	%+		0.95	%+		N/A			0.95	%+		0.95	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.83	%+*		2.33	%+		2.04	%+		2.31	%+		2.36	%+		2.05	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		13	%#		29	%		29	%		23	%		34	%		40	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.02	%*		1.04	%		0.99	%		0.97	%		0.98	%		0.98	%+
Net Investment Income to Average Net Assets		2.76	%*		2.24	%		1.99	%		2.29	%		2.33	%		2.02	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Equity Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	15.28		$	16.78		$	14.18		$	12.11		$	13.45		$	12.87
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.31			0.25			0.27			0.28			0.23
Net Realized and Unrealized Gain (Loss)		0.87			(1.38	)		2.59			2.07			(1.34	)		0.51
Total from Investment Operations		1.07			(1.07	)		2.84			2.34			(1.06	)		0.74
Distributions from and/or in Excess of:
Net Investment Income		—			(0.43	)		(0.24	)		(0.27	)		(0.28	)		(0.16	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	16.35		$	15.28		$	16.78		$	14.18		$	12.11		$	13.45
Total Return++		7.00	%#		(6.43	)%		20.13	%		19.31	%		(7.83	)%		5.78	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,483,811		$	1,576,475		$	1,508,564		$	1,012,956		$	916,002		$	928,966
Ratio of Expenses to Average Net Assets (1)		1.30	%+*		1.30	%+		1.22	%+^		1.20	%+		1.20	%+		1.20	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.30	%+*		1.30	%+		1.22	%+^		N/A			1.20	%+		1.20	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.46	%+*		1.89	%+		1.60	%+		2.06	%+		2.11	%+		1.80	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		13	%#		29	%		29	%		23	%		34	%		40	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.31	%*		1.34	%		1.25	%		1.22	%		1.23	%		1.23	%+
Net Investment Income to Average Net Assets		2.45	%*		1.85	%		1.57	%		2.04	%		2.08	%		1.77	%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.30% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.20% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Equity Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from June 14, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	15.23		$	16.71		$	14.12		$	12.36
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.16			0.24			0.19			(0.07	)
Net Realized and Unrealized Gain (Loss)		0.87			(1.39	)		2.55			2.11
Total from Investment Operations		1.03			(1.15	)		2.74			2.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.33	)		(0.15	)		(0.28	)
Redemption Fees 0.00‡		0.00	‡		0.00	‡		0.00			‡
Net Asset Value, End of Period	$	16.26		$	15.23		$	16.71		$	14.12
Total Return++		6.76	%#		(6.91	)%		19.49	%		16.53	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10,233		$	9,763		$	12,072		$	11,982
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.80	%+		1.72	%+^^		1.70	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.80	%+*		1.80	%+		1.73	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.99	%+*		1.48	%+		1.24	%+		(0.91	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		13	%#		29	%		29	%		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.90	%*		1.89	%		1.78	%		1.70	%*
Net Investment Income (Loss) to Average Net Assets		1.89	%*		1.38	%		1.18	%		(0.91	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.80% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.70% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Equity Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	16.70
Loss from Investment Operations:
Net Investment Loss†		(0.01	)
Net Realized and Unrealized Loss		(0.43	)
Total from Investment Operations		(0.44	)
Net Asset Value, End of Period	$	16.26
Total Return++		(2.63	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	159
Ratios of Expenses to Average Net Assets (1)		2.05	%+*
Ratios of Expenses to Average Net Assets Excluding Non Operating Expenses		2.05	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.25	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		13	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.54	%*
Net Investment Loss to Average Net Assets		(1.74	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Equity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30,2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	15.47		$	16.98		$	16.08
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.24			0.40			(0.01	)
Net Realized and Unrealized Gain (Loss)		0.89			(1.43	)		1.19
Total from Investment Operations		1.13			(1.03	)		1.18
Distributions from and/or in Excess of:
Net Investment Income		—			(0.48	)		(0.28	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	16.60		$	15.47		$	16.98
Total Return++		7.30	%#		(6.07	)%		7.42	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	893,845		$	715,262		$	285,253
Ratio of Expenses to Average Net Assets (1)		0.91	%+*		0.91	%+		0.91	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.91	%+*		0.91	%+		0.91	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.89	%+*		2.36	%+		(0.29	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§*
Portfolio Turnover Rate		13	%#		29	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.91	%*		0.91	%		0.91	%*
Net Investment Income (Loss) to Average Net Assets		2.89	%*		2.36	%		(0.29	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.91% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the International Equity Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	64,093	$	—	$	—	$	64,093
Auto Components		168,622		—		—		168,622
Automobiles		127,685		—		—		127,685
Banks		317,945		—		—		317,945
Beverages		184,974		—		—		184,974
Capital Markets		104,780		—		—		104,780
Chemicals		105,402		—		—		105,402
Commercial Services & Supplies		8,522		—		—		8,522
Construction Materials		149,534		—		—		149,534
Diversified Telecommunication Services		117,008		—		—		117,008
Electronic Equipment, Instruments & Components		137,476		—		—		137,476
Energy Equipment & Services		21,178		—		—		21,178

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Food & Staples Retailing	$	41,467	$	—		$	—	$	41,467
Food Products		421,714		—			—		421,714
Health Care Equipment & Supplies		36,490		—			—		36,490
Household Durables		45,351		—			—		45,351
Household Products		229,051		—			—		229,051
Industrial Conglomerates		58,757		—			—		58,757
Insurance		460,880		—			—		460,880
Machinery		90,325		—			—		90,325
Media		130,060		—			—		130,060
Metals & Mining		149,430		—			—		149,430
Oil, Gas & Consumable Fuels		214,193		—			—		214,193
Pharmaceuticals		670,662		—			—		670,662
Professional Services		61,738		—			—		61,738
Real Estate Management & Development		57,174		—			—		57,174
Semiconductors & Semiconductor Equipment		24,723		—			—		24,723
Software		65,015		—			—		65,015
Textiles, Apparel & Luxury Goods		21,260		—			—		21,260
Tobacco		360,532		—			—		360,532
Trading Companies & Distributors		130,755		—			—		130,755
Wireless Telecommunication Services		44,093		—			—		44,093
Total Common Stocks		4,820,889		—			—		4,820,889
Short-Term Investments
Investment Company		119,937		—			—		119,937
Repurchase Agreements		—		16,755			—		16,755
Total Short-Term Investments		119,937		16,755			—		136,692
Total Assets		4,940,826		16,755			—		4,957,581
Liabilities:
Foreign Currency Forward Exchange Contract		—		(10,759	)		—		(10,759	)
Total	$	4,940,826	$	5,996		$	—	$	4,946,822

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $4,552,482,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio

lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser and/or Sub-Advisers seek to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contract	Unrealized Depreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	(10,759	)

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	19,170
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(10,284	)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(a) (000)		Liabilities(a) (000)
Foreign Currency Forward Exchange Contract	$	—	$	(10,759	)

(a) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Pledged (000)		Net Amount (not less than $0) (000)
Commonwealth Bank of Australia	$	10,759	$	—	$	—	$	10,759

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	386,045,000

6.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to

ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	55,722	(b)	$	—	$	(55,722	)(c)(d)	$	0

(b) Represents market value of loaned securities at period end.

(c) The Portfolio received cash collateral of approximately $58,257,000, of which approximately $57,221,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $1,036,000, which is not reflected in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $2,022,000 in the form of U.S. Government obligations, which the Portfolio cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(d) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

8.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

9.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $10 billion			Over $10 billion
	0.80	%		0.75	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.80% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio

operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.95% for Class I shares, 1.30% for Class A shares, 1.80% for Class L shares, 2.05% for Class C shares and 0.91% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $3,000 of advisory fees were waived and approximately $954,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee,

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $662,788,000 and $884,186,000 respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an

amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $4,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	175,317	$	624,987	$	680,367	$	5	$	119,937

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	144,283	$	—	$	88,057	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies and redemptions in kind, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	47,481	$	(53,905	)	$	6,424

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	41,702	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,049,961,000 and the aggregate gross unrealized deprecia-

tion is approximately $210,524,000 resulting in net unrealized appreciation of approximately $839,437,000.

At December 31, 2014, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, through the indicated expiration dates:

Amount (000)		Expiration*
$	10,001	December 31, 2016
	8,116	December 31, 2017

* Includes capital losses acquired from Morgan Stanley International Value Equity Fund that may be subject to limitation under IRC section 382 in future years.

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended December 31, 2014, the Portfolio utilized capital loss carryforwards for U.S. Federal income tax purposes of approximately $89,484,000.

For the year ended December 31, 2014, the Portfolio realized gains from in-kind redemptions of approximately $7,332,000. These gains are not taxable income to the Portfolio.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 43.1%, 94.6%, 79.4% and 59.0% for Class I, Class A, Class L and Class IS shares, respectively.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

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Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

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You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

30

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

  IFIIESAN
1259847 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Real Estate Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	19
U.S. Privacy Policy	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in International Real Estate Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

International Real Estate Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemption fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
International Real Estate Portfolio Class I	$	1,000.00	$	1,030.20	$	1,019.84	$	5.03	*	$	5.01	*		1.00	%
International Real Estate Portfolio Class A		1,000.00		1,028.70		1,018.10		6.79	*		6.76	*		1.35
International Real Estate Portfolio Class H		1,000.00		1,028.30		1,018.10		6.79	*		6.76	*		1.35
International Real Estate Portfolio Class L		1,000.00		1,025.90		1,015.62		9.29	*		9.25	*		1.85
International Real Estate Portfolio Class C		1,000.00		948.80		1,004.85		3.42	**		3.52	**		2.10
International Real Estate Portfolio Class IS		1,000.00		1,030.80		1,019.98		4.88	*		4.86	*		0.97

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three-year period, but below its peer group average for the one- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which does not include breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

International Real Estate Portfolio

	Shares		Value (000)
Common Stocks (99.6%)
Australia (11.6%)
Dexus Property Group REIT		113,723	$	641
Federation Centres REIT		225,292		508
Goodman Group REIT		336,289		1,627
GPT Group REIT		339,268		1,120
Investa Office Fund REIT		82,921		243
Mirvac Group REIT		562,962		804
Scentre Group REIT		1,019,664		2,950
Shopping Centres Australasia Property Group REIT		45,200		74
Stockland REIT		363,964		1,151
Westfield Corp. REIT		382,884		2,694
				11,812
Austria (0.4%)
Atrium European Real Estate Ltd. (a)		59,682		275
BUWOG AG (a)		5,559		108
				383
China (0.1%)
China Resources Land Ltd. (b)		10,000		32
Dalian Wanda Commercial Properties Co., Ltd. H Shares (b)(c)		4,200		34
				66
Finland (1.0%)
Citycon Oyj (a)		234,352		586
Sponda Oyj		126,273		466
				1,052
France (6.3%)
Fonciere Des Regions REIT		2,721		231
Gecina SA REIT		5,555		685
ICADE REIT		10,118		722
Klepierre REIT		21,704		955
Mercialys SA REIT		1,584		35
Unibail-Rodamco SE REIT		15,090		3,814
				6,442
Germany (3.1%)
Deutsche Annington Immobilien SE		49,297		1,390
Deutsche Euroshop AG		6,137		269
Deutsche Wohnen AG		38,390		880
DO Deutsche Office AG		28,764		137
LEG Immobilien AG (a)		6,840		475
				3,151
Hong Kong (25.3%)
Champion REIT		241,000		132
Hang Lung Properties Ltd.		165,000		491
Henderson Land Development Co., Ltd.		146,627		1,004
Hongkong Land Holdings Ltd.		644,500		5,285
Hysan Development Co., Ltd.		507,836		2,201
Kerry Properties Ltd.		135,771		532
Link REIT (The)		458,395		2,685
New World Development Co., Ltd.		1,051,748		1,376
Sino Land Co., Ltd.		240,945		403

	Shares		Value (000)
Sun Hung Kai Properties Ltd.		473,456	$	7,672
Swire Properties Ltd.		531,900		1,698
Wharf Holdings Ltd.		333,117		2,217
				25,696
Ireland (0.5%)
Green REIT PLC		100,429		164
Hibernia REIT PLC		273,978		385
				549
Italy (0.3%)
Beni Stabili SpA REIT		368,760		274
Japan (24.2%)
Activia Properties, Inc. REIT		73		619
Advance Residence Investment Corp. REIT		134		328
Daibiru Corp.		5,500		51
Daiwa Office Investment Corp. REIT		52		249
Frontier Real Estate Investment Corp. REIT		15		67
GLP J-REIT		535		511
Hulic Co., Ltd.		20,300		180
Hulic REIT, Inc.		22		31
Japan Real Estate Investment Corp. REIT		271		1,231
Japan Retail Fund Investment Corp. REIT		256		512
Kenedix Office Investment Corp. REIT		16		80
Mitsubishi Estate Co., Ltd.		300,000		6,463
Mitsui Fudosan Co., Ltd.		232,000		6,497
Mori Hills Investment Corp. REIT		444		575
Nippon Building Fund, Inc. REIT		274		1,200
Nippon Prologis, Inc. REIT		286		527
NTT Urban Development Corp.		12,600		125
Orix, Inc. J-REIT		343		494
Premier Investment Corp. REIT		12		66
Sumitomo Realty & Development Co., Ltd.		96,000		3,368
Tokyo Tatemono Co., Ltd.		43,500		604
Tokyu, Inc. REIT		54		67
United Urban Investment Corp. REIT		578		818
				24,663
Malta (0.0%)
BGP Holdings PLC (a)(d)(e)		4,769,371		—
Netherlands (1.3%)
Eurocommercial Properties N.V. CVA REIT		19,576		817
Wereldhave N.V. REIT		9,427		535
				1,352
Norway (0.7%)
Entra ASA (c)		60,658		565
Norwegian Property ASA (a)		98,206		121
				686
Singapore (4.3%)
Ascendas Real Estate Investment Trust REIT		204,600		374
CapitaLand Commercial Trust REIT		54,000		63
CapitaLand Ltd.		557,800		1,449
CapitaLand Mall Trust REIT		217,200		347
Global Logistic Properties Ltd.		735,200		1,381

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

International Real Estate Portfolio

	Shares		Value (000)
Singapore (cont'd)
SPH REIT		182,300	$	141
UOL Group Ltd.		116,040		596
				4,351
Sweden (1.9%)
Atrium Ljungberg AB, Class B		26,649		349
Castellum AB		12,440		175
Fabege AB		25,391		346
Hufvudstaden AB, Class A		89,741		1,092
				1,962
Switzerland (1.9%)
Mobimo Holding AG (Registered) (a)		427		87
PSP Swiss Property AG (Registered) (a)		19,453		1,665
Swiss Prime Site AG (Registered) (a)		2,180		165
				1,917
United Kingdom (16.7%)
British Land Co., PLC REIT		256,342		3,196
Capital & Counties Properties PLC		71,114		486
Capital & Regional PLC REIT		656,034		593
Derwent London PLC REIT		24,541		1,312
Grainger PLC		56,480		203
Great Portland Estates PLC REIT		108,621		1,324
Hammerson PLC REIT		159,917		1,547
Helical Bar PLC		225		1
Intu Properties PLC REIT		167,561		810
Land Securities Group PLC REIT		190,962		3,613
LXB Retail Properties PLC (a)		330,988		458
Quintain Estates & Development PLC (a)		355,592		592
Safestore Holdings PLC REIT		38,370		170
Segro PLC REIT		128,370		819
Shaftesbury PLC REIT		26,248		358
ST Modwen Properties PLC		40,541		289
Unite Group PLC		58,048		521
Urban & Civic PLC		136,462		541
Workspace Group PLC REIT		8,914		126
				16,959
Total Common Stocks (Cost $99,783)				101,315
	No. of Rights
Rights (0.1%)
Finland (0.1%)
Citycon Oyj (a) (Cost $—)		215,028		24
	Shares
Short-Term Investment (0.5%)
Investment Company (0.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $559)		559,499		559
Total Investments (100.2%) (Cost $100,342)				101,898
Liabilities in Excess of Other Assets (-0.2%)				(165	)
Net Assets (100.0%)			$	101,733

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(d)  Security has been deemed illiquid at June 30, 2015.

(e)  At June 30, 2015, the Portfolio held a fair valued security valued at $0, representing 0.0% of net assets. This security has been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Diversified		54.0	%
Retail		20.8
Office		14.7
Other*		5.4
Industrial		5.1
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $99,783)	$	101,339
Investment in Security of Affiliated Issuer, at Value (Cost $559)		559
Total Investments in Securities, at Value (Cost $100,342)		101,898
Foreign Currency, at Value (Cost $150)		148
Receivable for Investments Sold		341
Dividends Receivable		240
Tax Reclaim Receivable		35
Receivable for Portfolio Shares Sold		1
Receivable from Affiliate		—	@
Other Assets		76
Total Assets		102,739
Liabilities:
Payable for Portfolio Shares Redeemed		571
Payable for Investments Purchased		193
Payable for Advisory Fees		147
Payable for Custodian Fees		32
Payable for Professional Fees		23
Payable for Sub Transfer Agency Fees — Class I		10
Payable for Sub Transfer Agency Fees — Class A		2
Payable for Sub Transfer Agency Fees — Class H		—	@
Payable for Administration Fees		7
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class H		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Directors' Fees and Expenses		1
Payable for Shareholder Services Fees — Class A		1
Payable for Shareholder Services Fees — Class H		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		18
Total Liabilities		1,006
Net Assets	$	101,733
Net Assets Consist Of:
Paid-in-Capital	$	701,987
Accumulated Undistributed Net Investment Income		991
Accumulated Net Realized Loss		(602,798	)
Unrealized Appreciation (Depreciation) on:
Investments		1,556
Foreign Currency Translations		(3	)
Net Assets	$	101,733

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	86,676
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,240,537
Net Asset Value, Offering and Redemption Price Per Share	$	20.44
CLASS A:
Net Assets	$	2,667
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		130,679
Net Asset Value, Redemption Price Per Share	$	20.41
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.13
Maximum Offering Price Per Share	$	21.54
CLASS H:
Net Assets	$	116
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,686
Net Asset Value, Redemption Price Per Share	$	20.36
Maximum Sales Load		4.75	%
Maximum Sales Charge	$	1.02
Maximum Offering Price Per Share	$	21.38
CLASS L:
Net Assets	$	68
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,374
Net Asset Value, Offering and Redemption Price Per Share	$	20.20
CLASS C:
Net Assets	$	24
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,206
Net Asset Value, Offering and Redemption Price Per Share	$	20.19
CLASS IS:
Net Assets	$	12,182
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		596,119
Net Asset Value, Offering and Redemption Price Per Share	$	20.43

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $118 of Foreign Taxes Withheld)	$	1,697
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		1,697
Expenses:
Advisory Fees (Note B)		407
Custodian Fees (Note F)		67
Professional Fees		48
Administration Fees (Note C)		41
Registration Fees		22
Sub Transfer Agency Fees — Class I		18
Sub Transfer Agency Fees — Class A		2
Sub Transfer Agency Fees — Class H		—	@
Sub Transfer Agency Fees — Class L		—	@
Shareholder Reporting Fees		9
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class H (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		5
Shareholder Services Fees — Class A (Note D)		3
Shareholder Services Fees — Class H (Note D)		—	@
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Directors' Fees and Expenses		3
Other Expenses		6
Total Expenses		637
Waiver of Advisory Fees (Note B)		(115	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(5	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class H (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		513
Net Investment Income		1,184
Realized Loss:
Investments Sold		(1,719	)
Foreign Currency Transactions		(—	@)
Net Realized Loss		(1,719	)
Change in Unrealized Appreciation (Depreciation):
Investments		3,311
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		3,312
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		1,593
Net Increase in Net Assets Resulting from Operations	$	2,777

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31,2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	1,184		$	2,491
Net Realized Loss		(1,719	)		(36,351	)
Net Change in Unrealized Appreciation (Depreciation)		3,312			34,120
Net Increase in Net Assets Resulting from Operations		2,777			260
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(2,415	)
Class A:
Net Investment Income		—			(58	)
Class H:
Net Investment Income		—			(2	)
Class L:
Net Investment Income		—			(1	)
Class IS:
Net Investment Income		—			(701	)
Total Distributions		—			(3,177	)
Capital Share Transactions:(1)
Class I:
Subscribed		4,401			16,918
Distributions Reinvested		—			1,200
Redeemed		(14,971	)		(53,548	)
Class A:
Subscribed		43			306
Distributions Reinvested		—			52
Redeemed		(254	)		(887	)
Class H:
Distributions Reinvested		—			2
Class L:
Subscribed		—			21
Distributions Reinvested		—			1
Redeemed		(30	)		—
Class C:
Subscribed		25	*		—
Class IS:
Subscribed		10,211			40,510
Distributions Reinvested		—			701
Redeemed		(295	)		(36,082	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(870	)		(30,806	)
Redemption Fees		—	@		1
Total Increase (Decrease) in Net Assets		1,907			(33,722	)
Net Assets:
Beginning of Period		99,826			133,548
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of$991 and $(193), respectively)	$	101,733		$	99,826

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31,2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		209			828
Shares Issued on Distributions Reinvested		—			60
Shares Redeemed		(721	)		(2,641	)
Net Decrease in Class I Shares Outstanding		(512	)		(1,753	)
Class A:
Shares Subscribed		2			16
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(12	)		(45	)
Net Decrease in Class A Shares Outstanding		(10	)		(26	)
Class H:
Shares Issued on Distributions Reinvested		—			—	@@
Class L:
Shares Subscribed		—			1
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		—
Net Increase (Decrease) in Class L Shares Outstanding		(1	)		1
Class C:
Shares Subscribed		1	*		—
Class IS:
Shares Subscribed		481			1,915
Shares Issued on Distributions Reinvested		—			36
Shares Redeemed		(14	)		(1,823	)
Net Increase in Class IS Shares Outstanding		467			128

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	19.84		$	19.99		$	20.16		$	14.66		$	18.85		$	17.80
Income (Loss) from Investment Operations:
Net Investment Income†		0.24			0.39			0.41			0.44			0.39			0.69
Net Realized and Unrealized Gain (Loss)		0.36			(0.07	)		0.65			5.89			(4.04	)		0.98
Total from Investment Operations		0.60			0.32			1.06			6.33			(3.65	)		1.67
Distributions from and/or in Excess of:
Net Investment Income		—			(0.47	)		(1.23	)		(0.83	)		(0.54	)		(0.62	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.44		$	19.84		$	19.99		$	20.16		$	14.66		$	18.85
Total Return++		3.02	%#		1.61	%		5.56	%		44.05	%		(19.92	)%		9.51	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	86,676		$	94,269		$	130,023		$	138,390		$	207,695		$	397,514
Ratio of Expenses to Average Net Assets (1)		1.00	%+*		1.00	%+		1.00	%+		1.00	%+		1.00	%+		0.98	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.98	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.31	%+*		1.91	%+		2.00	%+		2.54	%+		2.17	%+		3.97	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		23	%#		59	%		40	%		31	%		18	%		64	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.24	%*		1.16	%		1.23	%+		1.12	%		N/A			N/A
Net Investment Income to Average Net Assets		2.07	%*		1.75	%		1.76	%+		2.42	%		N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	19.84		$	19.98		$	20.14		$	14.65		$	18.83		$	17.77
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.31			0.35			0.39			0.34			0.64
Net Realized and Unrealized Gain (Loss)		0.37			(0.06	)		0.66			5.89			(4.04	)		0.98
Total from Investment Operations		0.57			0.25			1.01			6.28			(3.70	)		1.62
Distributions from and/or in Excess of:
Net Investment Income		—			(0.39	)		(1.17	)		(0.79	)		(0.48	)		(0.56	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.41		$	19.84		$	19.98		$	20.14		$	14.65		$	18.83
Total Return++		2.87	%#		1.27	%		5.28	%		43.71	%		(20.16	)%		9.26	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,667		$	2,792		$	3,331		$	4,431		$	3,400		$	5,547
Ratio of Expenses to Average Net Assets (1)		1.35	%+*		1.35	%+		1.27	%+^		1.25	%+		1.25	%+		1.23	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.23	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.97	%+*		1.55	%+		1.72	%+		2.23	%+		1.92	%+		3.72	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		23	%#		59	%		40	%		31	%		18	%		64	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.68	%*		1.58	%		1.53	%+		1.38	%		N/A			N/A
Net Investment Income to Average Net Assets		1.64	%*		1.32	%		1.47	%+		2.10	%		N/A			N/A

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.35% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.25% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class H
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	19.79		$	19.95		$	20.13		$	17.31
Income (Loss) from Investment Operations:
Net Investment Income†		0.21			0.31			0.37			0.22
Net Realized and Unrealized Gain (Loss)		0.36			(0.07	)		0.63			3.40
Total from Investment Operations		0.57			0.24			1.00			3.62
Distributions from and/or in Excess of:
Net Investment Income		—			(0.40	)		(1.18	)		(0.80	)
Redemption Fees		—			0.00	‡		—			—
Net Asset Value, End of Period	$	20.36		$	19.79		$	19.95		$	20.13
Total Return++		2.83	%#		1.27	%		5.27	%		21.66	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	116		$	113		$	111		$	13
Ratio of Expenses to Average Net Assets (1)		1.35	%+*		1.35	%+		1.28	%+^^		1.25	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.99	%+*		1.54	%+		1.83	%+		1.85	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		23	%#		59	%		40	%		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.75	%*		2.92	%		1.92	%+		1.43	%*
Net Investment Income (Loss) to Average Net Assets		0.59	%*		(0.03	)%		1.20	%+		1.67	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.35% for Class H shares. Prior to September 16, 2013, the maximum ratio was 1.25% for Class H shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	19.69		$	19.86		$	20.13		$	17.31
Income (Loss) from Investment Operations:
Net Investment Income†		0.13			0.21			0.22			0.16
Net Realized and Unrealized Gain (Loss)		0.38			(0.06	)		0.68			3.40
Total from Investment Operations		0.51			0.15			0.90			3.56
Distributions from and/or in Excess of:
Net Investment Income		—			(0.32	)		(1.17	)		(0.74	)
Redemption Fees		0.00	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	20.20		$	19.69		$	19.86		$	20.13
Total Return++		2.59	%#		0.75	%		4.73	%		21.28	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	68		$	95		$	73		$	12
Ratio of Expenses to Average Net Assets (1)		1.85	%+*		1.85	%+		1.81	%+^^		1.75	%*+
Ratio of Net Investment Income to Average Net Assets (1)		1.24	%+*		1.05	%+		1.08	%+		1.37	%*+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		23	%#		59	%		40	%		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.93	%*		3.90	%		3.44	%+		1.93	%*
Net Investment Income (Loss) to Average Net Assets		(0.84	)%*		(1.00	)%		(0.55	)%+		1.19	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.85% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.75% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	21.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.06
Net Realized and Unrealized Loss		(1.15	)
Total from Investment Operations		(1.09	)
Net Asset Value, End of Period	$	20.19
Total Return++		(5.12	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	24
Ratios of Expenses to Average Net Assets (1)		2.10	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.64	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		11.22	%*
Net Investment Loss to Average Net Assets		(7.48	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Real Estate Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	19.83		$	19.99		$	19.97
Income from Investment Operations:
Net Investment Income†		0.29			0.23			0.11
Net Realized and Unrealized Gain		0.31			0.09			0.22
Total from Investment Operations		0.60			0.32			0.33
Distributions from and/or in Excess of:
Net Investment Income		—			(0.48	)		(0.31	)
Redemption Fees		0.00	‡		0.00	‡		—
Net Asset Value, End of Period	$	20.43		$	19.83		$	19.99
Total Return++		3.08	%#		1.60	%		1.68	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	12,182		$	2,557		$	10
Ratio of Expenses to Average Net Assets (1)		0.97	%+*		0.97	%+		0.97	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		2.78	%+*		1.14	%+		1.76	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§*
Portfolio Turnover Rate		23	%#		59	%		40	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.22	%*		1.13	%		6.46	%*
Net Investment Income (Loss) to Average Net Assets		2.53	%*		0.98	%		(3.73	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.97% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the International Real Estate Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek a combination of current income and long-term capital appreciation by investing primarily in equity securities of companies in the real estate industry located throughout the world (excluding the United States and Canada).

The Portfolio offers six classes of shares — Class I, Class A, Class H, Class L, Class C and Class IS. The Portfolio's Class H shares are currently closed to all investors. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price,

last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

The Portfolio invests a significant portion of its assets in securities of real estate investment trusts ("REITs"). The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Portfolio.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)			Total (000)
Assets:
Common Stocks
Diversified	$	55,032	$	—	$	—	†	$	55,032	†
Industrial		5,239		—		—			5,239
Mixed Industrial/Office		805		—		—			805
Office		14,974		—		—			14,974
Residential		3,937		—		—			3,937
Retail		21,158		—		—			21,158
Self Storage		170		—		—			170
Total Common Stocks		101,315		—		—	†		101,315	†
Rights		24		—		—			24
Short-Term Investment
Investment Company		559		—		—			559
Total Assets	$	101,898	$	—	$	—	†	$	101,898	†

†  Includes one security which is valued at zero.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $100,699,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

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

	Common Stock (000)
Beginning Balance	$	—	†
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		—
Realized gains (losses)		—
Ending Balance	$	—	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	—

†  Includes one security which was valued at zero.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class H, Class L shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

5.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at an annual rate of 0.80% of the daily net assets of the Portfolio.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.35% for Class H, 1.85% for Class L shares, 2.10% for Class C shares and 0.97% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $115,000 of advisory fees were waived and approximately $9,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted Shareholder Services Plan with respect to Class A and Class H shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A and Class H shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class H, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases

and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $22,903,000 and $22,671,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	174	$	21,107	$	20,722	$	—	@	$	559

@ Amount is less than $500.

During the six months ended June 30, 2015, the Portfolio incurred less than $500 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator, Sub-Advisers and Distributor, for portfolio transactions executed on behalf of the Portfolio.

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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	3,177	$	—	$	7,760	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, in-kind

redemptions, and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	592	$	11,801	$	(12,393	)

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	1,241	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $6,366,000 and the aggregate gross unrealized depreciation is approximately $4,810,000 resulting in net unrealized appreciation of approximately $1,556,000.

At December 31, 2014, the Portfolio had available unused capital losses of approximately $2,493,000 and long-term capital losses of approximately $203,051,000 that do not have an expiration date.

In addition, At December 31, 2014, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, through the indicated expiration dates:

Amount (000)		Expiration
$	98,798	December 31, 2016
	217,627	December 31, 2017
	66,872	December 31, 2018

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 68.8%, 68.8% and 99.9% for Class I, Class L and Class IS shares, respectively.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIRESAN
1260904 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Real Estate Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	9
Statement of Operations	11
Statements of Changes in Net Assets	12
Financial Highlights	14
Notes to Financial Statements	19
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Real Estate Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Real Estate Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Real Estate Portfolio Class I	$	1,000.00	$	981.10	$	1,019.69	$	5.06	*	$	5.16	*		1.03	%
Global Real Estate Portfolio Class A		1,000.00		979.20		1,018.20		6.53	*		6.66	*		1.33
Global Real Estate Portfolio Class L		1,000.00		977.10		1,016.02		8.68	*		8.85	*		1.77
Global Real Estate Portfolio Class C		1,000.00		949.20		1,004.76		3.50	**		3.60	**		2.15
Global Real Estate Portfolio Class IS		1,000.00		981.10		1,020.03		4.72	*		4.81	*		0.96

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three- and five-year periods but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a Fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that while the Portfolio's contractual management fee and total expense ratio were higher but close to its peer group average, its actual management fee was higher than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; (ii) management fee was acceptable; and (iii) total expense ratio was competitive with its peer group average.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Real Estate Portfolio

	Shares		Value (000)
Common Stocks (98.4%)
Australia (5.3%)
Dexus Property Group REIT		1,199,061	$	6,753
Federation Centres REIT		2,361,068		5,319
Goodman Group REIT		3,489,022		16,879
GPT Group REIT		3,596,559		11,877
Investa Office Fund REIT		863,538		2,532
Mirvac Group REIT		5,943,861		8,484
Scentre Group REIT		10,765,819		31,149
Shopping Centres Australasia Property Group REIT		479,500		788
Stockland REIT		3,809,037		12,049
Westfield Corp. REIT		4,092,945		28,800
				124,630
Austria (0.2%)
Atrium European Real Estate Ltd. (a)		553,829		2,551
BUWOG AG (a)		57,483		1,117
				3,668
Brazil (0.5%)
BR Malls Participacoes SA		752,761		3,525
BR Properties SA		803,400		2,706
Iguatemi Empresa de Shopping Centers SA		599,301		4,740
				10,971
Canada (2.0%)
Boardwalk REIT		140,388		6,365
Brookfield Canada Office Properties REIT		233,524		5,054
Calloway REIT		94,001		2,177
Canadian Apartment Properties REIT		45,981		1,016
Crombie Real Estate Investment Trust REIT		317,868		3,174
Extendicare, Inc.		189,890		1,151
First Capital Realty, Inc.		457,230		6,545
RioCan REIT		1,064,385		22,813
				48,295
China (0.0%)
China Resources Land Ltd. (b)		110,000		357
Dalian Wanda Commercial Properties Co., Ltd. H Shares (b)(c)		44,000		354
				711
Finland (0.5%)
Citycon Oyj (a)		2,422,390		6,055
Sponda Oyj		1,305,688		4,818
				10,873
France (2.8%)
Fonciere Des Regions REIT		27,648		2,349
Gecina SA REIT		57,441		7,079
ICADE REIT		105,142		7,509
Klepierre REIT		224,433		9,872
Mercialys SA REIT		16,375		365
Unibail-Rodamco SE REIT		156,029		39,435
				66,609

	Shares		Value (000)
Germany (1.4%)
Deutsche Annington Immobilien SE		513,687	$	14,489
Deutsche Euroshop AG		63,180		2,774
Deutsche Wohnen AG		400,820		9,185
DO Deutsche Office AG		297,334		1,412
LEG Immobilien AG (a)		70,725		4,914
				32,774
Hong Kong (11.4%)
Champion REIT		2,514,000		1,382
Hang Lung Properties Ltd.		1,759,000		5,230
Henderson Land Development Co., Ltd.		1,529,368		10,467
Hongkong Land Holdings Ltd.		6,817,400		55,903
Hysan Development Co., Ltd.		5,333,014		23,117
Kerry Properties Ltd.		1,416,220		5,554
Link REIT (The)		4,835,275		28,320
New World Development Co., Ltd.		11,033,109		14,433
Sino Land Co., Ltd.		2,533,637		4,236
Sun Hung Kai Properties Ltd.		5,032,367		81,540
Swire Properties Ltd.		5,422,800		17,314
Wharf Holdings Ltd.		3,495,763		23,270
				270,766
Ireland (0.2%)
Green REIT PLC		1,044,748		1,707
Hibernia REIT PLC		2,833,012		3,980
				5,687
Italy (0.1%)
Beni Stabili SpA REIT		3,873,935		2,876
Japan (11.0%)
Activia Properties, Inc. REIT		764		6,474
Advance Residence Investment Corp. REIT		1,394		3,416
Daibiru Corp.		58,100		538
Daiwa Office Investment Corp. REIT		554		2,653
Frontier Real Estate Investment Corp. REIT		164		734
GLP J-REIT		5,640		5,387
Hulic Co., Ltd.		217,500		1,930
Hulic REIT, Inc.		234		333
Japan Real Estate Investment Corp. REIT		2,824		12,830
Japan Retail Fund Investment Corp. REIT		2,734		5,471
Kenedix Office Investment Corp. REIT		180		903
Mitsubishi Estate Co., Ltd.		3,183,000		68,570
Mitsui Fudosan Co., Ltd.		2,447,000		68,520
Mori Hills Investment Corp. REIT		4,637		6,002
Nippon Building Fund, Inc. REIT		2,906		12,727
Nippon Prologis, Inc. REIT		3,014		5,551
NTT Urban Development Corp.		131,400		1,308
Orix, Inc. J-REIT		3,671		5,291
Premier Investment Corp. REIT		132		727
Sumitomo Realty & Development Co., Ltd.		1,013,000		35,538
Tokyo Tatemono Co., Ltd.		456,000		6,334
Tokyu, Inc. REIT		592		731
United Urban Investment Corp. REIT		6,036		8,537
				260,505

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	Shares		Value (000)
Malta (0.0%)
BGP Holdings PLC (a)(d)(e)		12,867,024	$	—
Netherlands (0.6%)
Eurocommercial Properties N.V. CVA REIT		202,370		8,439
Wereldhave N.V. REIT		100,809		5,724
				14,163
Norway (0.3%)
Entra ASA (c)		626,993		5,838
Norwegian Property ASA (a)		1,023,251		1,266
				7,104
Singapore (1.9%)
Ascendas Real Estate Investment Trust REIT		2,172,900		3,969
CapitaLand Commercial Trust REIT		606,300		702
CapitaLand Ltd.		5,945,000		15,449
CapitaLand Mall Trust REIT		2,262,300		3,611
Global Logistic Properties Ltd.		7,776,500		14,608
SPH REIT		2,011,100		1,561
UOL Group Ltd.		1,212,393		6,229
				46,129
Sweden (0.9%)
Atrium Ljungberg AB, Class B		278,300		3,642
Castellum AB		138,125		1,941
Fabege AB		264,385		3,607
Hufvudstaden AB, Class A		927,710		11,292
				20,482
Switzerland (0.8%)
Mobimo Holding AG (Registered) (a)		4,283		873
PSP Swiss Property AG (Registered) (a)		201,147		17,211
Swiss Prime Site AG (Registered) (a)		24,090		1,828
				19,912
United Kingdom (7.4%)
British Land Co., PLC REIT		2,649,690		33,036
Capital & Counties Properties PLC		735,071		5,026
Capital & Regional PLC REIT		6,762,325		6,109
Derwent London PLC REIT		253,690		13,561
Grainger PLC		586,871		2,109
Great Portland Estates PLC REIT		1,122,769		13,690
Hammerson PLC REIT		1,611,806		15,588
Helical Bar PLC		2,313		15
Intu Properties PLC REIT		1,732,627		8,374
Land Securities Group PLC REIT		1,973,828		37,341
LXB Retail Properties PLC (a)		3,749,232		5,184
Quintain Estates & Development PLC (a)		3,660,143		6,096
Safestore Holdings PLC REIT		396,619		1,762
Segro PLC REIT		1,321,657		8,427
Shaftesbury PLC REIT		271,348		3,701
ST Modwen Properties PLC		419,202		2,983
Unite Group PLC		597,867		5,369
Urban & Civic PLC		1,408,869		5,589
Workspace Group PLC REIT		91,964		1,300
				175,260

	Shares		Value (000)
United States (51.1%)
Acadia Realty Trust REIT		144,071	$	4,194
Alexandria Real Estate Equities, Inc. REIT		90,985		7,958
AvalonBay Communities, Inc. REIT		446,269		71,345
BioMed Realty Trust, Inc. REIT		430,178		8,320
Boston Properties, Inc. REIT		520,995		63,061
Camden Property Trust REIT		575,882		42,777
Chesapeake Lodging Trust REIT		572,340		17,445
Corporate Office Properties Trust REIT		190,150		4,476
Cousins Properties, Inc. REIT		1,191,265		12,365
CubeSmart REIT		164,543		3,811
DDR Corp. REIT		174,130		2,692
Douglas Emmett, Inc. REIT		768,940		20,715
Duke Realty Corp. REIT		497,320		9,235
Equity Lifestyle Properties, Inc. REIT		343,804		18,077
Equity One, Inc. REIT		113,546		2,650
Equity Residential REIT		1,442,375		101,211
Essex Property Trust, Inc. REIT		75,794		16,106
Exeter Industrial Value Fund, LP REIT (a)(d)(e)(f)		1,860,000		1,380
Federal Realty Investment Trust REIT		10,604		1,358
Forest City Enterprises, Inc., Class A (a)		280,019		6,188
General Growth Properties, Inc. REIT		1,707,944		43,826
HCP, Inc. REIT		80,504		2,936
Health Care REIT, Inc.		251,664		16,517
Healthcare Realty Trust, Inc. REIT		172,166		4,005
Hilton Worldwide Holdings, Inc. (a)		656,512		18,087
Host Hotels & Resorts, Inc. REIT		3,610,267		71,592
Hudson Pacific Properties, Inc. REIT		410,106		11,635
Kimco Realty Corp. REIT		1,317,438		29,695
LaSalle Hotel Properties REIT		165,298		5,861
Lexington Realty Trust REIT		28,360		241
Liberty Property Trust REIT		440,540		14,194
Macerich Co. (The) REIT		170,056		12,686
Mack-Cali Realty Corp. REIT		675,827		12,455
Mid-America Apartment Communities, Inc. REIT		195,073		14,203
National Retail Properties, Inc. REIT		410,256		14,363
Paramount Group, Inc. REIT		351,481		6,031
ProLogis, Inc. REIT		699,001		25,933
Public Storage REIT		344,215		63,463
Realty Income Corp. REIT		90,758		4,029
Regency Centers Corp. REIT		610,778		36,024
Rexford Industrial Realty, Inc. REIT		259,492		3,783
Senior Housing Properties Trust REIT		906,514		15,909
Simon Property Group, Inc. REIT		865,933		149,824
Sovran Self Storage, Inc. REIT		55,145		4,793
Starwood Hotels & Resorts Worldwide, Inc.		490,216		39,752
STORE Capital Corp. REIT		674,811		13,564
Tanger Factory Outlet Centers, Inc. REIT		753,099		23,873
Urban Edge Properties REIT		246,094		5,116
Ventas, Inc. REIT		539,292		33,485
Vornado Realty Trust REIT		882,421		83,768
WP GLIMCHER, Inc. REIT		1,168,260		15,807
				1,212,814
Total Common Stocks (Cost $2,040,017)				2,334,229

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	No. of Rights		Value (000)
Rights (0.0%)
Finland (0.0%)
Citycon Oyj (a) (Cost $—)		2,150,784	$	236
	Shares
Short-Term Investment (1.0%)
Investment Company (1.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $23,479)		23,478,647		23,479
Total Investments (99.4%) (Cost $2,063,496)				2,357,944
Other Assets in Excess of Liabilities (0.6%)				13,134
Net Assets (100.0%)			$	2,371,078

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(d)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $1,380,000, representing 0.1% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(e)  Security has been deemed illiquid at June 30, 2015.

(f)  Restricted security valued at fair value and not registered under the Securities Act of 1933, Exeter Industrial Value Fund, LP was acquired between 11/07 — 4/11 and has a current cost basis of $1,145,000. At June 30, 2015, this security had an aggregate market value of approximately $1,380,000, representing 0.1% of net assets.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Diversified		28.3	%
Retail		26.5
Residential		13.2
Office		13.1
Other*		12.4
Lodging/Resorts		6.5
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $2,040,017)	$	2,334,465
Investment in Security of Affiliated Issuer, at Value (Cost $23,479)		23,479
Total Investments in Securities, at Value (Cost $2,063,496)		2,357,944
Foreign Currency, at Value (Cost $11,446)		11,393
Receivable for Portfolio Shares Sold		11,175
Dividends Receivable		7,196
Receivable for Investments Sold		2,656
Tax Reclaim Receivable		262
Receivable from Affiliate		1
Other Assets		235
Total Assets		2,390,862
Liabilities:
Payable for Investments Purchased		9,401
Payable for Advisory Fees		5,244
Payable for Portfolio Shares Redeemed		4,499
Payable for Sub Transfer Agency Fees — Class I		267
Payable for Sub Transfer Agency Fees — Class A		21
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Administration Fees		159
Payable for Custodian Fees		81
Payable for Shareholder Services Fees — Class A		22
Payable for Distribution and Shareholder Services Fees — Class L		3
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Professional Fees		16
Payable for Transfer Agency Fees — Class I		3
Payable for Transfer Agency Fees — Class A		1
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		67
Total Liabilities		19,784
Net Assets	$	2,371,078
Net Assets Consist Of:
Paid-in-Capital	$	2,140,388
Accumulated Undistributed Net Investment Income		9,498
Accumulated Net Realized Loss		(73,200	)
Unrealized Appreciation (Depreciation) on:
Investments		294,448
Foreign Currency Translations		(56	)
Net Assets	$	2,371,078

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	1,759,668
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		161,593,132
Net Asset Value, Offering and Redemption Price Per Share	$	10.89
CLASS A:
Net Assets	$	108,901
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,064,283
Net Asset Value, Redemption Price Per Share	$	10.82
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.60
Maximum Offering Price Per Share	$	11.42
CLASS L:
Net Assets	$	4,761
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		446,635
Net Asset Value, Offering and Redemption Price Per Share	$	10.66
CLASS C:
Net Assets	$	166
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		15,565
Net Asset Value, Offering and Redemption Price Per Share	$	10.66
CLASS IS:
Net Assets	$	497,582
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		45,655,246
Net Asset Value, Offering and Redemption Price Per Share	$	10.90

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,398 of Foreign Taxes Withheld)	$	40,587
Dividends from Security of Affiliated Issuer (Note G)		4
Total Investment Income		40,591
Expenses:
Advisory Fees (Note B)		10,619
Administration Fees (Note C)		1,000
Sub Transfer Agency Fees — Class I		653
Sub Transfer Agency Fees — Class A		61
Sub Transfer Agency Fees — Class L		1
Custodian Fees (Note F)		161
Shareholder Services Fees — Class A (Note D)		134
Distribution and Shareholder Services Fees — Class L (Note D)		19
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Shareholder Reporting Fees		115
Professional Fees		50
Directors' Fees and Expenses		32
Registration Fees		28
Transfer Agency Fees — Class I (Note E)		7
Transfer Agency Fees — Class A (Note E)		3
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		8
Other Expenses		22
Expenses Before Non Operating Expenses		12,915
Bank Overdraft Expense		5
Total Expenses		12,920
Rebate from Morgan Stanley Affiliate (Note G)		(3	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Net Expenses		12,917
Net Investment Income		27,674
Realized Gain (Loss):
Investments Sold		25,444
Foreign Currency Transactions		(419	)
Net Realized Gain		25,025
Change in Unrealized Appreciation (Depreciation):
Investments		(97,856	)
Foreign Currency Translations		16
Net Change in Unrealized Appreciation (Depreciation)		(97,840	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(72,815	)
Net Decrease in Net Assets Resulting from Operations	$	(45,141	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	27,674		$	43,522
Net Realized Gain (Loss)		25,025			(13,640	)
Net Change in Unrealized Appreciation (Depreciation)		(97,840	)		267,088
Net Increase (Decrease) in Net Assets Resulting from Operations		(45,141	)		296,970
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(32,422	)
Class A:
Net Investment Income		—			(1,673	)
Class L:
Net Investment Income		—			(51	)
Class IS:
Net Investment Income		—			(10,854	)
Total Distributions		—			(45,000	)
Capital Share Transactions:(1)
Class I:
Subscribed		183,600			400,262
Distributions Reinvested		—			30,916
Redeemed		(218,694	)		(594,468	)
Class A:
Subscribed		18,993			25,611
Distributions Reinvested		—			1,655
Redeemed		(13,710	)		(28,866	)
Class L:
Subscribed		392			308
Distributions Reinvested		—			51
Redeemed		(270	)		(1,972	)
Class C:
Subscribed		170	*		—
Class IS:
Subscribed		33,965			439,963
Distributions Reinvested		—			9,217
Redeemed		(113,915	)		(111,220	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(109,469	)		171,457
Total Increase (Decrease) in Net Assets		(154,610	)		423,427
Net Assets:
Beginning of Period		2,525,688			2,102,261
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $9,498 and $(18,176), respectively)	$	2,371,078		$	2,525,688

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)	Capital Share Transactions:
Class I:
Shares Subscribed		16,000			37,469
Shares Issued on Distributions Reinvested		—			2,857
Shares Redeemed		(19,099	)		(56,654	)
Net Decrease in Class I Shares Outstanding		(3,099	)		(16,328	)
Class A:
Shares Subscribed		1,693			2,432
Shares Issued on Distributions Reinvested		—			154
Shares Redeemed		(1,201	)		(2,750	)
Net Increase (Decrease) in Class A Shares Outstanding		492			(164	)
Class L:
Shares Subscribed		35			29
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(24	)		(198	)
Net Increase (Decrease) in Class L Shares Outstanding		11			(164	)
Class C:
Shares Subscribed		16	*		—
Class IS:
Shares Subscribed		2,942			41,496
Shares Issued on Distributions Reinvested		—			852
Shares Redeemed		(10,085	)		(10,405	)
Net Increase (Decrease) in Class IS Shares Outstanding		(7,143	)		31,943

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	11.10		$	9.91		$	9.77		$	7.77		$	8.78		$	7.47
Income (Loss) from Investment Operations:
Net Investment Income†		0.13			0.20			0.18			0.17			0.14			0.19
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.19			0.16			2.17			(0.99	)		1.31
Total from Investment Operations		(0.21	)		1.39			0.34			2.34			(0.85	)		1.50
Distributions from and/or in Excess of:
Net Investment Income		—			(0.20	)		(0.20	)		(0.34	)		(0.16	)		(0.19	)
Net Asset Value, End of Period	$	10.89		$	11.10		$	9.91		$	9.77		$	7.77		$	8.78
Total Return++		(1.89	)%#		14.08	%		3.55	%		30.19	%		(9.67	)%		20.22	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,759,668		$	1,828,656		$	1,793,614		$	1,880,999		$	1,337,853		$	1,215,881
Ratio of Expenses to Average Net Assets (1)		1.03	%+*		1.05	%+		1.02	%+		1.02	%+		1.04	%+		1.01	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.03	%+*		N/A			1.02	%+		N/A			N/A			1.01	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.23	%+*		1.85	%+		1.77	%+		2.42	%+		2.12	%+		2.43	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		15	%#		32	%		33	%		29	%		28	%		18	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.05	%		N/A			N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			1.85	%		N/A			N/A			N/A			N/A

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	11.05		$	9.86		$	9.72		$	7.73		$	8.74		$	7.44
Income (Loss) from Investment Operations:
Net Investment Income†		0.11			0.17			0.15			0.15			0.12			0.17
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.19			0.15			2.16			(0.98	)		1.30
Total from Investment Operations		(0.23	)		1.36			0.30			2.31			(0.86	)		1.47
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.16	)		(0.32	)		(0.15	)		(0.17	)
Net Asset Value, End of Period	$	10.82		$	11.05		$	9.86		$	9.72		$	7.73		$	8.74
Total Return++		(2.08	)%#		13.88	%		3.18	%		29.93	%		(9.91	)%		19.90	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	108,901		$	105,766		$	96,046		$	171,413		$	130,244		$	67,812
Ratio of Expenses to Average Net Assets (1)		1.33	%+*		1.31	%+		1.30	%+^		1.27	%+		1.29	%+		1.26	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.33	%+*		N/A			1.30	%+^		N/A			N/A			1.26	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.93	%+*		1.60	%+		1.43	%+		2.17	%+		1.87	%+		2.18	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		15	%#		32	%		33	%		29	%		28	%		18	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			1.32	%		N/A			1.29	%		N/A
Net Investment Income to Average Net Assets		N/A			N/A			1.41	%		N/A			1.87	%		N/A

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.40% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.30% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010
Net Asset Value, Beginning of Period	$	10.91		$	9.74		$	9.59		$	7.63		$	8.62		$	7.35
Income (Loss) from Investment Operations:
Net Investment Income†		0.08			0.12			0.10			0.10			0.07			0.13
Net Realized and Unrealized Gain (Loss)		(0.33	)		1.17			0.16			2.13			(0.96	)		1.28
Total from Investment Operations		(0.25	)		1.29			0.26			2.23			(0.89	)		1.41
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)		(0.11	)		(0.27	)		(0.10	)		(0.14	)
Net Asset Value, End of Period	$	10.66		$	10.91		$	9.74		$	9.59		$	7.63		$	8.62
Total Return++		(2.29	)%#		13.27	%		2.77	%		29.26	%		(10.33	)%		19.26	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,761		$	4,755		$	5,844		$	7,050		$	6,418		$	5,043
Ratio of Expenses to Average Net Assets (1)		1.77	%+*		1.79	%+		1.77	%+^		1.77	%+		1.79	%+		1.76	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.77	%+*		N/A			1.77	%+^		N/A			N/A			1.76	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.52	%+*		1.08	%+		0.98	%+		1.67	%+		1.37	%+		1.68	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		15	%#		32	%		33	%		29	%		28	%		18	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			N/A			N/A			1.79	%		N/A
Net Investment Income to Average Net Assets		N/A			N/A			N/A			N/A			1.37	%		N/A

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratios of 1.90% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.80% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.23
Income (Loss) from Investment Operations:
Net Investment Income†		0.06
Net Realized and Unrealized Loss		(0.63	)
Total from Investment Operations		(0.57	)
Net Asset Value, End of Period	$	10.66
Total Return++		(5.08	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	166
Ratios of Expenses to Average Net Assets (1)		2.15	%+*
Ratios of Expenses to Average Net Assets Excluding Non Operating Expenses		2.15	%+*
Ratio of Net Investment Income to Average Net Assets (1)		3.35	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		15	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.17	%*
Net Investment Income to Average Net Assets		1.33	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Real Estate Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30,2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	11.11		$	9.91		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income†		0.13			0.22			0.08
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.19			0.02
Total from Investment Operations		(0.21	)		1.41			0.10
Distributions from and/or in Excess of:
Net Investment Income		—			(0.21	)		(0.20	)
Net Asset Value, End of Period	$	10.90		$	11.11		$	9.91
Total Return++		(1.89	)%#		14.27	%		1.08	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	497,582		$	586,511		$	206,757
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		0.96	%+		0.96	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.96	%+*		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		2.22	%+*		2.01	%+		2.88	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§*
Portfolio Turnover Rate		15	%#		32	%		33	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		N/A			0.96	%		0.97	%*
Net Investment Income to Average Net Assets		N/A			2.01	%		2.87	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.99% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Real Estate Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek to provide current income and capital appreciation by investing primarily in equity securities of companies in the real estate industry located throughout the world, including real estate operating companies ("REOCs"), real estate investment trusts ("REITs") and similar entities established outside of the U.S. (foreign real estate companies). The Portfolio has capital subscription commitments to certain investee company for this same purpose, the details of which are disclosed in the Unfunded Commitments note.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

The Portfolio invests a significant portion of its assets in securities of REITs. The market's perception of prospective declines in private real estate values and other financial assets may result in increased volatility of market prices that can negatively impact the valuation of certain issuers held by the Portfolio.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)			Total (000)
Assets:
Common Stocks
Diversified	$	668,086	$	—	$	—	†	$	668,086	†
Health Care		74,003		—		—			74,003
Industrial		84,537		—		1,380			85,917
Lodging/Resorts		152,737		—		—			152,737
Mixed Industrial/ Office		34,595		—		—			34,595
Office		309,082		—		—			309,082
Residential		312,056		—		—			312,056
Retail		623,924		—		—			623,924
Self Storage		73,829		—		—			73,829
Total Common Stocks		2,332,849		—		1,380	†		2,334,229	†
Rights		236		—		—			236
Short-Term Investment
Investment Company		23,479		—		—			23,479
Total Assets	$	2,356,564	$	—	$	1,380	†	$	2,357,944	†

†  Includes one security which is valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $1,067,868,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

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

	Common Stocks (000)
Beginning Balance	$	6,673	†
Purchases		—
Sales		(6,572	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(3,371	)
Realized gains (losses)		4,650
Ending Balance	$	1,380	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	25

†  Includes one security which is valued at zero.

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input
Industrial
Common Stocks	$	1,380	Reported Capital Balance, Adjusted for Subsequent Capital Calls, Return of Capital and significant market changes between last capital statement and valuation date, as applicable	Adjusted Capital Balance

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Unfunded Commitments: Subject to the terms of a Subscription Agreement between the Portfolio and Exeter Industrial Value Fund LP, the Portfolio has made a subscription commitment of $2,000,000 for which it will receive 2,000,000 shares of common stock. As of June 30, 2015, Exeter Industrial Value Fund LP has drawn down

approximately $1,860,000 which represents 93.0% of the commitment.

5.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of REITs which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $2.5 billion			Over $2.5 billion
	0.85	%		0.80	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.85% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 1.90% for Class L shares, 2.15% for Class C shares and 0.99% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, less than $500 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $369,792,000 and $435,080,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $3,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	51,296	$	177,732	$	205,549	$	4	$	23,479

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment

options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	45,000	$	—	$	41,276	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies and a dividend redesignation, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	3,345	$	(2,503	)	$	(842	)

At December 31, 2014, the Portfolio had no distributable earnings on a tax basis.

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $358,239,000 and the aggregate gross unrealized depreciation is approximately $63,791,000 resulting in net unrealized appreciation of approximately $294,448,000.

At December 31, 2014, the Portfolio had available unused short-term capital losses of approximately $262,000 and long-term capital losses of approximately $5,470,000 that do not have an expiration date.

In addition, at December 31, 2014, the Portfolio had available capital loss carryforwards to offset future net capital gains, to the extent provided by regulations, through the indicated expiration dates:

Amount (000)		Expiration
$	4,679	December 31, 2017
	41,571	December 31, 2018

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the

Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	1,432	$	—

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 26.5%, 69.8% and 48.7% for Class I, Class A and Class IS shares, respectively.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRESAN
1262688 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Opportunity Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in International Opportunity Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

International Opportunity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
International Opportunity Portfolio Class I	$	1,000.00	$	1,132.30	$	1,019.29	$	5.87	*	$	5.56	*		1.11	%
International Opportunity Portfolio Class A		1,000.00		1,129.90		1,017.36		7.92	*		7.50	*		1.50
International Opportunity Portfolio Class L		1,000.00		1,127.00		1,014.88		10.55	*		9.99	*		2.00
International Opportunity Portfolio Class C		1,000.00		1,003.20		1,004.61		3.75	**		3.75	**		2.24
International Opportunity Portfolio Class IS		1,000.00		1,131.50		1,019.39		5.76	*		5.46	*		1.09

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one- and three-year periods and the period since the end of March 2010, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that although the Portfolio's contractual management fee was higher than its peer group average, the actual management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

International Opportunity Portfolio

	Shares		Value (000)
Common Stocks (85.6%)
Australia (0.0%)
AET&D Holdings No. 1 Ltd. (a)(b)(c)		16,699	$	—
Belgium (2.2%)
Anheuser-Busch InBev N.V.		4,063		487
Brazil (1.5%)
CETIP SA — Mercados Organizados		29,695		325
Canada (4.4%)
Brookfield Asset Management, Inc., Class A		10,014		350
Brookfield Infrastructure Partners LP		13,697		611
				961
China (13.5%)
Autohome, Inc. ADR (a)		12,933		654
Baidu, Inc. ADR (a)		2,327		463
JD.com, Inc. ADR (a)		8,835		301
TAL Education Group ADR (a)		31,817		1,123
Vipshop Holdings Ltd. ADR (a)		10,902		242
Wynn Macau Ltd. (d)		99,200		166
				2,949
Denmark (4.7%)
DSV A/S		31,783		1,030
France (4.6%)
Christian Dior SE		2,254		440
Danone SA		3,610		233
Hermes International		878		328
				1,001
Germany (1.3%)
Adidas AG		3,661		280
India (1.3%)
MakeMyTrip Ltd. (a)		14,733		290
Japan (3.7%)
Calbee, Inc.		19,100		805
Korea, Republic of (12.5%)
Hotel Shilla Co., Ltd.		3,637		364
Loen Entertainment, Inc.		10,616		766
NAVER Corp.		1,463		832
Seegene, Inc. (a)		6,276		231
ViroMed Co., Ltd. (a)		3,449		551
				2,744
Norway (1.2%)
TGS Nopec Geophysical Co., ASA		11,673		273
South Africa (3.5%)
Naspers Ltd., Class N		4,880		760
Switzerland (3.6%)
Kuehne & Nagel International AG (Registered)		3,280		436
Nestle SA (Registered)		4,947		357
				793
United Kingdom (10.7%)
Burberry Group PLC		35,635		880
Hargreaves Lansdown PLC		24,413		442
Intertek Group PLC		9,331		359

	Shares		Value (000)
Just Eat PLC (a)		53,935	$	345
Reckitt Benckiser Group PLC		3,739		322
				2,348
United States (16.9%)
AeroSpace Technology of Korea, Inc. (a)		11,873		279
Cognizant Technology Solutions Corp., Class A (a)		9,936		607
EPAM Systems, Inc. (a)		14,799		1,054
Greenlight Capital Re Ltd., Class A (a)		14,587		425
Luxoft Holding, Inc. (a)		13,909		787
Priceline Group, Inc. (The) (a)		486		560
				3,712
Total Common Stocks (Cost $16,288)				18,758
Preferred Stock (1.0%)
India (1.0%)
Flipkart Online Services Pvt Ltd. Series D (a)(b)(c)(e) (acquisition cost — $36; acquired 10/4/13) (Cost $36)		1,590		226
Convertible Preferred Stock (0.0%)
China (0.0%)
Youku Tudou, Inc., Class A (a)(b)(e) (acquisition cost — $—@; acquired 9/16/10) (Cost $—@)		6		—	@
Participation Notes (8.6%)
China (8.6%)
China International Travel Service Corp., Ltd., Class A, Equity Linked Notes, expires 5/5/16 (a)		44,800		479
Foshan Haitian Flavouring & Food Company Ltd., Class A, Equity Linked Notes, expires 10/11/24 (a)		96,460		497
Kweichow Moutai Co., Ltd, Class A, Equity Linked Notes, expires 5/5/16 (a)		11,491		478
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a)		10,436		433
Total Participation Notes (Cost $1,652)				1,887
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016 @ CNY 6.70		2,495,691		5
USD/CNY November 2015 @ CNY 6.65		1,490,682		1
Total Call Options Purchased (Cost $15)				6
	Shares
Short-Term Investment (7.7%)
Investment Company (7.7%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $1,688)		1,688,045		1,688
Total Investments (102.9%) (Cost $19,679)				22,565
Liabilities in Excess of Other Assets (-2.9%)				(637	)
Net Assets (100.0%)			$	21,928

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

International Opportunity Portfolio

(a)  Non-income producing security.

(b)  Security has been deemed illiquid at June 30, 2015.

(c)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $226,000, representing 1.0% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(d)  Security trades on the Hong Kong exchange.

(e)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $226,000 and represents 1.0% of net assets.

@  Value is less than $500.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		29.5	%
Information Technology Services		10.8
Internet Software & Services		10.2
Textiles, Apparel & Luxury Goods		8.5
Food Products		8.4
Short-Term Investment		7.5
Internet & Catalog Retail		7.2
Media		6.7
Beverages		6.2
Diversified Consumer Services		5.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $17,991)	$	20,877
Investment in Security of Affiliated Issuer, at Value (Cost $1,688)		1,688
Total Investments in Securities, at Value (Cost $19,679)		22,565
Foreign Currency, at Value (Cost $3)		3
Cash		7
Receivable for Portfolio Shares Sold		119
Tax Reclaim Receivable		14
Due from Adviser		8
Receivable for Investments Sold		4
Dividends Receivable		3
Receivable from Affiliate		—	@
Other Assets		56
Total Assets		22,779
Liabilities:
Payable for Investments Purchased		822
Payable for Professional Fees		15
Payable for Custodian Fees		4
Payable for Administration Fees		1
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Other Liabilities		9
Total Liabilities		851
Net Assets	$	21,928
Net Assets Consist Of:
Paid-in-Capital	$	18,256
Accumulated Undistributed Net Investment Income		55
Accumulated Net Realized Gain		731
Unrealized Appreciation (Depreciation) on:
Investments		2,886
Foreign Currency Translations		—	@
Net Assets	$	21,928

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	18,974
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,204,766
Net Asset Value, Offering and Redemption Price Per Share	$	15.75
CLASS A:
Net Assets	$	2,241
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		143,112
Net Asset Value, Redemption Price Per Share	$	15.66
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.87
Maximum Offering Price Per Share	$	16.53
CLASS L:
Net Assets	$	249
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,092
Net Asset Value, Offering and Redemption Price Per Share	$	15.44
CLASS C:
Net Assets	$	452
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		29,286
Net Asset Value, Offering and Redemption Price Per Share	$	15.44
CLASS IS:
Net Assets	$	12
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		784
Net Asset Value, Offering and Redemption Price Per Share	$	15.75

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $12 of Foreign Taxes Withheld)	$	97
Income from Securities Loaned — Net		3
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		101
Expenses:
Advisory Fees (Note B)		67
Professional Fees		48
Registration Fees		21
Custodian Fees (Note F)		10
Administration Fees (Note C)		6
Shareholder Reporting Fees		5
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		2
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		3
Shareholder Services Fees — Class A (Note D)		2
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		1
Sub Transfer Agency Fees — Class A		1
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		10
Total Expenses		180
Waiver of Advisory Fees (Note B)		(67	)
Expenses Reimbursed by Adviser (Note B)		(23	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		87
Net Investment Income		14
Realized Gain (Loss):
Investments Sold		354
Foreign Currency Transactions		(1	)
Net Realized Gain		353
Change in Unrealized Appreciation (Depreciation):
Investments		1,219
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		1,220
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		1,573
Net Increase in Net Assets Resulting from Operations	$	1,587

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	14		$	46
Net Realized Gain		353			584
Net Change in Unrealized Appreciation (Depreciation)		1,220			(475	)
Net Increase in Net Assets Resulting from Operations		1,587			155
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(4	)
Net Realized Gain		—			(210	)
Class A:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(23	)
Class L:
Net Realized Gain		—			(4	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		—			(241	)
Capital Share Transactions:(1)
Class I:
Subscribed		6,717			3,295
Distributions Reinvested		—			78
Redeemed		(131	)		(26	)
Class A:
Subscribed		1,449			1,260
Distributions Reinvested		—			18
Redeemed		(321	)		(529	)
Class L:
Subscribed		32			59
Distributions Reinvested		—			1
Redeemed		(2	)		(1	)
Class C:
Subscribed		458	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		8,202			4,155
Redemption Fees		—			—	@
Total Increase in Net Assets		9,789			4,069
Net Assets:
Beginning of Period		12,139			8,070
End of Period (Including Accumulated Undistributed Net Investment Income of $55 and $41)	$	21,928		$	12,139

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Opportunity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		427			227
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(8	)		(2	)
Net Increase in Class I Shares Outstanding		419			231
Class A:
Shares Subscribed		94			88
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(22	)		(37	)
Net Increase in Class A Shares Outstanding		72			52
Class L:
Shares Subscribed		2			4
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(—	@@)		(—	@@)
Net Increase in Class L Shares Outstanding		2			4
Class C:
Shares Subscribed		29	*		—

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Opportunity Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from March 31, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	13.92		$	13.77		$	11.19		$	10.26		$	12.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.02			0.08			0.10			0.08			0.08			0.03
Net Realized and Unrealized Gain (Loss)		1.81			0.36			2.85			0.92			(1.31	)		2.04
Total from Investment Operations		1.83			0.44			2.95			1.00			(1.23	)		2.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.09	)		(0.07	)		(0.10	)		—
Net Realized Gain		—			(0.28	)		(0.28	)		—			(0.48	)		—
Total Distributions		—			(0.29	)		(0.37	)		(0.07	)		(0.58	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	15.75		$	13.92		$	13.77		$	11.19		$	10.26		$	12.07
Total Return++		13.23	%#		3.14	%		26.47	%		9.76	%		(10.16	)%		20.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	18,974		$	10,943		$	7,647		$	5,259		$	4,822		$	5,672
Ratio of Expenses to Average Net Assets (1)		1.11	%+*		1.09	%+		1.13	%+		1.14	%+		1.15	%+		1.15	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.25	%+*		0.57	%+		0.82	%+		0.70	%+		0.67	%+		0.33	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§*
Portfolio Turnover Rate		12	%#		33	%		40	%		33	%		37	%		18	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.33	%*		3.25	%		3.84	%		3.87	%		3.82	%		4.79	%+*
Net Investment Loss to Average Net Assets		(0.97	)%*		(1.59	)%		(1.89	)%		(2.03	)%		(2.00	)%		(3.31	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from March 31, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	13.87		$	13.78		$	11.19		$	10.26		$	12.04		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.01	)		0.01			0.02			0.05			0.05			0.01
Net Realized and Unrealized Gain (Loss)		1.80			0.37			2.89			0.92			(1.30	)		2.03
Total from Investment Operations		1.79			0.38			2.91			0.97			(1.25	)		2.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.04	)		(0.04	)		(0.05	)		—
Net Realized Gain		—			(0.28	)		(0.28	)		—			(0.48	)		—
Total Distributions		—			(0.29	)		(0.32	)		(0.04	)		(0.53	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	15.66		$	13.87		$	13.78		$	11.19		$	10.26		$	12.04
Total Return++		12.99	%#		2.71	%		26.12	%		9.49	%		(10.33	)%		20.40	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,241		$	992		$	275		$	112		$	103		$	120
Ratio of Expenses to Average Net Assets (1)		1.50	%+*		1.49	%+		1.44	%+^^		1.39	%+		1.40	%+		1.40	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.16	)%+*		0.04	%+		0.13	%+		0.45	%+		0.42	%+		0.08	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§*
Portfolio Turnover Rate		12	%#		33	%		40	%		33	%		37	%		18	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.92	%*		3.81	%		4.49	%		4.12	%		4.07	%		5.04	%+*
Net Investment Loss to Average Net Assets		(1.58	)%*		(2.28	)%		(2.92	)%		(2.28	)%		(2.25	)%		(3.56	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.50% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.40% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Opportunity Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from March 31, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	13.71		$	13.68		$	11.13		$	10.22		$	12.00		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.04	)		(0.05	)		(0.00	)‡		(0.01	)		(0.01	)		(0.03	)
Net Realized and Unrealized Gain (Loss)		1.77			0.36			2.83			0.92			(1.29	)		2.03
Total from Investment Operations		1.73			0.31			2.83			0.91			(1.30	)		2.00
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.28	)		(0.28	)		—			(0.48	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	15.44		$	13.71		$	13.68		$	11.13		$	10.22		$	12.00
Total Return++		12.70	%#		2.24	%		25.49	%		8.90	%		(10.81	)%		20.00	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	249		$	193		$	137		$	112		$	102		$	120
Ratio of Expenses to Average Net Assets (1)		2.00	%+*		1.99	%+		1.92	%+^^		1.89	%+		1.90	%+		1.90	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.57	)%+*		(0.38	)%+		(0.00	)%+§		(0.05	)%+		(0.08	)%+		(0.42	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§*
Portfolio Turnover Rate		12	%#		33	%		40	%		33	%		37	%		18	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.78	%*		5.06	%		4.91	%		4.62	%		4.57	%		5.54	%+*
Net Investment Loss to Average Net Assets		(2.35	)%*		(3.45	)%		(2.99	)%		(2.78	)%		(2.75	)%		(4.06	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.00% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.90% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	15.39
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)
Net Realized and Unrealized Gain		0.08
Total from Investment Operations		0.05
Net Asset Value, End of Period	$	15.44
Total Return++		0.32	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	452
Ratios of Expenses to Average Net Assets (1)		2.24	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.24	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		12	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.90	%*
Net Investment Loss to Average Net Assets		(2.90	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Opportunity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	13.92		$	13.77		$	12.75
Income (Loss) from Investment Operations:
Net Investment Income Gain (Loss)†		0.01			0.07			(0.02	)
Net Realized and Unrealized Gain		1.82			0.37			1.41
Total from Investment Operations		1.83			0.44			1.39
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.09	)
Net Realized Gain		—			(0.28	)		(0.28	)
Total Distributions		—			(0.29	)		(0.37	)
Redemption Fees		—			0.00	‡		—
Net Asset Value, End of Period	$	15.75		$	13.92		$	13.77
Total Return++		13.15	%#		3.22	%		10.96	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	12		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		1.09	%+*		1.08	%+		1.08	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.31	%+*		0.51	%+		(0.47	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%*
Portfolio Turnover Rate		12	%#		33	%		40	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		14.93	%*		20.64	%		9.61	%*
Net Investment Loss to Average Net Assets		(13.53	)%*		(19.05	)%		(9.00	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.09% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the International Opportunity Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and emerging companies on an international basis, with capitalizations within the range of companies included in the MSCI All Country World Ex-United States Index.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April, 30, 2015 the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the

exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Directors or quotes from a broker or dealer; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have the ultimate responsibility of determining the fair value of the investments. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)			Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	279	$	—	$	—		$	279
Beverages		487		—		—			487
Biotechnology		782		—		—			782
Capital Markets		767		—		—			767
Diversified Consumer Services		1,123		—		—			1,123
Electric Utilities		611		—		—			611
Energy Equipment & Services		273		—		—			273
Food Products		1,395		—		—			1,395
Hotels, Restaurants & Leisure		166		—		—			166
Household Products		322		—		—			322
Information Technology Services		2,448		—		—			2,448
Insurance		425		—		—			425
Internet & Catalog Retail		1,393		—		—			1,393
Internet Software & Services		2,294		—		—			2,294
Marine		436		—		—			436
Media		1,526		—		—			1,526
Multi-Utilities		—		—		—	†		—	†
Professional Services		359		—		—			359
Real Estate Management & Development		350		—		—			350
Road & Rail		1,030		—		—			1,030

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)			Total (000)
Common Stocks (cont'd)
Specialty Retail	$	364	$	—		$	—		$	364
Textiles, Apparel & Luxury Goods		1,928		—			—			1,928
Total Common Stocks		18,758		—			—	†		18,758	†
Preferred Stock		—		—			226			226
Convertible Preferred Stock		—		—	@		—			—	@
Participation Notes		—		1,887			—			1,887
Call Options Purchased		—		6			—			6
Short-Term Investment
Investment Company		1,688		—			—			1,688
Total Assets	$	20,446	$	1,893		$	226	†	$	22,565	†

@  Value is less than $500.

†  Includes one security which is valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $9,020,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015. At June 30, 2015, the Portfolio held a security with a value of

less than $500 that transferred from Level 3 to Level 2. This security was valued using significant unobservable inputs at December 31, 2014 and was valued using other significant observable inputs at June 30, 2015.

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

	Common Stock (000)			Preferred Stock (000)		Convertible Preferred Stock (000)
Beginning Balance	$	—	†	$	190	$	—	@
Purchases		—			—		—
Sales		—			—		—
Amortization of discount		—			—		—
Transfers in		—			—		—
Transfers out		—			—		(—	@)
Corporate actions		—			—		—
Change in unrealized appreciation (depreciation)		—			36		—	@
Realized gains (losses)		—			—		—
Ending Balance	$	—	†	$	226	$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	—		$	36	$	—	@

@  Value is less than $500.

†  Includes one security which was valued at zero.

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range				Selected Value		Impact to Valuation from an Increase in Input
Internet & Catalog Retail
Preferred Stock	$	226	Market Transaction Method	Issuance Price of Financing	$	119.76	$	119.76	$	119.76	Increase
				Issuance Price of Pending Financing	$	142.24	$	142.24	$	142.24	Increase

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the

foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to

enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	6	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(5	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(9	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	6	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	6	$	—	$	—	$	6

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	3,283,000

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the

fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

At June 30, 2015, the Portfolio did not have any outstanding securities on loan.

6.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

7.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

9.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

10.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

11.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.90	%		0.85	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.15% for Class I shares, 1.50% for Class A shares, 2.00% for Class L shares, 2.25% for Class C shares and 1.09% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $67,000 of advisory fees were waived and approximately $26,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $9,211,000 and $1,807,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	253	$	7,588	$	6,153	$	1	$	1,688

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	102	$	139	$	51	$	162

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations

which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments for the timing in the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, a dividend redesignation, basis adjustments on partnerships and equalization debits, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(4	)	$	4	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	41	$	384

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $3,217,000 and the aggregate gross unrealized depreciation is approximately $331,000 resulting in net unrealized appreciation of approximately $2,886,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 25.8% and 72.1% for Class I and Class A shares, respectively.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIIOSAN
1260899 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Advantage Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Advantage Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Advantage Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Advantage Portfolio Class I	$	1,000.00	$	1,063.00	$	1,020.48	$	4.45	*	$	4.36	*		0.87	%
Advantage Portfolio Class A		1,000.00		1,061.70		1,018.89		6.08	*		5.99	*		1.19
Advantage Portfolio Class L		1,000.00		1,063.00		1,019.98		4.96	*		4.86	*		0.97
Advantage Portfolio Class C		1,000.00		987.30		1,005.11		3.22	**		3.25	**		1.94
Advantage Portfolio Class IS		1,000.00		1,062.90		1,020.68		4.25	*		4.16	*		0.83

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three- and five-year periods but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Advantage Portfolio

	Shares		Value (000)
Common Stocks (99.6%)
Beverages (4.3%)
Monster Beverage Corp. (a)		4,045	$	542
PepsiCo, Inc.		8,304		775
				1,317
Diversified Financial Services (7.0%)
Berkshire Hathaway, Inc., Class B (a)		6,125		834
McGraw Hill Financial, Inc.		9,531		957
MSCI, Inc.		6,094		375
				2,166
Food & Staples Retailing (6.2%)
Costco Wholesale Corp.		5,603		757
Walgreens Boots Alliance, Inc.		13,577		1,146
				1,903
Food Products (10.4%)
Keurig Green Mountain, Inc.		7,349		563
Kraft Foods Group, Inc.		5,604		477
Mead Johnson Nutrition Co.		10,042		906
Mondelez International, Inc., Class A		13,590		559
Nestle SA ADR (Switzerland)		9,807		708
				3,213
Hotels, Restaurants & Leisure (7.1%)
Dunkin' Brands Group, Inc.		6,075		334
Panera Bread Co., Class A (a)		1,619		283
Restaurant Brands International, Inc.		8,552		327
Starbucks Corp.		23,023		1,234
				2,178
Information Technology Services (5.8%)
Cognizant Technology Solutions Corp., Class A (a)		5,057		309
Mastercard, Inc., Class A		9,281		868
Visa, Inc., Class A		9,355		628
				1,805
Insurance (1.2%)
Progressive Corp. (The)		12,960		361
Internet & Catalog Retail (9.3%)
Amazon.com, Inc. (a)		6,621		2,874
Internet Software & Services (23.3%)
Alibaba Group Holding Ltd. ADR (China) (a)		4,872		401
eBay, Inc. (a)		5,527		333
Facebook, Inc., Class A (a)		32,023		2,746
Google, Inc., Class C (a)		2,768		1,441
LinkedIn Corp., Class A (a)		5,061		1,046
Twitter, Inc. (a)		33,242		1,204
				7,171
Life Sciences Tools & Services (2.4%)
Thermo Fisher Scientific, Inc.		5,737		744
Media (4.9%)
Naspers Ltd., Class N (South Africa)		3,836		597
Walt Disney Co. (The)		7,979		911
				1,508

	Shares		Value (000)
Pharmaceuticals (6.9%)
Valeant Pharmaceuticals International, Inc. (Canada) (a)		5,194	$	1,154
Zoetis, Inc.		20,175		973
				2,127
Specialty Retail (3.4%)
L Brands, Inc.		3,483		299
TJX Cos., Inc. (The)		11,154		738
				1,037
Tech Hardware, Storage & Peripherals (3.7%)
Apple, Inc.		9,044		1,134
Textiles, Apparel & Luxury Goods (3.7%)
Christian Dior SE (France)		4,122		805
Hermes International (France)		231		86
Michael Kors Holdings Ltd. (a)		6,311		266
				1,157
Total Common Stocks (Cost $23,423)				30,695
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016@ CNY 6.70		4,812,538		10
USD/CNY November 2015@ CNY 6.65		4,375,807		2
Total Call Options Purchased (Cost $33)				12
	Shares
Short-Term Investment (0.3%)
Investment Company (0.3%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $80)		79,856		80
Total Investments (99.9%) (Cost $23,536)				30,787
Other Assets in Excess of Liabilities (0.1%)				27
Net Assets (100.0%)			$	30,814

(a)  Non-income producing security.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Advantage Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		23.9	%
Internet Software & Services		23.3
Food Products		10.4
Internet & Catalog Retail		9.3
Hotels, Restaurants & Leisure		7.1
Diversified Financial Services		7.0
Pharmaceuticals		6.9
Food & Staples Retailing		6.2
Information Technology Services		5.9
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $23,456)	$	30,707
Investment in Security of Affiliated Issuer, at Value (Cost $80)		80
Total Investments in Securities, at Value (Cost $23,536)		30,787
Foreign Currency, at Value (Cost $4)		4
Dividends Receivable		10
Receivable from Affiliate		—	@
Receivable for Portfolio Shares Sold		—	@
Other Assets		65
Total Assets		30,866
Liabilities:
Payable for Professional Fees		18
Payable for Advisory Fees		16
Payable for Custodian Fees		7
Payable for Portfolio Shares Redeemed		5
Payable for Administration Fees		2
Payable for Shareholder Services Fees — Class A		1
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class I		1
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		2
Total Liabilities		52
Net Assets	$	30,814
Net Assets Consist of:
Paid-in-Capital	$	21,893
Accumulated Undistributed Net Investment Income		49
Accumulated Net Realized Gain		1,621
Unrealized Appreciation (Depreciation) on:
Investments		7,251
Foreign Currency Translations		(—	@)
Net Assets	$	30,814

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	19,734
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,103,198
Net Asset Value, Offering and Redemption Price Per Share	$	17.89
CLASS A:
Net Assets	$	4,942
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		278,768
Net Asset Value, Redemption Price Per Share	$	17.73
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.98
Maximum Offering Price Per Share	$	18.71
CLASS L:
Net Assets	$	5,912
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		330,669
Net Asset Value, Offering and Redemption Price Per Share	$	17.88
CLASS C:
Net Assets	$	214
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,990
Net Asset Value, Offering and Redemption Price Per Share	$	17.85
CLASS IS:
Net Assets	$	12
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		685
Net Asset Value, Offering and Redemption Price Per Share	$	17.90

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $5 of Foreign Taxes Withheld)	$	180
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		181
Expenses:
Advisory Fees (Note B)		111
Professional Fees		48
Shareholder Services Fees — Class A (Note D)		7
Distribution and Shareholder Services Fees — Class L (Note D)		29
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Registration Fees		21
Administration Fees (Note C)		13
Shareholder Reporting Fees		11
Sub Transfer Agency Fees — Class I		3
Sub Transfer Agency Fees — Class A		2
Sub Transfer Agency Fees — Class L		3
Custodian Fees (Note F)		6
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		2
Directors' Fees and Expenses		—	@
Other Expenses		10
Total Expenses		270
Waiver of Advisory Fees (Note B)		(86	)
Distribution Fees — Class L Shares Waived (Note D)		(28	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class A (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		154
Net Investment Income		27
Realized Gain:
Investments Sold		1,388
Foreign Currency Transactions		1
Net Realized Gain		1,389
Change in Unrealized Appreciation (Depreciation):
Investments		338
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		338
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		1,727
Net Increase in Net Assets Resulting from Operations	$	1,754

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31,2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	27		$	39
Net Realized Gain		1,389			1,140
Net Change in Unrealized Appreciation (Depreciation)		338			716
Net Increase in Net Assets Resulting from Operations		1,754			1,895
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(5	)
Net Realized Gain		—			(781	)
Class A:
Net Investment Income		—			—
Net Realized Gain		—			(166	)
Class L:
Net Investment Income		—			(1	)
Net Realized Gain		—			(267	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(1	)
Total Distributions		—			(1,221	)
Capital Share Transactions:(1)
Class I:
Subscribed		2,979			4,207
Distributions Reinvested		—			434
Redeemed		(2,301	)		(1,822	)
Class A:
Subscribed		3,465			2,507
Distributions Reinvested		—			166
Redeemed		(2,487	)		(2,170	)
Class L:
Subscribed		2,963			3,222
Distributions Reinvested		—			254
Redeemed		(4,045	)		(967	)
Class C:
Subscribed		216	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		790			5,831
Total Increase in Net Assets		2,544			6,505
Net Assets:
Beginning of Period		28,270			21,765
End of Period (Including Accumulated Undistributed Net Investment Income of $49 and $22)	$	30,814		$	28,270

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		164			255
Shares Issued on Distributions Reinvested		—			27
Shares Redeemed		(129	)		(111	)
Net Increase in Class I Shares Outstanding		35			171
Class A:
Shares Subscribed		194			155
Shares Issued on Distributions Reinvested		—			10
Shares Redeemed		(139	)		(133	)
Net Increase in Class A Shares Outstanding		55			32
Class L:
Shares Subscribed		164			194
Shares Issued on Distributions Reinvested		—			16
Shares Redeemed		(223	)		(59	)
Net Increase (Decrease) in Class L Shares Outstanding		(59	)		151
Class C:
Shares Subscribed		12	*		—

@  Amount is less than $500.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Advantage Portfolio

	Class I**
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 1, 2010 to December 31,			Year Ended August 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	16.83		$	16.41		$	12.40		$	11.38		$	10.87		$	9.15		$	7.97
Income from Investment Operations:
Net Investment Income†		0.02			0.04			0.01			0.14			0.04			0.01			0.04
Net Realized and Unrealized Gain		1.04			1.15			4.54			1.72			0.54			1.74			1.19
Total from Investment Operations		1.06			1.19			4.55			1.86			0.58			1.75			1.23
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		—			(0.10	)		(0.07	)		(0.03	)		(0.05	)
Net Realized Gain		—			(0.76	)		(0.54	)		(0.74	)		—			—			—
Total Distributions		—			(0.77	)		(0.54	)		(0.84	)		(0.07	)		(0.03	)		(0.05	)
Net Asset Value, End of Period	$	17.89		$	16.83		$	16.41		$	12.40		$	11.38		$	10.87		$	9.15
Total Return++		6.30	%#		7.43	%		37.11	%		16.38	%		5.33	%		19.30	%#		15.34	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	19,734		$	17,971		$	14,712		$	8,595		$	7,239		$	5,015		$	4,223
Ratio of Expenses to Average Net Assets (1)		0.87	%+^*		1.04	%+		1.04	%+		1.05	%+		1.05	%+		1.02	%+*		1.05	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.25	%+*		N/A
Ratio of Net Investment Income to Average Net Assets (1)		0.25	%+*		0.23	%+		0.11	%+		1.08	%+		0.39	%+		0.42	%+*		0.49	%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.03	%*		N/A
Portfolio Turnover Rate		23	%#		31	%		36	%		50	%		28	%		33	%#		32	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.40	%*		1.78	%		2.33	%		2.34	%		3.43	%		3.49	%+*		4.49	%
Net Investment Loss to Average Net Assets		(0.28	)%*		(0.51	)%		(1.18	)%		(0.21	)%		(1.99	)%		(2.05	)%+*		(2.95	)%

**  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Core Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class I shares for the 12-month period ended August 31, 2010 reflect the historical per share data of Class I shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum of 0.85% for Class I shares. Prior to January 23, 2015, the maximum ratio was 1.05% for Class I shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Advantage Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 1, 2010 to December 31,			Period from May 21, 2010^ to August 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	16.70		$	16.34		$	12.39		$	11.37		$	10.86		$	9.15		$	9.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.01	)		(0.03	)		(0.07	)		0.11			0.02			0.01			0.01
Net Realized and Unrealized Gain		1.04			1.15			4.56			1.72			0.53			1.73			0.14
Total from Investment Operations		1.03			1.12			4.49			1.83			0.55			1.74			0.15
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.07	)		(0.04	)		(0.03	)		—
Net Realized Gain		—			(0.76	)		(0.54	)		(0.74	)		—			—			—
Total Distributions		—			(0.76	)		(0.54	)		(0.81	)		(0.04	)		(0.03	)		—
Net Asset Value, End of Period	$	17.73		$	16.70		$	16.34		$	12.39		$	11.37		$	10.86		$	9.15
Total Return++		6.17	%#		7.05	%		36.65	%		16.11	%		5.07	%		19.16	%#		1.56	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,942		$	3,738		$	3,134		$	12		$	11		$	10		$	1
Ratio of Expenses to Average Net Assets (1)		1.19	%+^^^*		1.39	%+		1.35	%+^^		1.30	%+		1.30	%+		1.29	%+*		1.30	%*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.52	%+*		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.15	)%+*		(0.15	)%+		(0.44	)%+		0.83	%+		0.14	%+		0.15	%+*		0.27	%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§		0.00	%§		0.00	%§		0.03	%*		N/A
Portfolio Turnover Rate		23	%#		31	%		36	%		50	%		28	%		33	%#		32	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.72	%*		2.14	%		2.68	%		2.59	%		3.68	%		3.76	%+		2.59	%*
Net Investment Loss to Average Net Assets		(0.68	)%*		(0.90	)%		(1.77	)%		(0.46	)%		(2.24	)%		(2.32	)%+		(1.02	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.40% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.30% for Class A shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum of 1.20% for Class A shares. Prior to January 23, 2015, the maximum ratio was 1.40% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Advantage Portfolio

	Class L**
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 1, 2010 to December 31,			Year Ended August 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	16.82		$	16.42		$	12.42		$	11.39		$	10.89		$	9.16		$	7.96
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			0.02			(0.01	)		0.13			0.04			0.01			0.04
Net Realized and Unrealized Gain		1.05			1.14			4.55			1.74			0.52			1.75			1.19
Total from Investment Operations		1.06			1.16			4.54			1.87			0.56			1.76			1.23
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		—			(0.10	)		(0.06	)		(0.03	)		(0.03	)
Net Realized Gain		—			(0.76	)		(0.54	)		(0.74	)		—			—			—
Total Distributions		—			(0.76	)		(0.54	)		(0.84	)		(0.06	)		(0.03	)		(0.03	)
Net Asset Value, End of Period	$	17.88		$	16.82		$	16.42		$	12.42		$	11.39		$	10.89		$	9.16
Total Return++		6.30	%#		7.28	%		36.97	%		16.42	%		5.19	%		19.20	%#		15.43	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,912		$	6,549		$	3,908		$	722		$	208		$	155		$	156
Ratio of Expenses to Average Net Assets (1)		0.97	%+^^*		1.18	%+		1.08	%+^		1.09	%+		1.09	%+		1.06	%+*		1.08	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.29	%+*		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.14	%+*		0.12	%+		(0.06	)%+		1.04	%+		0.35	%+		0.38	%+*		0.45	%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.03	%*		N/A
Portfolio Turnover Rate		23	%#		31	%		36	%		50	%		28	%		33	%#		32	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.21	%*		2.64	%		3.10	%		3.09	%		4.18	%		3.53	%+*		4.53	%
Net Investment Loss to Average Net Assets		(1.10	)%*		(1.34	)%		(2.08	)%		(0.96	)%		(2.74	)%		(2.09	)%+*		(3.00	)%

**  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Core Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class L shares for the 12-month period ended August 31, 2010 reflect the historical per share data of Class C shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.19% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.09% for Class L shares.

^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum of 0.99% for Class L shares. Prior to January 23, 2015, the maximum ratio was 1.19% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	18.08
Income (Loss) from Investment Operations:
Net Investment Income Loss†		(0.05	)
Net Realized and Unrealized Loss		(0.18	)
Total from Investment Operations		(0.23	)
Net Asset Value, End of Period	$	17.85
Total Return++		(1.27	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	214
Ratios of Expenses to Average Net Assets (1)		1.94	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.33	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.90	%*
Net Investment Loss to Average Net Assets		(3.29	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Advantage Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	16.84		$	16.41		$	14.59
Income (Loss) from Investment Operations:
Net Investment Income Gain (Loss)†		0.03			0.04			(0.01	)
Net Realized and Unrealized Gain		1.03			1.16			2.21
Total from Investment Operations		1.06			1.20			2.20
Distribution from and/or in Excess of:
Net Investment Income		—			(0.01	)		—
Net Realized Gain		—			(0.76	)		(0.38	)
Total Distributions		—			(0.77	)		(0.38	)
Net Asset Value, End of Period	$	17.90		$	16.84		$	16.41
Total Return++		6.29	%#		7.50	%		15.15	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	12		$	11
Ratio of Expenses to Average Net Assets (1)		0.83	%+^^^*		1.00	%+		1.01	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.30	%+*		0.26	%+		(0.25	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.00	%§*
Portfolio Turnover Rate		23	%#		31	%		36	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		13.51	%*		18.84	%		7.31	%*
Net Investment Loss to Average Net Assets		(12.38	)%*		(17.58	)%		(6.55	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.01% for Class IS shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum of 0.81% for Class IS shares. Prior to January 23, 2015, the maximum ratio was 1.01% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Advantage Portfolio. The Portfolio seeks long-term capital appreciation. The Portfolio seeks to achieve the investment objective by investing primarily in established companies with capitalizations within the range of companies included in the Russell 1000® Growth Index.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Fund's Board of Directors

(the "Directors") or quotes from a broker or dealer; (4) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	1,317	$	—	$	—	$	1,317
Diversified Financial Services		2,166		—		—		2,166
Food & Staples Retailing		1,903		—		—		1,903
Food Products		3,213		—		—		3,213
Hotels, Restaurants & Leisure		2,178		—		—		2,178
Information Technology Services		1,805		—		—		1,805
Insurance		361		—		—		361
Internet & Catalog Retail		2,874		—		—		2,874

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Internet Software & Services	$	7,171	$	—	$	—	$	7,171
Life Sciences Tools & Services		744		—		—		744
Media		1,508		—		—		1,508
Pharmaceuticals		2,127		—		—		2,127
Specialty Retail		1,037		—		—		1,037
Tech Hardware, Storage & Peripherals		1,134		—		—		1,134
Textiles, Apparel & Luxury Goods		1,157		—		—		1,157
Total Common Stocks		30,695		—		—		30,695
Call Options Purchased		—		12		—		12
Short-Term Investment
Investment Company		80		—		—		80
Total Assets	$	30,775	$	12	$	—	$	30,787

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $1,488,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized

foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	12	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(12	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)		$(24)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	12	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments'

payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	12	$	—	$	—	$	12

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	8,906,000

5.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.75	%		0.70	%		0.65	%

Effective March 2, 2015, the Portfolio's annual rate based on the daily net assets was reduced and is as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.65	%		0.60	%		0.55	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.15% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes,

interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 1.19% for Class L shares and 1.01% for Class IS shares. Effective January 23, 2015, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 0.99% for Class L shares, 1.95% for Class C shares (effective April 30, 2015) and 0.81% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $86,000 of advisory fees were waived and approximately $1,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares. The Distributor has agreed to waive for at least one year the 12b-1 fees on Class L shares of the Portfolio to the extent it exceeds 0.04% of the average daily net assets of such shares on an annualized basis. For the six months ended June 30, 2015, this waiver amounted to approximately $28,000.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $9,268,000 and $7,202,000 respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management

investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	1,407	$	10,463	$	11,790	$	1	$	80

During the six months ended June 30, 2015, the Portfolio incurred approximately $1,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator and Distributor, for portfolio transactions executed on behalf of the Portfolio.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	121	$	1,100	$	251	$	420

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(21	)	$	21	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	18	$	244

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $8,003,000 and the aggregate gross unrealized depreciation is approximately $752,000 resulting in net unrealized appreciation of approximately $7,251,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 15.2%, 46.0% and 43.5% for Class I, Class A and Class L shares, respectively.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5. HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIADVSAN
1262673 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Opportunity Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	12
Notes to Financial Statements	16
U.S. Privacy Policy	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Opportunity Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Opportunity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Opportunity Portfolio Class I	$	1,000.00	$	1,113.60	$	1,020.43	$	4.61	$	4.41		0.88	%
Opportunity Portfolio Class A		1,000.00		1,111.10		1,018.70		6.44		6.16		1.23
Opportunity Portfolio Class L		1,000.00		1,108.80		1,016.22		9.05		8.65		1.73
Opportunity Portfolio Class IS		1,000.00		1,114.40		1,020.78		4.25		4.06		0.81

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Annualized.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was below its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Opportunity Portfolio

	Shares		Value (000)
Common Stocks (90.3%)
Aerospace & Defense (2.0%)
TransDigm Group, Inc. (a)		20,631	$	4,635
Air Freight & Logistics (1.3%)
Expeditors International of Washington, Inc.		63,020		2,906
Beverages (1.6%)
Anheuser-Busch InBev N.V. (Belgium)		31,789		3,810
Capital Markets (5.4%)
CETIP SA — Mercados Organizados (Brazil)		272,357		2,985
WisdomTree Investments, Inc.		433,316		9,518
				12,503
Chemicals (3.5%)
Monsanto Co.		75,665		8,065
Diversified Consumer Services (3.4%)
TAL Education Group ADR (China) (a)		220,154		7,771
Diversified Financial Services (4.9%)
CME Group, Inc.		43,040		4,005
MSCI, Inc.		117,147		7,211
				11,216
Hotels, Restaurants & Leisure (1.6%)
Wynn Resorts Ltd.		37,580		3,708
Information Technology Services (21.5%)
Cognizant Technology Solutions Corp., Class A (a)		120,979		7,391
EPAM Systems, Inc. (a)		95,863		6,828
FleetCor Technologies, Inc. (a)		28,821		4,498
Luxoft Holding, Inc. (a)		94,735		5,357
Mastercard, Inc., Class A		141,735		13,249
Visa, Inc., Class A		185,760		12,474
				49,797
Insurance (1.6%)
Greenlight Capital Re Ltd., Class A (a)		130,578		3,809
Internet & Catalog Retail (14.1%)
Amazon.com, Inc. (a)		43,501		18,883
Priceline Group, Inc. (The) (a)		11,825		13,615
				32,498
Internet Software & Services (23.4%)
Baidu, Inc. ADR (China) (a)		18,928		3,768
Facebook, Inc., Class A (a)		339,725		29,137
Google, Inc., Class A (a)		7,701		4,159
Google, Inc., Class C (a)		19,512		10,156
NAVER Corp. (Korea, Republic of)		6,517		3,704
Twitter, Inc. (a)		85,659		3,103
				54,027
Media (1.3%)
Naspers Ltd., Class N (South Africa)		19,691		3,067
Road & Rail (3.0%)
DSV A/S (Denmark)		211,339		6,847
Textiles, Apparel & Luxury Goods (1.7%)
Burberry Group PLC (United Kingdom)		156,401		3,861
Total Common Stocks (Cost $108,193)				208,520

	Shares		Value (000)
Preferred Stock (1.3%)
Internet & Catalog Retail (1.3%)
Airbnb, Inc. Series D (a)(b)(c)(d) (acquisition cost — $1,502; acquired 4/16/14) (Cost $1,502)		36,894	$	3,124
Participation Note (4.0%)
Beverages (4.0%)
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a) (Cost $5,044)		221,337		9,192
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016@ CNY 6.70		30,711,040		67
USD/CNY November 2015@ CNY 6.65		36,335,180		14
Total Call Options Purchased (Cost $238)				81
	Shares
Short-Term Investment (4.1%)
Investment Company (4.1%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $9,397)		9,396,570		9,397
Total Investments (99.7%) (Cost $124,374)				230,314
Other Assets in Excess of Liabilities (0.3%)				722
Net Assets (100.0%)			$	231,036

(a)  Non-income producing security.

(b)  Security has been deemed illiquid at June 30, 2015.

(c)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $3,124,000 and represents 1.4% of net assets.

(d)  At June 30, 2015, the Portfolio held a fair valued security valued at approximately $3,124,000, representing 1.4% of net assets. This security has been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Opportunity Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		28.4	%
Internet Software & Services		23.5
Information Technology Services		21.6
Internet & Catalog Retail		15.5
Beverages		5.6
Capital Markets		5.4
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $114,977)	$	220,917
Investment in Security of Affiliated Issuer, at Value (Cost $9,397)		9,397
Total Investments in Securities, at Value (Cost $124,374)		230,314
Foreign Currency, at Value (Cost $—@)		—	@
Receivable for Investments Sold		4,178
Dividends Receivable		72
Receivable for Portfolio Shares Sold		24
Tax Reclaim Receivable		14
Receivable from Affiliate		1
Other Assets		60
Total Assets		234,663
Liabilities:
Payable for Investments Purchased		2,758
Due to Broker		260
Payable for Advisory Fees		189
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		85
Payable for Transfer Agency Fees — Class L		11
Payable for Reorganization Expense		89
Payable for Shareholder Services Fees — Class A		40
Payable for Distribution and Shareholder Services Fees — Class L		19
Payable for Portfolio Shares Redeemed		46
Payable for Sub Transfer Agency Fees — Class I		1
Payable for Sub Transfer Agency Fees — Class A		37
Payable for Sub Transfer Agency Fees — Class L		6
Payable for Professional Fees		37
Payable for Administration Fees		15
Payable for Custodian Fees		7
Other Liabilities		27
Total Liabilities		3,627
Net Assets	$	231,036
Net Assets Consist of:
Paid-in-Capital	$	100,379
Accumulated Net Investment Loss		(819	)
Accumulated Net Realized Gain		25,538
Unrealized Appreciation (Depreciation) on:
Investments		105,940
Foreign Currency Translations		(2	)
Net Assets	$	231,036

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	10,484
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		434,607
Net Asset Value, Offering and Redemption Price Per Share	$	24.12
CLASS A:
Net Assets	$	190,358
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		8,029,546
Net Asset Value, Redemption Price Per Share	$	23.71
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.31
Maximum Offering Price Per Share	$	25.02
CLASS L:
Net Assets	$	30,182
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,465,831
Net Asset Value, Offering and Redemption Price Per Share	$	20.59
CLASS IS:
Net Assets	$	12
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		510
Net Asset Value, Offering and Redemption Price Per Share	$	24.16

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $21 of Foreign Taxes Withheld)	$	645
Dividends from Security of Affiliated Issuer (Note G)		4
Total Investment Income		649
Expenses:
Advisory Fees (Note B)		573
Shareholder Services Fees — Class A (Note D)		236
Distribution and Shareholder Services Fees — Class L (Note D)		113
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		168
Transfer Agency Fees — Class L (Note E)		24
Transfer Agency Fees — Class IS (Note E)		1
Reorganization Expense (Note I)		108
Sub Transfer Agency Fees — Class I		4
Sub Transfer Agency Fees — Class A		87
Sub Transfer Agency Fees — Class L		14
Administration Fees (Note C)		92
Professional Fees		50
Shareholder Reporting Fees		37
Registration Fees		25
Custodian Fees (Note F)		20
Directors' Fees and Expenses		5
Pricing Fees		3
Other Expenses		13
Total Expenses		1,574
Reimbursement of Class Specific Expenses — Class I (Note B)		(2	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(91	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(12	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(3	)
Net Expenses		1,465
Net Investment Loss		(816	)
Realized Gain (Loss):
Investments Sold		22,686
Foreign Currency Transactions		(3	)
Net Realized Gain		22,683
Change in Unrealized Appreciation (Depreciation):
Investments		2,418
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		2,418
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		25,101
Net Increase in Net Assets Resulting from Operations	$	24,285

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(816	)	$	(920	)
Net Realized Gain		22,683			7,026
Net Change in Unrealized Appreciation (Depreciation)		2,418			(371	)
Net Increase in Net Assets Resulting from Operations		24,285			5,735
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(252	)
Class A:
Net Realized Gain		—			(3,870	)
Class L:
Net Realized Gain		—			(697	)
Class IS:
Net Realized Gain		—			(—	@)
Total Distributions		—			(4,819	)
Capital Share Transactions:(1)
Class I:
Subscribed		2,216			3,299
Distributions Reinvested		—			245
Redeemed		(5,571	)		(4,460	)
Class A:
Subscribed		2,359			4,061
Distributions Reinvested		—			3,713
Redeemed		(17,231	)		(31,707	)
Class L:
Subscribed		123			301
Distributions Reinvested		—			637
Redeemed		(2,184	)		(4,436	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(20,288	)		(28,347	)
Total Increase (Decrease) in Net Assets		3,997			(27,431	)
Net Assets:
Beginning of Period		227,039			254,470
End of Period (Including Accumulated Net Investment Loss of $(819) and $(3))	$	231,036		$	227,039
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		93			152
Shares Issued on Distributions Reinvested		—			12
Shares Redeemed		(247	)		(208	)
Net Decrease in Class I Shares Outstanding		(154	)		(44	)
Class A:
Shares Subscribed		102			191
Shares Issued on Distributions Reinvested		—			179
Shares Redeemed		(755	)		(1,492	)
Net Decrease in Class A Shares Outstanding		(653	)		(1,122	)
Class L:
Shares Subscribed		6			17
Shares Issued on Distributions Reinvested		—			35
Shares Redeemed		(108	)		(239	)
Net Decrease in Class L Shares Outstanding		(102	)		(187	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Opportunity Portfolio

	Class I*
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from July 1, 2010 to December 31,			Year Ended June 30,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	21.66		$	21.47		$	16.59		$	15.16		$	15.23		$	11.91		$	9.59
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.04	)		0.02			0.02			0.02			0.00	‡		0.02			(0.02	)
Net Realized and Unrealized Gain (Loss)		2.50			0.61			7.13			1.41			(0.07	)		3.30			2.34
Total from Investment Operations		2.46			0.63			7.15			1.43			(0.07	)		3.32			2.32
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(2.27	)		—			—			—			—
Net Asset Value, End of Period	$	24.12		$	21.66		$	21.47		$	16.59		$	15.16		$	15.23		$	11.91
Total Return++		11.36	%#		3.01	%		43.92	%		9.43	%		(0.46	)%		27.88	%#		24.19	%
Ratios and Supplemental Data:
Net Assets, End of Period (Millions)	$	10.5		$	12.8		$	13.6		$	11.9		$	13.2		$	13.0		$	11.0
Ratio of Expenses to Average Net Assets (1)		0.88	%+@		0.81	%+		0.86	%+		0.88	%+		0.88	%+		0.72	%+@		1.14	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.90	%+@		0.96	%
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.31	)%+@		0.07	%+		0.13	%+		0.14	%+		0.01	%+		0.25	%+@		(0.14	)%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§@		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§@		N/A
Portfolio Turnover Rate		5	%#		8	%		21	%		24	%		21	%		6	%#		12	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.82	%@		N/A			0.87	%		0.91	%		0.95	%		N/A			N/A
Net Investment Income (Loss) to Average Net Assets		(0.25	)%@		N/A			0.12	%		0.11	%		(0.06	)%		N/A			N/A

*  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Equity Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class I shares for the 12-month period ended June 30, 2010 reflect the historical per share data of Class I shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

@  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from July 1, 2010^ to December 31,			Period from May 21, 2010^ to June 30,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	21.32		$	21.23		$	16.47		$	15.08		$	15.19		$	11.89		$	12.13
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.08	)		(0.07	)		(0.10	)		(0.02	)		(0.04	)		0.00	‡		(0.01	)
Net Realized and Unrealized Gain (Loss)		2.47			0.60			7.13			1.41			(0.07	)		3.30			(0.23	)
Total from Investment Operations		2.39			0.53			7.03			1.39			(0.11	)		3.30			(0.24	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(2.27	)		—			—			—			—
Net Asset Value, End of Period	$	23.71		$	21.32		$	21.23		$	16.47		$	15.08		$	15.19		$	11.89
Total Return++		11.11	%#		2.62	%		43.51	%		9.22	%		(0.72	)%		27.75	%#		(1.98	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	190,358		$	185,158		$	208,161		$	12		$	2,098		$	2,113		$	1
Ratio of Expenses to Average Net Assets (1)		1.23	%+*		1.23	%+		1.21	%+^^		1.13	%+		1.13	%+		0.97	%+*		1.39	%*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.15	%+*		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.66	)%+*		(0.34	)%+		(0.46	)%+		(0.11	)%+		(0.24	)%+		0.00	%§+*		(0.71	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§*		N/A
Portfolio Turnover Rate		5	%#		8	%		21	%		24	%		21	%		6	%#		12	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.23	%*		1.27	%		1.22	%		1.16	%		1.20	%		N/A			N/A
Net Investment Income (Loss) to Average Net Assets		(0.66	)%		(0.38	)%		(0.47	)%		(0.14	)%		(0.31	)%		N/A			N/A

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.23% for Class A Shares. Prior to September 16, 2013, the maximum ratio was 1.13% for Class A Shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Opportunity Portfolio

	Class L*
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from July 1, 2010 to December 31,			Year Ended June 30,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			2010			2010
Net Asset Value, Beginning of Period	$	18.57		$	18.64		$	14.74		$	13.57		$	13.73		$	10.78		$	8.77
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.11	)		(0.16	)		(0.11	)		(0.09	)		(0.10	)		(0.03	)		(0.13	)
Net Realized and Unrealized Gain (Loss)		2.13			0.53			6.28			1.26			(0.06	)		2.98			2.14
Total from Investment Operations		2.02			0.37			6.17			1.17			(0.16	)		2.95			2.01
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(2.27	)		—			—			—			—
Net Asset Value, End of Period	$	20.59		$	18.57		$	18.64		$	14.74		$	13.57		$	13.73		$	10.78
Total Return++		10.88	%#		2.07	%		42.78	%		8.62	%		(1.17	)%		27.37	%#		22.92	%
Ratios and Supplemental Data:
Net Assets, End of Period (Millions)	$	30.2		$	29.1		$	32.7		$	28.0		$	30.8		$	39.0		$	34.8
Ratio of Expenses to Average Net Assets (1)		1.73	%+@		1.73	%+		1.65	%+^		1.63	%+		1.63	%+		1.47	%+@		2.12	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.65	%+@		1.94	%
Ratio of Net Investment Loss to Average Net Assets (1)		(1.16	)%+@		(0.84	)%+		(0.65	)%+		(0.61	)%+		(0.74	)%+		(0.50	)%+@		(1.16	)%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§@		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§@		N/A
Portfolio Turnover Rate		5	%#		8	%		21	%		24	%		21	%		6	%#		12	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.72	%@		1.74	%		1.67	%		1.66	%		1.70	%		N/A			N/A
Net Investment Loss to Average Net Assets		(1.15	)%@		(0.85	)%		(0.67	)%		(0.64	)%		(0.81	)%		N/A			N/A

*  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Equity Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class L shares for the 12-month period ended June 30, 2010 reflect the historical per share data of Class L shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.73% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.63% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

@  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Opportunity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	21.68		$	21.47		$	19.59
Income (Loss) from Investment Operations:
Net Investment Income Gain (Loss)†		(0.03	)		0.03			0.00	‡
Net Realized and Unrealized Gain		2.51			0.62			3.95
Total from Investment Operations		2.48			0.65			3.95
Net Realized Gain		—			(0.44	)		(2.07	)
Net Asset Value, End of Period	$	24.16		$	21.68		$	21.47
Total Return++		11.44	%#		3.11	%		20.51	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	12		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		0.81	%+*		0.72	%+		0.73	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.24	)%+*		0.16	%+		0.06	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		5	%#		8	%		21	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		13.32	%*		18.47	%		5.67	%*
Net Investment Loss to Average Net Assets		(12.75	)%*		(17.59	)%		(4.88	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.81% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Opportunity Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and emerging companies with capitalizations within the range of companies included in the Russell 1000® Growth Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class IS.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an

official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Directors or quotes from a broker or dealer; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	4,635	$	—	$	—	$	4,635
Air Freight & Logistics		2,906		—		—		2,906
Beverages		3,810		—		—		3,810
Capital Markets		12,503		—		—		12,503
Chemicals		8,065		—		—		8,065

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Diversified Consumer Services	$	7,771	$	—	$	—	$	7,771
Diversified Financial Services		11,216		—		—		11,216
Hotels, Restaurants & Leisure		3,708		—		—		3,708
Information Technology Services		49,797		—		—		49,797
Insurance		3,809		—		—		3,809
Internet & Catalog Retail		32,498		—		—		32,498
Internet Software & Services		54,027		—		—		54,027
Media		3,067		—		—		3,067
Road & Rail		6,847		—		—		6,847
Textiles, Apparel & Luxury Goods		3,861		—		—		3,861
Total Common Stocks		208,520		—		—		208,520
Preferred Stock		—		—		3,124		3,124
Participation Note		—		9,192		—		9,192
Call Options Purchased		—		81		—		81
Short-Term Investment
Investment Company		9,397		—		—		9,397
Total Assets		217,917		9,273		3,124		230,314

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in

an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $21,207,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

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

	Preferred Stock (000)
Beginning Balance	$	1,860
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		1,264
Realized gains (losses)		—
Ending Balance	$	3,124
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	1,264

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Internet & Catalog Retail
Preferred Stock	$	3,124	Market Transaction Method	Pending Precedent Transaction	$	93.38		$	93.38		$	93.38		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		15.0	%		17.0	%		16.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		10.2	x		15.5	x		15.5	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign

investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable

investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	81	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(121	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(176	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	81	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received(e) (000)			Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	81	$	—	$	(81	)	$	0

(e) In some instances, the actual collateral received may be more than the amount shown here due to overcollateralization.

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	77,747,000

5.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

6.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

7.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

8.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semiannually. Net realized capital gains, if any, are distributed at least annually.

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Next $1 billion			Next $1 billion			Over $3 billion
	0.50	%		0.45	%		0.40	%		0.35	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.50% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation),

will not exceed 0.88% for Class I shares, 1.23% for Class A shares, 1.73% for Class L shares and 0.81% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $106,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A and Class L shares.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $10,471,000 and $39,767,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $3,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	657	$	31,292	$	22,552	$	4	$	9,397

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts

credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	392	$	4,427	$	—	$	25,601

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities and a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	918	$	(405	)	$	(513	)

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	—	$	2,644

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $106,786,000 and the aggregate gross unrealized depreciation is approximately $846,000 resulting in net unrealized appreciation of approximately $105,940,000.

I. Subsequent Event:

The Board of Directors of the Fund, on behalf of the Portfolio, approved an Agreement and Plan of Reorganization by and between the Fund, on behalf of the Portfolio, and the Fund, on behalf of its series Global Opportunity Portfolio ("MSIF Global Opportunity"), pursuant to which substantially all of the assets and liabilities of the Portfolio would be transferred to MSIF Global Opportunity and stockholders of the Portfolio would become stockholders of MSIF Global Opportunity, receiving shares of common stock of MSIF Global Opportunity ("Shares") equal to the value of their holdings in the Portfolio (the "Reorganization"). Class I stockholders of the Portfolio would receive Class I Shares of MSIF Global Opportunity, Class A stockholders of the Portfolio would receive Class A Shares of MSIF Global Opportunity, Class L stockholders of the Portfolio would receive Class L Shares of MSIF Global Opportunity and Class IS stockholders of the Portfolio would receive Class IS Shares of MSIF Global Opportunity. The

Reorganization is subject to the approval of stockholders of the Portfolio at a special meeting of stockholders scheduled to be held during the third quarter of 2015.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIOPPSAN
1262695 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Opportunity Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	12
Notes to Financial Statements	17
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Opportunity Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Opportunity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Opportunity Portfolio Class I	$	1,000.00	$	1,149.50	$	1,019.64	$	5.54	*	$	5.21	*		1.04	%
Global Opportunity Portfolio Class A		1,000.00		1,147.70		1,018.00		7.30	*		6.85	*		1.37
Global Opportunity Portfolio Class L		1,000.00		1,146.80		1,017.50		7.82	*		7.35	*		1.47
Global Opportunity Portfolio Class C		1,000.00		1,023.60		1,004.76		3.64	**		3.60	**		2.15
Global Opportunity Portfolio Class IS		1,000.00		1,149.50		1,019.64		5.54	*		5.21	*		1.04

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Opportunity Portfolio

	Shares		Value (000)
Common Stocks (85.5%)
Australia (0.0%)
AET&D Holdings No. 1 Ltd. (a)(b)(c)		36,846	$	—
Belgium (1.4%)
Anheuser-Busch InBev N.V.		8,947		1,072
Brazil (1.5%)
CETIP SA - Mercados Organizados		104,122		1,141
Canada (1.7%)
Brookfield Infrastructure Partners LP		28,022		1,251
China (11.6%)
Autohome, Inc. ADR (a)		39,511		1,997
Baidu, Inc. ADR (a)		8,480		1,688
JD.com, Inc. ADR (a)		30,328		1,034
TAL Education Group ADR (a)		115,964		4,094
				8,813
Denmark (3.3%)
DSV A/S		77,588		2,514
India (4.2%)
Jubilant Foodworks Ltd. (a)		48,448		1,413
Monsanto India Ltd.		40,082		1,773
				3,186
Japan (2.3%)
Calbee, Inc.		40,900		1,724
Korea, Republic of (9.7%)
Hotel Shilla Co., Ltd.		12,536		1,253
Loen Entertainment, Inc.		32,748		2,363
NAVER Corp.		4,225		2,402
ViroMed Co., Ltd. (a)		8,445		1,350
				7,368
South Africa (3.7%)
Naspers Ltd., Class N		17,789		2,771
Switzerland (1.3%)
Kuehne & Nagel International AG (Registered)		7,190		954
United Kingdom (4.1%)
Burberry Group PLC		82,509		2,037
Just Eat PLC (a)		172,703		1,104
				3,141
United States (40.7%)
Amazon.com, Inc. (a)		7,238		3,142
Cognizant Technology Solutions Corp., Class A (a)		36,216		2,213
EPAM Systems, Inc. (a)		53,934		3,842
Facebook, Inc., Class A (a)		56,949		4,884
Google, Inc., Class C (a)		5,301		2,759
Greenlight Capital Re Ltd., Class A (a)		34,937		1,019
Luxoft Holding, Inc. (a)		50,706		2,867
Mastercard, Inc., Class A		25,428		2,377
Monsanto Co.		9,983		1,064
Priceline Group, Inc. (The) (a)		1,795		2,067
Visa, Inc., Class A		33,260		2,233

	Shares		Value (000)
WisdomTree Investments, Inc.		83,490	$	1,834
Wynn Resorts Ltd.		5,656		558
				30,859
Total Common Stocks (Cost $56,477)				64,794
Preferred Stocks (0.7%)
India (0.4%)
Flipkart Online Services Pvt Ltd. Series D (a)(b)(c)(d) (acquisition cost — $51; acquired 10/4/13)		2,242		319
United States (0.3%)
Airbnb, Inc. Series D (a)(b)(c)(d) (acquisition cost — $92; acquired 4/16/14)		2,259		191
Total Preferred Stocks (Cost $143)				510
Convertible Preferred Stock (0.0%)
China (0.0%)
Youku Tudou, Inc., Class A (a)(b)(d) (acquisition cost — $—@; acquired 9/16/10) (Cost $—@)		9		—	@
Participation Notes (8.3%)
China (8.3%)
China International Travel Service Corp., Ltd., Class A, Equity Linked Notes, expires 5/5/16 (a)		150,000		1,604
Foshan Haitian Flavouring & Food Company Ltd., Class A, Equity Linked Notes, expires 10/11/24 (a)		331,120		1,705
Kweichow Moutai Co., Ltd, Class A, Equity Linked Notes, expires 5/5/16 (a)		37,178		1,545
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a)		34,385		1,428
Total Participation Notes (Cost $5,466)				6,282
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016 @ CNY 6.70		8,323,781		18
USD/CNY November 2015 @ CNY 6.65		2,863,668		1
Total Call Options Purchased (Cost $42)				19
	Shares
Short-Term Investment (5.3%)
Investment Company (5.3%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $4,018)		4,017,910		4,018
Total Investments (99.8%) (Cost $66,146)				75,623
Other Assets in Excess of Liabilities (0.2%)				127
Net Assets (100.0%)			$	75,750

(a)  Non-income producing security.

(b)  Security has been deemed illiquid at June 30, 2015.

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Opportunity Portfolio

(c)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $510,000, representing 0.7% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

(d)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $510,000 and represents 0.7% of net assets.

@  Value is less than $500.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		30.7	%
Internet Software & Services		19.6
Information Technology Services		17.9
Internet & Catalog Retail		8.9
Media		6.8
Diversified Consumer Services		5.4
Beverages		5.4
Short-Term Investment		5.3
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $62,128)	$	71,605
Investment in Security of Affiliated Issuer, at Value (Cost $4,018)		4,018
Total Investments in Securities, at Value (Cost $66,146)		75,623
Foreign Currency, at Value (Cost $—@)		—	@
Cash		12
Receivable for Portfolio Shares Sold		1,860
Receivable for Investments Sold		978
Dividends Receivable		15
Tax Reclaim Receivable		13
Receivable from Affiliate		1
Other Assets		62
Total Assets		78,564
Liabilities:
Payable for Investments Purchased		2,620
Payable for Advisory Fees		88
Payable for Portfolio Shares Redeemed		55
Payable for Professional Fees		24
Payable for Shareholder Services Fees — Class A		6
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Distribution and Shareholder Services Fees — Class C		1
Deferred Capital Gain Country Tax		8
Payable for Administration Fees		4
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		2
Payable for Transfer Agency Fees — Class L		—	@
Payable for Custodian Fees		2
Other Liabilities		2
Total Liabilities		2,814
Net Assets	$	75,750
Net Assets Consist Of:
Paid-in-Capital	$	65,059
Accumulated Net Investment Loss		(117	)
Accumulated Net Realized Gain		1,339
Unrealized Appreciation (Depreciation) on:
Investments (Net of $8 of Deferred Capital Gain Country Tax)		9,469
Foreign Currency Translations		(—	@)
Net Assets	$	75,750

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	37,596
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,339,560
Net Asset Value, Offering and Redemption Price Per Share	$	16.07
CLASS A:
Net Assets	$	32,802
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,079,789
Net Asset Value, Redemption Price Per Share	$	15.77
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.87
Maximum Offering Price Per Share	$	16.64
CLASS L:
Net Assets	$	3,166
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		202,614
Net Asset Value, Offering and Redemption Price Per Share	$	15.62
CLASS C:
Net Assets	$	2,173
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		139,204
Net Asset Value, Offering and Redemption Price Per Share	$	15.61
CLASS IS:
Net Assets	$	13
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		805
Net Asset Value, Offering and Redemption Price Per Share	$	16.08

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $14 of Foreign Taxes Withheld)	$	164
Dividends from Security of Affiliated Issuer (Note G)		2
Total Investment Income		166
Expenses:
Advisory Fees (Note B)		191
Professional Fees		46
Shareholder Services Fees — Class A (Note D)		27
Distribution and Shareholder Services Fees — Class L (Note D)		8
Distribution and Shareholder Services Fees — Class C (Note D)		2
Registration Fees		20
Administration Fees (Note C)		19
Custodian Fees (Note F)		15
Shareholder Reporting Fees		8
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		4
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		4
Sub Transfer Agency Fees — Class L		—	@
Pricing Fees		3
Directors' Fees and Expenses		1
Other Expenses		10
Total Expenses		361
Waiver of Advisory Fees (Note B)		(71	)
Distribution Fees- Class L Shares Waived (Note D)		(5	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		283
Net Investment Loss		(117	)
Realized Gain:
Investments Sold (Net of $8 of Capital Gain Country Tax)		1,013
Foreign Currency Transactions		1
Net Realized Gain		1,014
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Decrease in Deferred Capital Gain Country Tax of $11)		4,702
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		4,703
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		5,717
Net Increase in Net Assets Resulting from Operations	$	5,600

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(117	)	$	(99	)
Net Realized Gain		1,014			1,331
Net Change in Unrealized Appreciation (Depreciation)		4,703			37
Net Increase in Net Assets Resulting from Operations		5,600			1,269
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(523	)
Class A:
Net Realized Gain		—			(586	)
Class L:
Net Realized Gain		—			(71	)
Class IS:
Net Realized Gain		—			(1	)
Total Distributions		—			(1,181	)
Capital Share Transactions:(1)
Class I:
Subscribed		25,501			3,648
Distributions Reinvested		—			124
Redeemed		(1,672	)		(166	)
Class A:
Subscribed		18,127			10,218
Distributions Reinvested		—			586
Redeemed		(865	)		(1,863	)
Class L:
Subscribed		1,900			809
Distributions Reinvested		—			62
Redeemed		(89	)		(303	)
Class C:
Subscribed		2,171	*		—
Redeemed		(14	)*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		45,059			13,115
Total Increase in Net Assets		50,659			13,203
Net Assets:
Beginning of Period		25,091			11,888
End of Period (Including Accumulated Net Investment Loss of $(117) and $( —@)	$	75,750		$	25,091
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,657			258
Shares Issued on Distributions Reinvested		—			9
Shares Redeemed		(107	)		(12	)
Net Increase in Class I Shares Outstanding		1,550			255
Class A:
Shares Subscribed		1,195			734
Shares Issued on Distributions Reinvested		—			43
Shares Redeemed		(57	)		(136	)
Net Increase in Class A Shares Outstanding		1,138			641
Class L:
Shares Subscribed		129			58
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(6	)		(22	)
Net Increase in Class L Shares Outstanding		123			41
Class C:
Shares Subscribed		140	*		—
Shares Redeemed		(1	)*		—
Net Increase in Class C Shares Outstanding		139			—

@  Amount is less than $500.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Opportunity Portfolio

	Class I**
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from April 1, 2010 to			Year Ended March 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010			2010
Net Asset Value, Beginning of Period	$	13.98		$	13.65		$	10.84		$	10.26		$	11.58		$	9.53		$	5.08
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.02	)		(0.06	)		(0.02	)		0.01			0.02			(0.00	)‡		0.01
Net Realized and Unrealized Gain (Loss)		2.11			1.26			4.21			1.01			(0.57	)		2.05			4.47
Total from Investment Operations		2.09			1.20			4.19			1.02			(0.55	)		2.05			4.48
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			—			—			—			(0.03	)
Net Realized Gain		—			(0.87	)		(1.38	)		(0.44	)		(0.77	)		—			—
Total Distributions		—			(0.87	)		(1.38	)		(0.44	)		(0.77	)		—			(0.03	)
Redemption Fees		—			—			—			—			0.00	‡		—			—
Net Asset Value, End of Period	$	16.07		$	13.98		$	13.65		$	10.84		$	10.26		$	11.58		$	9.53
Total Return++		14.95	%#		9.04	%		40.12	%		9.99	%		(4.90	)%		21.51	%#		88.32	%
Ratios and Supplemental Data:
Net Assets, End of Period (Millions)	$	37.6		$	11.0		$	7.3		$	5.1		$	8.4		$	5.4		$	5.6
Ratio of Expenses to Average Net Assets (1)		1.04	%+^*		1.17	%+		1.24	%+		1.25	%+		1.25	%+		1.25	%+*		1.25	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.07	%+*		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.32	)%+*		(0.42	)%+		(0.21	)%+		0.06	%+		0.13	%+		(0.01	)%+*		0.09	%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§		0.00	%§		0.00	%§		0.01	%*		N/A
Portfolio Turnover Rate		14	%#		29	%		38	%		33	%		39	%		19	%#		17	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.35	%*		2.47	%		3.36	%		2.57	%		2.92	%		2.77	%+*		4.51	%
Net Investment Loss to Average Net Assets		(0.63	)%*		(1.72	)%		(2.33	)%		(1.26	)%		(1.54	)%		(1.53	)%+*		(3.17	)%

**  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Global Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class I shares for the period ended December 31, 2010 and the prior year reflects the historical per share data of Class I shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^  Effective January 23, 2015, the advisor has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.10% for Class I shares. Prior to January 23, 2015, the maximum ratio was 1.25% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from May 21, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	13.75		$	13.48		$	10.75		$	10.21		$	11.56		$	8.62
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.05	)		(0.11	)		(0.15	)		(0.02	)		(0.01	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		2.07			1.25			4.26			1.00			(0.57	)		3.00
Total from Investment Operations		2.02			1.14			4.11			0.98			(0.58	)		2.94
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.87	)		(1.38	)		(0.44	)		(0.77	)		—
Redemption Fees		—			—			—			—			0.00	‡		—
Net Asset Value, End of Period	$	15.77		$	13.75		$	13.48		$	10.75		$	10.21		$	11.56
Total Return++		14.77	%#		8.55	%		39.80	%		9.65	%		(5.16	)%		34.11	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	32,802		$	12,952		$	4,057		$	87		$	10		$	11
Ratio of Expenses to Average Net Assets (1)		1.37	%+^^^*		1.56	%+		1.59	%+^^		1.50	%+		1.50	%+		1.53	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			0.87	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.66	)%+*		(0.82	)%+		(1.15	)%+		(0.19	)%+		(0.12	)%+		(0.89	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		14	%#		29	%		38	%		33	%		39	%		19	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.68	%*		2.86	%		3.93	%		2.82	%		3.17	%		4.52	%+*
Net Investment Loss to Average Net Assets		(0.97	)%*		(2.12	)%		(3.49	)%		(1.51	)%		(1.79	)%		(3.88	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.60% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.50% for Class A shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.45% for Class A shares. Prior to January 23, 2015, the maximum ratio was 1.60% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Opportunity Portfolio

	Class L**
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from April 1, 2010 to			Year Ended March 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010			2010
Net Asset Value, Beginning of Period	$	13.62		$	13.38		$	10.68		$	10.15		$	11.50		$	9.48		$	5.08
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.05	)		(0.12	)		(0.07	)		(0.03	)		(0.02	)		(0.04	)		(0.09	)
Net Realized and Unrealized Gain (Loss)		2.05			1.23			4.15			1.00			(0.56	)		2.06			4.51
Total from Investment Operations		2.00			1.11			4.08			0.97			(0.58	)		2.02			4.42
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			—			—			—			(0.02	)
Net Realized Gain		—			(0.87	)		(1.38	)		(0.44	)		(0.77	)		—			—
Total Distributions		—			(0.87	)		(1.38	)		(0.44	)		(0.77	)		—			(0.02	)
Redemption Fees		—			—			—			—			0.00	‡		—			—
Net Asset Value, End of Period	$	15.62		$	13.62		$	13.38		$	10.68		$	10.15		$	11.50		$	9.48
Total Return++		14.68	%#		8.46	%		39.79	%		9.61	%		(5.19	)%		21.31	%#		87.08	%
Ratios and Supplemental Data:
Net Assets, End of Period (Millions)	$	3.2		$	1.0		$	0.5		$	0.4		$	0.5		$	0.7		$	1.4
Ratio of Expenses to Average Net Assets (1)		1.47	%+^^^*		1.64	%+		1.58	%+^^		1.55	%+		1.55	%+		2.09	%+*		2.11	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.91	%+*		N/A
Ratio of Net Investment Loss to Average Net Assets (1)		(0.73	)%+*		(0.87	)%+		(0.57	)%+		(0.24	)%+		(0.17	)%+		(0.85	)%+*		(1.03	)%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§		0.00	%§		0.00	%§		0.01	%*		N/A
Portfolio Turnover Rate		14	%#		29	%		38	%		33	%		39	%		19	%#		17	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.23	%*		3.52	%		4.23	%		3.32	%		3.67	%		3.61	%+*		5.37	%
Net Investment Loss to Average Net Assets		(1.49	)%*		(2.75	)%		(3.22	)%		(2.01	)%		(2.29	)%		(2.37	)%+*		(4.29	)%

**  On May 21, 2010, the Portfolio acquired substantially all of the assets and liabilities of the Van Kampen Global Growth Fund ("the Predecessor Fund"). Therefore, the per share data and ratios of Class L shares for the period ended December 31, 2010 and the prior year reflects the historical per share data of Class C shares of the Predecessor Fund.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.65% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.55% for Class L shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.50% for Class L shares. Prior to January 23, 2015, the maximum ratio was 1.65% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	15.25
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.04	)
Net Realized and Unrealized Gain		0.40
Total from Investment Operations		0.36
Net Asset Value, End of Period	$	15.61
Total Return++		2.36	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,173
Ratios of Expenses to Average Net Assets (1)		2.15	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.68	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		14	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.36	%*
Net Investment Loss to Average Net Assets		(1.89	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Opportunity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 31, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	13.99		$	13.65		$	12.43
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.06	)		(0.03	)
Net Realized and Unrealized Gain		2.12			1.27			2.27
Total from Investment Operations		2.09			1.21			2.24
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.87	)		(1.02	)
Net Asset Value, End of Period	$	16.08		$	13.99		$	13.65
Total Return++		14.95	%#		8.96	%		18.35	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	13		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		1.04	%+^^^*		1.17	%+		1.18	%+^^*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.36	)%+*		(0.42	)%+		(0.74	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§*
Portfolio Turnover Rate		14	%#		29	%		38	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		13.55	%*		19.50	%		8.44	%*
Net Investment Loss to Average Net Assets		(12.87	)%*		(18.75	)%		(8.00	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.18% for Class IS shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.03% for Class IS shares. Prior to January 23, 2015, the maximum ratio was 1.18% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Opportunity Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and emerging companies located throughout the world, with capitalizations within the range of companies included in the MSCI All Country World Index.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) listed options are valued at the

last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Directors or quotes from a broker or dealer; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	1,072	$	—	$	—	$	1,072
Biotechnology		1,350		—		—		1,350
Capital Markets		2,975		—		—		2,975
Chemicals		2,837		—		—		2,837
Diversified Consumer Services		4,094		—		—		4,094
Electric Utilities		1,251		—		—		1,251
Food Products		1,724		—		—		1,724
Hotels, Restaurants & Leisure		1,971		—		—		1,971

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)			Total (000)
Common Stocks (cont'd)
Information Technology Services	$	13,532	$	—		$	—		$	13,532
Insurance		1,019		—			—			1,019
Internet & Catalog Retail		6,243		—			—			6,243
Internet Software & Services		14,834		—			—			14,834
Marine		954		—			—			954
Media		5,134		—			—			5,134
Multi-Utilities		—		—			—	†		—	†
Road & Rail		2,514		—			—			2,514
Specialty Retail		1,253		—			—			1,253
Textiles, Apparel & Luxury Goods		2,037		—			—			2,037
Total Common Stocks		64,794		—			—	†		64,794	†
Preferred Stocks		—		—			510			510
Convertible Preferred Stock		—		—	@		—			—	@
Participation Notes		—		6,282			—			6,282
Call Options Purchased		—		19			—			19
Short-Term Investment
Investment Company		4,018		—			—			4,018
Total Assets	$	68,812	$	6,301		$	510	†	$	75,623	†

@  Value is less than $500.

†  Includes one security which is valued at zero.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $18,385,000 transferred from Level 2 to Level 1.

Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015. At June 30, 2015, the Fund held a security with an approximate value of less than $500 that transferred from Level 3 to Level 2. This security was valued using significant unobservable inputs at December 31, 2014 and was valued using other significant observable inputs at June 30, 2015.

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

	Common Stock (000)			Preferred Stocks (000)		Convertible Preferred Stock (000)
Beginning Balance	$	—	†	$	382	$	—	@
Purchases		—			—		—
Sales		—			—		—
Amortization of discount		—			—		—
Transfers in		—			—		—
Transfers out		—			—		(—	@)
Corporate actions		—			—		—
Change in unrealized appreciation (depreciation)		—			128		—	@
Realized gains (losses)		—			—		—
Ending Balance	$	—	†	$	510	$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	—		$	128	$	—	@

@  Value is less than $500.

†  Includes one security which was valued at zero.

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Internet & Catalog Retail
Preferred Stocks	$	191	Market Transaction Method	Pending Precedent Transaction	$	93.38		$	93.38		$	93.38		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		15.0	%		17.0	%		16.0%		Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/Revenue		10.2	x		15.5	x		15.5x		Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
	$	319	Market Transaction Method	Issuance Price of Financing	$	119.76		$	119.76		$	119.76		Increase
				Issuance Price of Pending Financing	$	142.24		$	142.24		$	142.24		Increase

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the

underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	19	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(8	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(25	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	19	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	19	$	—	$	—	$	19

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	6,546,000

5.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

6.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

7.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

8.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

9.Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are

allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.90	%		0.85	%		0.80	%

Effective March 2, 2015, the Portfolio's annual rate based on the daily net assets was reduced and is as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.51% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.25% for Class I shares, 1.60% for Class A shares,1.65% for Class L shares and 1.18% for Class IS shares. Effective January 23, 2015, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses will not exceed 1.10% for Class I shares, 1.45% for Class A shares, 1.50% for Class L shares, 2.20% for Class C shares (effective April 30, 2015) and 1.03% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $71,000 of advisory fees were waived and approximately $1,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares. The Distributor has agreed to waive for at least one year from the date of the Portfolio's prospectus the 12b-1 fees on Class L shares of the Portfolio to the extent it exceeds 0.30% of the average daily net assets of such shares on an annualized basis. For the six months ended June 30, 2015, this waiver amounted to approximately $5,000.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the

number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $47,354,000 and $6,239,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	619	$	34,357	$	30,958	$	2	$	4,018

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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	160	$	1,020	$	25	$	1,144

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and a net operating loss, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	99	$	(101	)	$	2

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	3	$	344

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $10,075,000 and the aggregate gross unrealized depreciation is approximately $598,000 resulting in net unrealized appreciation of approximately $9,477,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 12.8% and 49.3% for Class I and Class A shares, respectively.

J. Subsequent Event: The Board of Directors of the Fund, on behalf of MSIF Opportunity Portfolio ("MSIF Opportunity"), approved an Agreement and Plan of Reorganization by and between the Fund, on behalf of MSIF Opportunity, and the Fund, on behalf of the Portfolio, pursuant to which substantially all of the assets and liabilities of MSIF Opportunity would be transferred to the Portfolio and stockholders of MSIF Opportunity would become stockholders of the Portfolio, receiving shares of common stock of the Portfolio ("Shares") equal to the value of their holdings in MSIF Opportunity (the "Reorganization"). The Reorganization is subject to the approval of stockholders of MSIF Opportunity at a special meeting of stockholders scheduled to be held during the third quarter of 2015.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGOSAN
1262687 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Infrastructure Portfolio

(formerly Select Global Infrastructure Portfolio)

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Infrastructure Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Infrastructure Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Infrastructure Portfolio Class I	$	1,000.00	$	979.90	$	1,020.03	$	4.71	*	$	4.81	*		0.96	%
Global Infrastructure Portfolio Class A		1,000.00		979.20		1,019.24		5.50	*		5.61	*		1.12
Global Infrastructure Portfolio Class L		1,000.00		975.20		1,016.31		8.37	*		8.55	*		1.71
Global Infrastructure Portfolio Class C		1,000.00		942.70		1,005.06		3.20	**		3.30	**		1.97
Global Infrastructure Portfolio Class IS		1,000.00		979.90		1,020.08		4.66	*		4.76	*		0.95

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

*** Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one- and three-year periods and the period since the end of September 2010, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which does not include breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Infrastructure Portfolio

	Shares		Value (000)
Common Stocks (98.2%)
Australia (4.7%)
DUET Group (a)		2,557,951	$	4,559
Macquarie Atlas Roads Group		1,521,584		3,733
Sydney Airport		630,470		2,423
Transurban Group		1,119,378		8,032
				18,747
Austria (2.1%)
Flughafen Wien AG		96,582		8,379
Brazil (2.0%)
Arteris SA		1,799,500		5,469
CCR SA		552,735		2,651
				8,120
Canada (13.0%)
Enbridge, Inc. (a)		587,020		27,452
Inter Pipeline Ltd. (a)		223,479		5,135
Pembina Pipeline Corp. (a)		133,532		4,316
TransCanada Corp. (a)		376,800		15,314
				52,217
China (7.3%)
China Everbright International Ltd. (b)		3,142,000		5,634
China Gas Holdings Ltd. (b)		140,000		224
ENN Energy Holdings Ltd. (b)		1,042,000		6,284
Guangdong Investment Ltd. (b)		6,010,000		8,420
Hopewell Highway Infrastructure Ltd. (b)		13,754,500		6,761
Jiangsu Expressway Co., Ltd. H Shares (b)		1,472,322		1,934
				29,257
France (4.3%)
Eutelsat Communications SA		200,001		6,455
SES SA		114,901		3,860
Vinci SA		124,220		7,185
				17,500
Italy (2.4%)
Atlantia SpA		214,656		5,303
Snam SpA		889,072		4,230
				9,533
Japan (1.0%)
Tokyo Gas Co., Ltd.		758,000		4,026
Mexico (0.1%)
Infraestructura Energetica Nova SAB de CV		116,600		576
Netherlands (0.6%)
Koninklijke Vopak N.V. (a)		45,231		2,283
Spain (2.8%)
Ferrovial SA		160,794		3,486
Red Electrica Corp., SA (a)		12,740		1,021
Saeta Yield SA		634,181		6,625
				11,132
Switzerland (1.8%)
Flughafen Zuerich AG (Registered)		9,149		7,080

	Shares		Value (000)
United Kingdom (9.3%)
John Laing Group PLC (c)(d)		2,299,848	$	7,787
National Grid PLC		1,296,612		16,649
Pennon Group PLC		356,571		4,541
Severn Trent PLC		121,350		3,968
United Utilities Group PLC		312,002		4,373
				37,318
United States (46.8%)
American Tower Corp. REIT		233,000		21,737
American Water Works Co., Inc.		54,420		2,646
Atmos Energy Corp.		102,012		5,231
Cheniere Energy, Inc. (c)		82,591		5,720
Crown Castle International Corp. REIT		246,395		19,786
Enbridge Energy Management LLC (c)		229,480		7,573
Eversource Energy		59,061		2,682
ITC Holdings Corp.		116,589		3,752
Kinder Morgan, Inc.		847,072		32,519
NiSource, Inc.		71,594		3,264
ONEOK, Inc.		103,790		4,098
Pattern Energy Group, Inc. (a)		348,978		9,904
PG&E Corp.		263,046		12,916
Plains GP Holdings LP, Class A		44,802		1,158
SBA Communications Corp., Class A (c)		56,500		6,496
SemGroup Corp., Class A		48,404		3,847
Sempra Energy		137,995		13,653
Spectra Energy Corp.		208,373		6,793
Targa Resources Corp.		23,430		2,090
TerraForm Power, Inc., Class A (c)		149,187		5,666
Union Pacific Corp.		23,660		2,256
Williams Cos., Inc. (The)		246,038		14,120
				187,907
Total Common Stocks (Cost $331,300)				394,075
Short-Term Investments (5.1%)
Securities held as Collateral on Loaned Securities (3.4%)
Investment Company (2.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		9,900,217		9,900
	Face Amount (000)
Repurchase Agreements (1.0%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $3,251; fully collateralized by various U.S. Government obligations; 0.88% - 2.00% due 2/28/17 - 10/31/21; valued at $3,316)	$	3,251		3,251
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $361; fully collateralized by various U.S. Government agency securities; 2.35% - 5.50% due 12/22/15 - 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $368)		361		361

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Infrastructure Portfolio

	Shares		Value (000)
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $487; fully collateralized by various U.S. Government obligations; Zero Coupon — 0.25% due 5/15/16 - 2/15/24; valued at $497)	$	487	$	487
				4,099
Total Securities held as Collateral on Loaned Securities (Cost $13,999)				13,999
	Shares
Investment Company (1.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $6,626)		6,626,243		6,626
Total Short-Term Investments (Cost $20,625)				20,625
Total Investments (103.3%) (Cost $351,925) Including $28,923 of Securities Loaned				414,700
Liabilities in Excess of Other Assets (-3.3%)				(13,373	)
Net Assets (100.0%)			$	401,327

(a)  All or a portion of this security was on loan at June 30, 2015.

(b)  Security trades on the Hong Kong exchange.

(c)  Non-income producing security.

(d)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

REIT  Real Estate Investment Trust.

Portfolio Composition*

Classification	Percentage of Total Investments
Oil & Gas Storage & Transportation		42.4	%
Communications		14.6
Other**		10.6
Toll Roads		10.3
Electricity Transmission & Distribution		9.2
Water		7.4
PPA Contracted Renewables		5.5
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $335,399)	$	398,174
Investment in Security of Affiliated Issuer, at Value (Cost $16,526)		16,526
Total Investments in Securities, at Value (Cost $351,925)		414,700
Foreign Currency, at Value (Cost $535)		531
Cash		254
Dividends Receivable		1,786
Receivable for Investments Sold		1,015
Receivable for Portfolio Shares Sold		969
Tax Reclaim Receivable		61
Receivable from Affiliate		—	@
Other Assets		68
Total Assets		419,384
Liabilities:
Collateral on Securities Loaned, at Value		14,253
Payable for Investments Purchased		2,516
Payable for Advisory Fees		642
Payable for Portfolio Shares Redeemed		239
Payable for Sub Transfer Agency Fees — Class I		9
Payable for Sub Transfer Agency Fees — Class A		107
Payable for Sub Transfer Agency Fees — Class L		2
Payable for Shareholder Services Fees — Class A		71
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Professional Fees		37
Payable for Custodian Fees		32
Payable for Transfer Agency Fees — Class I		3
Payable for Transfer Agency Fees — Class A		28
Payable for Transfer Agency Fees — Class L		1
Payable for Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		27
Other Liabilities		85
Total Liabilities		18,057
Net Assets	$	401,327
Net Assets Consist Of:
Paid-in-Capital	$	324,204
Accumulated Undistributed Net Investment Income		3,516
Accumulated Net Realized Gain		10,829
Unrealized Appreciation (Depreciation) on:
Investments		62,775
Foreign Currency Translations		3
Net Assets	$	401,327

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	56,269
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,727,369
Net Asset Value, Offering and Redemption Price Per Share	$	15.10
CLASS A:
Net Assets	$	337,785
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		22,446,918
Net Asset Value, Redemption Price Per Share	$	15.05
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.83
Maximum Offering Price Per Share	$	15.88
CLASS L:
Net Assets	$	7,170
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		479,315
Net Asset Value, Offering and Redemption Price Per Share	$	14.96
CLASS C:
Net Assets	$	92
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		6,121
Net Asset Value, Offering and Redemption Price Per Share	$	14.96
CLASS IS:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		728
Net Asset Value, Offering and Redemption Price Per Share	$	15.10
(1) Including: Securities on Loan, at Value:	$	28,923

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Infrastructure Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $384 of Foreign Taxes Withheld)	$	4,773
Income from Securities Loaned — Net		75
Dividends from Security of Affiliated Issuer (Note G)		2
Total Investment Income		4,850
Expenses:
Advisory Fees (Note B)		1,038
Shareholder Services Fees — Class A (Note D)		239
Distribution and Shareholder Services Fees — Class L (Note D)		17
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		98
Sub Transfer Agency Fees — Class I		10
Sub Transfer Agency Fees — Class A		56
Sub Transfer Agency Fees — Class L		1
Custodian Fees (Note F)		44
Professional Fees		44
Shareholder Reporting Fees		28
Registration Fees		27
Transfer Agency Fees — Class I (Note E)		3
Transfer Agency Fees — Class A (Note E)		19
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Directors' Fees and Expenses		4
Pricing Fees		3
Other Expenses		7
Total Expenses		1,640
Waiver of Advisory Fees (Note B)		(230	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(9	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(54	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(2	)
Net Expenses		1,343
Net Investment Income		3,507
Realized Gain:
Investments Sold		9,760
Foreign Currency Transactions		18
Net Realized Gain		9,778
Change in Unrealized Appreciation (Depreciation):
Investments		(23,276	)
Foreign Currency Translations		4
Net Change in Unrealized Appreciation (Depreciation)		(23,272	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(13,494	)
Net Decrease in Net Assets Resulting from Operations	$	(9,987	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Infrastructure Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	3,507		$	836
Net Realized Gain		9,778			3,542
Net Change in Unrealized Appreciation (Depreciation)		(23,272	)		1,321
Net Increase (Decrease) in Net Assets Resulting from Operations		(9,987	)		5,699
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(542	)
Net Realized Gain		—			(1,898	)
Class A:
Net Investment Income		—			(251	)
Net Realized Gain		—			(965	)
Class L:
Net Investment Income		—			(6	)
Net Realized Gain		—			(46	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(1	)
Total Distributions		—			(3,709	)
Capital Share Transactions:(1)
Class I:
Subscribed		17,409			13,096
Issued due to a tax-free reorganization		4,898			—
Distributions Reinvested		—			1,454
Redeemed		(5,294	)		(2,618	)
Class A:
Subscribed		3,902			24,454
Issued due to a tax-free reorganization		340,098			—
Distributions Reinvested		—			1,197
Redeemed		(18,459	)		(8,386	)
Class L:
Subscribed		234			723
Issued due to a tax-free reorganization		6,284			—
Distributions Reinvested		—			44
Redeemed		(271	)		(253	)
Class C:
Subscribed		95	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		348,896			29,711
Total Increase in Net Assets		338,909			31,701
Net Assets:
Beginning of Period		62,418			30,717
End of Period (Including Accumulated Undistributed Net Investment Income of $3,516 and $9)	$	401,327		$	62,418

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Infrastructure Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,126			845
Shares Issued due to a tax-free reorganization		316			—
Shares Issued on Distributions Reinvested		—			98
Shares Redeemed		(341	)		(170	)
Net Increase in Class I Shares Outstanding		1,101			773
Class A:
Shares Subscribed		251			1,547
Shares Issued due to a tax-free reorganization		22,027			—
Shares Issued on Distributions Reinvested		—			81
Shares Redeemed		(1,184	)		(535	)
Net Increase in Class A Shares Outstanding		21,094			1,093
Class L:
Shares Subscribed		15			46
Shares Issued due to a tax-free reorganization		409			—
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(17	)		(17	)
Net Increase in Class L Shares Outstanding		407			32
Class C:
Shares Subscribed		6	*		—

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Infrastructure Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 20, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	15.41		$	14.26		$	12.91		$	11.50		$	10.40		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.28			0.26			0.27			0.23			0.08
Net Realized and Unrealized Gain (Loss)		(0.51	)		1.87			2.00			1.82			1.42			0.40
Total from Investment Operations		(0.31	)		2.15			2.26			2.09			1.65			0.48
Distributions from and/or in Excess of:
Net Investment Income		—			(0.22	)		(0.25	)		(0.26	)		(0.22	)		(0.08	)
Net Realized Gain		—			(0.78	)		(0.66	)		(0.42	)		(0.33	)		—
Total Distributions		—			(1.00	)		(0.91	)		(0.68	)		(0.55	)		(0.08	)
Net Asset Value, End of Period	$	15.10		$	15.41		$	14.26		$	12.91		$	11.50		$	10.40
Total Return++		(2.01	)%#		15.38	%		17.91	%		18.21	%		15.95	%		4.94	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	56,269		$	40,477		$	26,428		$	15,707		$	12,589		$	10,086
Ratio of Expenses to Average Net Assets (1)		0.96	%+^^*		1.08	%+		1.12	%+		1.15	%+		1.15	%+		1.14	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.54	%+*		1.82	%+		1.87	%+		2.18	%+		2.09	%+		2.71	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		40	%		30	%		33	%		51	%		6	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.21	%*		1.42	%		2.04	%		2.39	%		2.93	%		3.61	%+*
Net Investment Income to Average Net Assets		2.29	%*		1.48	%		0.95	%		0.94	%		0.31	%		0.24	%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective March 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.87% for Class I Shares. Prior to March 30, 2015, the maximum ratio was 1.15% for Class I Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Infrastructure Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 20, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	15.38		$	14.25		$	12.90		$	11.50		$	10.40		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.23			0.24			0.26			0.24			0.21			0.07
Net Realized and Unrealized Gain (Loss)		(0.56	)		1.86			1.97			1.80			1.41			0.41
Total from Investment Operations		(0.33	)		2.10			2.23			2.04			1.62			0.48
Distributions from and/or in Excess of:
Net Investment Income		—			(0.19	)		(0.22	)		(0.22	)		(0.19	)		(0.08	)
Net Realized Gain		—			(0.78	)		(0.66	)		(0.42	)		(0.33	)		—
Total Distributions		—			(0.97	)		(0.88	)		(0.64	)		(0.52	)		(0.08	)
Net Asset Value, End of Period	$	15.05		$	15.38		$	14.25		$	12.90		$	11.50		$	10.40
Total Return++		(2.08	)%#		14.94	%		17.69	%		17.85	%		15.67	%		4.86	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	337,785		$	20,815		$	3,706		$	129		$	115		$	104
Ratio of Expenses to Average Net Assets (1)		1.12	%+^^^*		1.42	%+		1.37	%+^^		1.40	%+		1.40	%+		1.39	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.97	%+*		1.53	%+		1.81	%+		1.93	%+		1.84	%+		2.46	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		40	%		30	%		33	%		51	%		6	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.36	%*		1.76	%		2.43	%		2.64	%		3.18	%		3.86	%+*
Net Investment Income (Loss) to Average Net Assets		2.73	%*		1.19	%		0.75	%		0.69	%		0.06	%		(0.01	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.50% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.40% for Class A shares.

^^^  Effective March 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.11% for Class A Shares. Prior to March 30, 2015, the maximum ratio was 1.50% for Class A Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Infrastructure Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from September 20, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	15.34		$	14.22		$	12.90		$	11.50		$	10.40		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.17			0.14			0.16			0.18			0.15			0.06
Net Realized and Unrealized Gain (Loss)		(0.55	)		1.87			1.98			1.80			1.42			0.40
Total from Investment Operations		(0.38	)		2.01			2.14			1.98			1.57			0.46
Distributions from and/or in Excess of:
Net Investment Income		—			(0.11	)		(0.16	)		(0.16	)		(0.14	)		(0.06	)
Net Realized Gain		—			(0.78	)		(0.66	)		(0.42	)		(0.33	)		—
Total Distributions		—			(0.89	)		(0.82	)		(0.58	)		(0.47	)		(0.06	)
Net Asset Value, End of Period	$	14.96		$	15.34		$	14.22		$	12.90		$	11.50		$	10.40
Total Return++		(2.48	)%#		14.35	%		16.98	%		17.31	%		15.12	%		4.72	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,170		$	1,115		$	573		$	129		$	115		$	104
Ratio of Expenses to Average Net Assets (1)		1.71	%+^^^*		2.00	%+		1.93	%+^^		1.90	%+		1.90	%+		1.89	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.24	%+*		0.91	%+		1.16	%+		1.43	%+		1.34	%+		1.96	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		40	%		30	%		33	%		51	%		6	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.93	%*		2.41	%		2.86	%		3.14	%		3.68	%		4.36	%+*
Net Investment Income (Loss) to Average Net Assets		2.02	%*		0.50	%		0.23	%		0.19	%		(0.44	)%		(0.51	)%+*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.00% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.90% for Class L shares.

^^^  Effective March 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.68% for Class L Shares. Prior to March 30, 2015, the maximum ratio was 2.00% for Class L Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Infrastructure Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	15.87
Income (Loss) from Investment Operations:
Net Investment Income†		0.09
Net Realized and Unrealized Loss		(1.00	)
Total from Investment Operations		(0.91	)
Net Asset Value, End of Period	$	14.96
Total Return++		(5.73	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	92
Ratio of Expenses to Average Net Assets (1)		1.97	%+*
Ratio of Net Investment Income to Average Net Assets (1)		3.46	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		23	%#
(1) Expense to Average Net Assets		4.18%*
Net Investment Income to Average Net Assets		1.25	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Infrastructure Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	15.41		$	14.26		$	13.73
Income (Loss) from Investment Operations:
Net Investment Income†		0.19			0.28			0.09
Net Realized and Unrealized Gain (Loss)		(0.50	)		1.87			1.20
Total from Investment Operations		(0.31	)		2.15			1.29
Distributions from and/or in Excess of:
Net Investment Income		—			(0.22	)		(0.25	)
Net Realized Gain		—			(0.78	)		(0.51	)
Total Distributions		—			(1.00	)		(0.76	)
Net Asset Value, End of Period	$	15.10		$	15.41		$	14.26
Total Return++		(2.01	)%#		15.38	%		9.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	11		$	11		$	10
Ratio of Expenses to Average Net Assets (1)		0.95	%+^^^*		1.08	%+		1.07	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		2.40	%+*		1.79	%+		2.13	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		40	%		30	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		19.36	%*		18.56	%		7.27	%*
Net Investment Loss to Average Net Assets		(16.01	)%*		(15.69	)%		(4.07	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.08% for Class IS shares.

^^^  Effective March 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.84% for Class IS Shares. Prior to March 30, 2015, the maximum ratio was 1.08% for Class IS Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Infrastructure Portfolio (formerly Select Global Infrastructure Portfolio). The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek to provide both capital appreciation and income by investing primarily in equity securities issued by companies located throughout the world that are engaged in the infrastructure business. Using internal proprietary research, the Adviser seeks to identify public infrastructure companies that are believed to offer the best value relative to their underlying assets and growth prospects.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

On March 30, 2015, the Portfolio acquired the net assets of Morgan Stanley Global Infrastructure Fund ("Global Infrastructure Fund"), an open-end investment company, based on the respective valuations as of the close of business on March 27, 2015, pursuant to a Plan of Reorganization approved by the shareholders of Global Infrastructure Fund on February 27, 2015 ("Reorganization"). The purpose of the transaction was to combine two portfolios managed by the Adviser with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of 316,431 Class I shares of the Portfolio at a net asset value of $15.48 for 679,771 Class I shares of Global Infrastructure Fund; 22,027,075 Class A shares of the Portfolio at a net asset value of $15.44 for 12,300,653 Class A shares, 152,892 Class B shares and 33,435,791 Class Q shares of Global Infrastructure Fund; 408,846 Class L shares of the Portfolio at a net asset value of $15.37 for 848,685 Class L shares of Global Infrastructure Fund; The net assets of Global Infrastructure Fund before the Reorganization were approximately

$351,280,000, including unrealized appreciation of approximately $79,957,000 at March 27, 2015. The investment portfolio of Global Infrastructure Fund, with a fair value of approximately $350,947,000 and identified cost of approximately $270,989,000 on March 27, 2015, was the principal asset acquired by the Portfolio. For financial reporting purposes, assets received and shares issued by the Portfolio were recorded at fair value; however, the cost basis of the investments received from Global Infrastructure Fund was carried forward to align ongoing reporting of the Portfolio's realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes. Immediately prior to the Reorganization, the net assets of the Portfolio were approximately $67,309,000. Immediately after the Reorganization, the net assets of the Portfolio were approximately $418,700,000.

Upon closing of the Reorganization, shareholders of Global Infrastructure Fund received shares of the Portfolio as follows:

Global Infrastructure Fund	MSIF Global Infrastructure Portfolio
Class I	Class I
Class A	Class A
Class B	Class A
Class Q	Class A
Class L	Class L

Assuming the acquisition had been completed on January 1, 2015, the beginning of the annual reporting period of the Portfolio, the Portfolio's pro forma results of operations for the period ended June 30, 2015, are as follows:

Net investment income(1)	$	6,665,000
Net realized gain and unrealized gain/loss(2)	$	(691,000	)
Net increase (decrease) in net assets resulting from operations	$	5,974,000

(1) Approximately $3,507,000 as reported, plus approximately $2,099,000 Global Infrastructure Fund prior to the Reorganization, plus approximately $1,059,000 of estimated pro-forma eliminated expenses.

(2) Approximately $(13,494,000) as reported, plus approximately $12,803,000 Global Infrastructure Fund prior to the Reorganization.

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Global Infrastructure Fund that have been included in the Portfolio's Statement of Operations since March 30, 2015.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in

which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Airports	$	17,882	$	—	$	—	$	17,882
Communications		58,334		—		—		58,334
Diversified		15,832		—		—		15,832
Electricity Transmission & Distribution		37,020		—		—		37,020
Oil & Gas Storage & Transportation		169,906		—		—		169,906
PPA Contracted Renewables		22,195		—		—		22,195
Railroads		2,256		—		—		2,256
Toll Roads		41,068		—		—		41,068
Water		29,582		—		—		29,582
Total Common Stocks		394,075		—		—		394,075
Short-Term Investments
Investment Company		16,526		—		—		16,526
Repurchase Agreements		—		4,099		—		4,099
Total Short-Term Investments		16,526		4,099		—		20,625
Total Assets	$	410,601	$	4,099	$	—	$	414,700

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $133,269,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received,

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities

transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	28,923	(a)	$	—	$	(28,923	)(b)(c)	$	0

(a) Represents market value of loaned securities at period end.

(b) The Portfolio received cash collateral of approximately $14,253,000, of which approximately $13,999,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $254,000, which is not reflected in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $16,440,000 in the form of a U.S. Government agency security and U.S. Government obligations, which the Portfolio cannot sell or repledge, and accordingly are not reflected in the Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net

investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at an annual rate of 0.85% of the daily net assets of the Portfolio.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.15% for Class I shares, 1.50% for Class A shares, 2.00% for Class L shares and 1.08% for Class IS shares. Effective March 30, 2015, pursuant to the Reorganization, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses will not exceed 0.87% for Class I shares, 1.11% for Class A

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

shares, 1.68% for Class L shares, 1.97% for Class C (effective April 30, 2015) shares and 0.84% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least two years from the date of the Reorganization or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $230,000 of advisory fees were waived and approximately $65,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly,

at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $65,177,000 and $59,038,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

six months ended June 30, 2015, advisory fees paid were reduced by approximately $2,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	9,409	$	62,806	$	55,689	$	2	$	16,526

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended

December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	941	$	2,768	$	573	$	1,276

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(27	)	$	27	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	9	$	1,120

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $66,472,000 and the aggregate gross unrealized depreciation is approximately $3,697,000 resulting in net unrealized appreciation of approximately $62,775,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	8

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 35.0% for Class I shares.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISGISAN
1260912 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Advantage Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	12
Notes to Financial Statements	16
U.S. Privacy Policy	24
Director and Officer Information	27

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Advantage Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Advantage Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Advantage Portfolio Class I	$	1,000.00	$	1,050.20	$	1,019.24	$	5.69	*	$	5.61	*		1.12	%
Global Advantage Portfolio Class A		1,000.00		1,048.00		1,017.50		7.46	*		7.35	*		1.47
Global Advantage Portfolio Class L		1,000.00		1,045.40		1,015.03		9.99	*		9.84	*		1.97
Global Advantage Portfolio Class C		1,000.00		986.50		1,004.68		3.65	**		3.69	**		2.20

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the actual days in year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three-year period and the period since the end of December 2010, the month of the Portfolio's inception, but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Advantage Portfolio

	Shares		Value (000)
Common Stocks (99.2%)
Brazil (1.7%)
MercadoLibre, Inc.		332	$	47
Qualicorp SA		5,045		32
				79
Canada (4.7%)
Fairfax Financial Holdings Ltd.		131		65
Valeant Pharmaceuticals International, Inc. (a)		715		159
				224
China (4.8%)
Alibaba Group Holding Ltd. ADR (a)		1,670		137
JD.com, Inc. ADR (a)		2,622		90
				227
France (9.3%)
Christian Dior SE		1,085		212
Edenred		4,134		102
Eurazeo SA		1,576		104
Hermes International		59		22
				440
Hong Kong (2.6%)
L'Occitane International SA		42,250		121
Italy (2.9%)
Moncler SpA		7,521		139
Japan (4.0%)
Calbee, Inc.		3,000		127
FANUC Corp.		300		61
				188
Korea, Republic of (2.5%)
NAVER Corp.		209		119
Netherlands (1.0%)
OCI N.V. (a)		1,743		49
Singapore (1.5%)
Jardine Matheson Holdings Ltd.		1,240		70
South Africa (5.8%)
Naspers Ltd., Class N		1,311		204
SABMiller PLC		1,368		71
				275
Switzerland (3.9%)
Nestle SA ADR		2,538		183
United Arab Emirates (0.2%)
Orascom Construction Ltd. (a)		871		11
United Kingdom (4.8%)
Diageo PLC ADR		646		75
Intertek Group PLC		1,203		46
Manchester United PLC, Class A (a)		5,900		106
				227

	Shares		Value (000)
United States (49.5%)
Amazon.com, Inc. (a)		827	$	359
Anheuser-Busch InBev N.V. ADR		776		94
Apple, Inc.		811		102
Berkshire Hathaway, Inc., Class B (a)		527		72
Costco Wholesale Corp.		452		61
Facebook, Inc., Class A (a)		3,983		342
Google, Inc., Class C (a)		315		164
Keurig Green Mountain, Inc.		601		46
LinkedIn Corp., Class A (a)		476		98
Mastercard, Inc., Class A		1,051		98
McGraw Hill Financial, Inc.		915		92
Mead Johnson Nutrition Co.		1,236		111
Starbucks Corp.		2,062		111
Thermo Fisher Scientific, Inc.		502		65
Twitter, Inc. (a)		4,374		158
Visa, Inc., Class A		930		62
Walgreens Boots Alliance, Inc.		1,397		118
Walt Disney Co. (The)		648		74
Zoetis, Inc.		2,438		118
				2,345
Total Common Stocks (Cost $3,952)				4,697
	Notional Amount
Call Options Purchased (0.1%)
Foreign Currency Options (0.1%)
USD/CNY June 2016 @ CNY 6.70		630,774		2
USD/CNY November 2015 @ CNY 6.65		739,759		—	@
Total Call Options Purchased (Cost $5)				2
	Shares
Short-Term Investment (0.0%)
Investment Company (0.0%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $2)		2,215		2
Total Investments (99.3%) (Cost $3,959)				4,701
Other Assets in Excess of Liabilities (0.7%)				35
Net Assets (100.0%)			$	4,736

(a)  Non-income producing security.

@  Value is less than $500.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Advantage Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		25.1	%
Internet Software & Services		22.7
Food Products		9.9
Internet & Catalog Retail		9.5
Media		8.2
Textiles, Apparel & Luxury Goods		7.9
Pharmaceuticals		5.9
Diversified Financial Services		5.7
Beverages		5.1
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $3,957)	$	4,699
Investment in Security of Affiliated Issuer, at Value (Cost $2)		2
Total Investments in Securities, at Value (Cost $3,959)		4,701
Foreign Currency, at Value (Cost $3)		3
Due from Adviser		34
Receivable for Investments Sold		7
Dividends Receivable		1
Receivable from Affiliate		—	@
Other Assets		48
Total Assets		4,794
Liabilities:
Payable for Professional Fees		21
Payable for Portfolio Shares Redeemed		18
Payable for Custodian Fees		9
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Administration Fees		—	@
Other Liabilities		10
Total Liabilities		58
Net Assets	$	4,736
Net Assets Consist Of:
Paid-in-Capital	$	3,889
Accumulated Undistributed Net Investment Income		25
Accumulated Net Realized Gain		80
Unrealized Appreciation (Depreciation) on:
Investments		742
Foreign Currency Translations		(—	@)
Net Assets	$	4,736

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	3,469
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		259,346
Net Asset Value, Offering and Redemption Price Per Share	$	13.38
CLASS A:
Net Assets	$	833
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		62,577
Net Asset Value, Redemption Price Per Share	$	13.31
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.74
Maximum Offering Price Per Share	$	14.05
CLASS L:
Net Assets	$	410
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		31,240
Net Asset Value, Offering and Redemption Price Per Share	$	13.13
CLASS C:
Net Assets	$	24
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,806
Net Asset Value, Offering and Redemption Price Per Share	$	13.12

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $3 of Foreign Taxes Withheld)	$	44
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		44
Expenses:
Professional Fees		46
Advisory Fees (Note B)		19
Registration Fees		15
Custodian Fees (Note F)		12
Shareholder Reporting Fees		3
Pricing Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		2
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		9
Total Expenses		114
Expenses Reimbursed by Adviser (Note B)		(65	)
Waiver of Advisory Fees (Note B)		(19	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		27
Net Investment Income		17
Realized Gain:
Investments Sold		5
Foreign Currency Transactions		(—	@)
Net Realized Gain		5
Change in Unrealized Appreciation (Depreciation):
Investments		177
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		177
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		182
Net Increase in Net Assets Resulting from Operations	$	199

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	17		$	13
Net Realized Gain		5			272
Net Change in Unrealized Appreciation (Depreciation)		177			(258	)
Net Increase in Net Assets Resulting from Operations		199			27
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(2	)
Net Realized Gain		—			(221	)
Class A:
Net Investment Income		—			(1	)
Net Realized Gain		—			(58	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(24	)
Total Distributions		—			(306	)
Capital Share Transactions:(1)
Class I:
Subscribed		498			1,143
Distributions Reinvested		—			176
Redeemed		(355	)		(805	)
Class A:
Subscribed		35			500
Distributions Reinvested		—			41
Redeemed		(30	)		(378	)
Class L:
Subscribed		128			108
Distributions Reinvested		—			15
Redeemed		(72	)		(15	)
Class C:
Subscribed		24	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		228			785
Total Increase in Net Assets		427			506
Net Assets:
Beginning of Period		4,309			3,803
End of Period (Including Accumulated Undistributed Net Investment Income of $25 and $8)	$	4,736		$	4,309
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		38			84
Shares Issued on Distributions Reinvested		—			14
Shares Redeemed		(28	)		(60	)
Net Increase in Class I Shares Outstanding		10			38
Class A:
Shares Subscribed		3			37
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(3	)		(28	)
Net Increase in Class A Shares Outstanding		—	@@		12
Class L:
Shares Subscribed		9			8
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(5	)		(1	)
Net Increase in Class L Shares Outstanding		4			8
Class C:
Shares Subscribed		2	*		—

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Advantage Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.74		$	13.57		$	11.37		$	9.97		$	10.01		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			0.05			0.04			0.16			0.06			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.59			0.04			3.27			2.12			(0.03	)		0.01
Total from Investment Operations		0.64			0.09			3.31			2.28			0.03			0.01
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.08	)		(0.12	)		(0.07	)		—
Net Realized Gain		—			(0.91	)		(1.03	)		(0.76	)		—			—
Total Distributions		—			(0.92	)		(1.11	)		(0.88	)		(0.07	)		—
Net Asset Value, End of Period	$	13.38		$	12.74		$	13.57		$	11.37		$	9.97		$	10.01
Total Return++		5.02	%#		0.83	%		29.71	%		22.83	%		0.34	%		0.10	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,469		$	3,181		$	2,868		$	1,129		$	1,603		$	701
Ratio of Expenses to Average Net Assets (1)		1.12	%+^^*		1.30	%+		1.29	%+		1.30	%+		1.30	%+		1.30	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.80	%+*		0.40	%+		0.29	%+		1.39	%+		0.57	%+		(1.10	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		24	%#		46	%		57	%		63	%		42	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.82	%*		5.31	%		8.07	%		7.28	%		7.31	%		245.42	%*
Net Investment Loss to Average Net Assets		(2.90	)%*		(3.61	)%		(6.49	)%		(4.59	)%		(5.44	)%		(245.22	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.10% for Class I Shares. Prior to January 23, 2015, the maximum ratio was 1.30% for Class I Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Advantage Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.70		$	13.57		$	11.36		$	9.97		$	10.01		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			0.01			(0.04	)		0.13			0.03			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.58			0.04			3.31			2.11			(0.02	)		0.01
Total from Investment Operations		0.61			0.05			3.27			2.24			0.01			0.01
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.03	)		(0.09	)		(0.05	)		—
Net Realized Gain		—			(0.91	)		(1.03	)		(0.76	)		—			—
Total Distributions		—			(0.92	)		(1.06	)		(0.85	)		(0.05	)		—
Net Asset Value, End of Period	$	13.31		$	12.70		$	13.57		$	11.36		$	9.97		$	10.01
Total Return++		4.80	%#		0.46	%		29.48	%		22.44	%		0.07	%		0.10	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	833		$	790		$	681		$	114		$	100		$	100
Ratio of Expenses to Average Net Assets (1)		1.47	%+^^^*		1.65	%+		1.60	%+^^		1.55	%+		1.55	%+		1.55	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.45	%+*		0.05	%+		(0.35	)%+		1.14	%+		0.32	%+		(1.35	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		24	%#		46	%		57	%		63	%		42	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.31	%*		5.79	%		8.43	%		7.53	%		7.56	%		245.67	%*
Net Investment Loss to Average Net Assets		(3.39	)%*		(4.09	)%		(7.18	)%		(4.84	)%		(5.69	)%		(245.47	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.65% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.55% for Class A shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.45% for Class A Shares. Prior to January 23, 2015, the maximum ratio was 1.65% for Class A Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Advantage Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.56		$	13.50		$	11.35		$	9.96		$	10.01		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.00	)‡		(0.06	)		(0.09	)		0.07			(0.02	)		(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.57			0.04			3.28			2.11			(0.02	)		0.01
Total from Investment Operations		0.57			(0.02	)		3.19			2.18			(0.04	)		0.01
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.01	)		(0.03	)		(0.01	)		—
Net Realized Gain		—			(0.91	)		(1.03	)		(0.76	)		—			—
Total Distributions		—			(0.92	)		(1.04	)		(0.79	)		(0.01	)		—
Net Asset Value, End of Period	$	13.13		$	12.56		$	13.50		$	11.35		$	9.96		$	10.01
Total Return++		4.54	%#		(0.07	)%		28.78	%		21.89	%		(0.44	)%		0.10	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	410		$	338		$	254		$	113		$	100		$	100
Ratio of Expenses to Average Net Assets (1)		1.97	%+^^^*		2.15	%+		2.09	%+^^		2.05	%+		2.05	%+		2.05	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.03	)%+*		(0.45	)%+		(0.71	)%+		0.64	%+		(0.18	)%+		(1.85	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		24	%#		46	%		57	%		63	%		42	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.92	%*		6.55	%		9.07	%		8.03	%		8.06	%		246.17	%*
Net Investment Loss to Average Net Assets		(3.98	)%*		(4.85	)%		(7.69	)%		(5.34	)%		(6.19	)%		(245.97	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.15% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.05% for Class L shares.

^^^  Effective January 23, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.95% for Class L Shares. Prior to January 23, 2015, the maximum ratio was 2.15% for Class L Share.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015 to June 30, 2015^ (unaudited)
Net Asset Value, Beginning of Period	$	13.30
Loss from Investment Operations:
Net Investment Loss†		(0.02	)
Net Realized and Unrealized Loss		(0.16	)
Total from Investment Operations		(0.18	)
Net Asset Value, End of Period	$	13.12
Total Return++		(1.35	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	24
Ratios of Expenses to Average Net Assets (1)		2.20	%*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.98	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		24	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		11.73	%*
Net Investment Loss to Average Net Assets		(10.51	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Advantage Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established companies located throughout the world, with capitalizations within the range of companies included in the MSCI All Country World Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Fund's Board of Directors (the

"Directors") or quotes from a broker or dealer; (4) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	240	$	—	$	—	$	240
Chemicals		49		—		—		49
Commercial Services & Supplies		102		—		—		102
Construction & Engineering		11		—		—		11
Diversified Financial Services		268		—		—		268
Food & Staples Retailing		179		—		—		179
Food Products		467		—		—		467
Health Care Providers & Services		32		—		—		32
Hotels, Restaurants & Leisure		111		—		—		111

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Industrial Conglomerates	$	70	$	—	$	—	$	70
Information Technology Services		160		—		—		160
Insurance		65		—		—		65
Internet & Catalog Retail		449		—		—		449
Internet Software & Services		1,065		—		—		1,065
Life Sciences Tools & Services		65		—		—		65
Machinery		61		—		—		61
Media		384		—		—		384
Pharmaceuticals		277		—		—		277
Professional Services		46		—		—		46
Specialty Retail		121		—		—		121
Tech Hardware, Storage & Peripherals		102		—		—		102
Textiles, Apparel & Luxury Goods		373		—		—		373
Total Common Stocks		4,697		—		—		4,697
Call Options Purchased		—		2		—		2
Short-Term Investment
Investment Company		2		—		—		2
Total Assets	$	4,699	$	2	$	—	$	4,701

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $1,164,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held

at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result,

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	2	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(2	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(3	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	2	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of

default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	2	$	—	$	—	$	2

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	1,545,000

5.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

pursuant to these contracts and expects the risk of loss to be remote.

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.90	%		0.85	%

Effective March 2, 2015, the Portfolio's annual rate based on the daily net assets was reduced and is as follows:

First $1 billion			Over $1 billion
	0.80	%		0.75	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.30% for Class I shares, 1.65% for Class A shares and 2.15% for Class L shares. Effective January 23, 2015, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses will not exceed 1.10% for Class I shares, 1.45% for Class A shares, 1.95% for Class L shares and 2.20% for Class C shares (effective April 30, 2015). The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $19,000 of advisory fees were waived and approximately $68,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee,

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $1,383,000 and $1,072,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were

reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	107	$	825	$	930	$	—	@	$	2

@ Amount is less than $500.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	58	$	248	$	107	$	162

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	8	$	(8	)	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	7	$	86

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $883,000 and the aggregate gross unrealized depreciation is approximately $141,000 resulting in net unrealized appreciation of approximately $742,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 42.7% for Class A shares.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

27

(This Page has been left blank intentionally.)

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGASAN
1259846 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Discovery Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	17
U.S. Privacy Policy	27
Director and Officer Information	30

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Discovery Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Discovery Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Discovery Portfolio Class I	$	1,000.00	$	1,045.20	$	1,018.15	$	6.80	*	$	6.71	*		1.34	%
Global Discovery Portfolio Class A		1,000.00		1,043.30		1,016.41		8.56	*		8.45	*		1.69
Global Discovery Portfolio Class L		1,000.00		1,041.50		1,013.93		11.09	*		10.94	*		2.19
Global Discovery Portfolio Class C		1,000.00		995.50		1,004.26		4.09	**		4.10	**		2.45

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three-year period and the period since the end of December 2010, the month of the Portfolio's inception, but lower than its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's contractual management fee was higher but close to its peer group average. The Board also noted that while the Portfolio's actual management fee was lower than its peer group average, its total expense ratio was higher but close to its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Discovery Portfolio

	Shares		Value (000)
Common Stocks (86.9%)
Brazil (2.3%)
JHSF Participacoes SA		238,156	$	143
Ouro Fino Saude Animal Participacoes SA		11,212		116
				259
Canada (1.5%)
Second Cup Ltd. (The) (a)		55,864		170
China (2.0%)
Jumei International Holding Ltd. ADR (a)		10,036		229
France (15.3%)
Christian Dior SE		4,586		895
Edenred		17,064		422
Eurazeo SA		6,004		397
				1,714
Germany (1.4%)
windeln.de AG (a)(b)		3,690		48
Zalando SE (a)(b)		3,218		107
				155
Greece (1.4%)
Titan Cement Co., SA (Preference) (a)		15,136		155
Hong Kong (2.0%)
L'Occitane International SA		76,500		218
Italy (2.0%)
Tamburi Investment Partners SpA		56,850		219
Netherlands (3.5%)
Koninklijke Philips N.V.		15,199		387
Sweden (1.8%)
Investment AB Kinnevik		6,375		202
United Kingdom (2.1%)
Just Eat PLC (a)		36,886		236
United States (51.6%)
Babcock & Wilcox Co. (The)		44,781		1,378
Castlight Health, Inc., Class B (a)(c)		9,142		74
Cosan Ltd., Class A		31,272		193
Dropbox, Inc. (a)(d)(e)(f) (acquisition cost — $25; acquired 5/1/12)		2,743		51
eBay, Inc. (a)		7,648		461
Fox Factory Holding Corp. (a)		14,086		227
Garmin Ltd.		4,174		183
Leucadia National Corp.		9,330		227
Manitowoc Co., Inc. (The)		62,905		1,233
New Relic, Inc. (a)(c)		537		19
Pandora Media, Inc. (a)		5,456		85
Progressive Corp. (The)		16,489		459
Rayonier Advanced Materials, Inc.		6,401		104
RenaissanceRe Holdings Ltd.		4,603		467
Solera Holdings, Inc.		8,337		371
Workday, Inc., Class A (a)		555		42
zulily, Inc., Class A (a)(c)		14,926		195
				5,769
Total Common Stocks (Cost $10,137)				9,713

	Shares		Value (000)
Preferred Stocks (6.7%)
India (2.4%)
Flipkart Online Services Pvt Ltd. Series D (a)(d)(e)(f) (acquisition cost — $44; acquired 10/4/13)		1,910	$	272
United States (4.3%)
Airbnb, Inc. Series D (a)(d)(e)(f) (acquisition cost — $78; acquired 4/16/14)		1,917		162
Blue Bottle Coffee, Inc. Series B (a)(d)(e)(f) (acquisition cost — $56; acquirred 1/24/14)		3,945		131
DOMO, Inc. (a)(d)(e)(f) (acquisition cost — $37; acquired 1/31/14 — 2/7/14)		9,082		77
Lookout, Inc. Series F (a)(d)(e)(f) (acquisition cost — $73; acquired 6/17/14)		6,374		51
Palantir Technologies, Inc. Series G (a)(d)(e)(f) (acquisition cost — $9; acquired 7/19/12)		2,935		25
Palantir Technologies, Inc. Series H (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572		14
Palantir Technologies, Inc. Series H1 (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572		14
				474
Total Preferred Stocks (Cost $309)				746
Convertible Preferred Stock (0.0%)
United States (0.0%)
Dropbox, Inc. Series A (a)(d)(e)(f) (acquisition cost — $3; acquired 5/25/12) (Cost $3)		277		5
	Notional Amount
Call Option Purchased (2.5%)
United States (2.5%)
Intuitive Surgical, Inc. January 2016 @ $300 (Cost $162)		15		280
	Shares
Short-Term Investments (8.0%)
Securities held as Collateral on Loaned Securities (2.6%)
Investment Company (1.8%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		204,591		205
	Face Amount (000)
Repurchase Agreements (0.8%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $67; fully collateralized by various U.S. Government obligations; 0.88% — 2.00% due 2/28/17 — 10/31/21; valued at $69)	$	67		67
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $7; fully collateralized by various U.S. Government agency securities; 2.35% — 5.50% due 12/22/15 — 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $8)		7		7

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Discovery Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (cont'd)
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $10; fully collateralized by various U.S. Government obligations; Zero Coupon — 0.25% due 5/15/16 — 2/15/24; valued at $10)	$	10	$	10
				84
Total Securities held as Collateral on Loaned Securities (Cost $289)				289
	Shares
Investment Company (5.4%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $605)		605,265		605
Total Short-Term Investments (Cost $894)				894
Total Investments (104.1%) (Cost $11,505) Including $288 of Securities Loaned				11,638
Liabilities in Excess of Other Assets (-4.1%)				(460	)
Net Assets (100.0%)			$	11,178

(a)  Non-income producing security.

(b)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(c)  All or a portion of this security was on loan at June 30, 2015.

(d)  Security has been deemed illiquid at June 30, 2015.

(e)  Security cannot be offered for public resale without first being registered under the Securities Act of 1933 and related rules ("restricted security"). Acquisition date represents the day on which an enforceable right to acquire such security is obtained and is presented along with related cost in the security description. The Portfolio has registration rights for certain restricted securities. Any costs related to such registration are borne by the issuer. The aggregate value of restricted securities (excluding 144A holdings) at June 30, 2015 amounts to approximately $802,000 and represents 7.2% of net assets.

(f)  At June 30, 2015, the Portfolio held fair valued securities valued at approximately $802,000, representing 7.2% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Directors.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		26.6	%
Electrical Equipment		12.1
Machinery		10.9
Internet & Catalog Retail		8.9
Insurance		8.2
Textiles, Apparel & Luxury Goods		7.9
Internet Software & Services		7.6
Diversified Financial Services		7.3
Short-Term Investment		5.3
Software		5.2
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $10,695)	$	10,828
Investment in Security of Affiliated Issuer, at Value (Cost $810)		810
Total Investments in Securities, at Value (Cost $11,505)		11,638
Foreign Currency, at Value (Cost $8)		8
Cash		7
Receivable for Investments Sold		242
Due from Adviser		10
Dividends Receivable		5
Tax Reclaim Receivable		3
Receivable from Affiliate		—	@
Other Assets		50
Total Assets		11,963
Liabilities:
Payable for Investments Purchased		447
Collateral on Securities Loaned, at Value		295
Payable for Professional Fees		21
Payable for Portfolio Shares Redeemed		8
Payable for Custodian Fees		3
Payable for Administration Fees		1
Payable for Shareholder Services Fees — Class A		1
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
Other Liabilities		9
Total Liabilities		785
Net Assets	$	11,178
Net Assets Consist Of:
Paid-in-Capital	$	11,050
Distributions in Excess of Net Investment Income		(1	)
Accumulated Net Realized Loss		(4	)
Unrealized Appreciation (Depreciation) on:
Investments		133
Foreign Currency Translations		(—	@)
Net Assets	$	11,178

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	7,302
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		657,764
Net Asset Value, Offering and Redemption Price Per Share	$	11.10
CLASS A:
Net Assets	$	3,635
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		328,097
Net Asset Value, Redemption Price Per Share	$	11.08
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.61
Maximum Offering Price Per Share	$	11.69
CLASS L:
Net Assets	$	231
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		20,924
Net Asset Value, Offering and Redemption Price Per Share	$	11.03
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		903
Net Asset Value, Offering and Redemption Price Per Share	$	11.03
(1) Including: Securities on Loan, at Value:	$	288

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Discovery Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $6 of Foreign Taxes Withheld)	$	142
Income from Securities Loaned — Net		17
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		160
Expenses:
Professional Fees		49
Advisory Fees (Note B)		48
Registration Fees		15
Custodian Fees (Note F)		8
Shareholder Services Fees — Class A (Note D)		4
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		4
Shareholder Reporting Fees		3
Pricing Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		1
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		7
Total Expenses		146
Waiver of Advisory Fees (Note B)		(48	)
Expenses Reimbursed by Adviser (Note B)		(17	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		79
Net Investment Income		81
Realized Gain (Loss):
Investments Sold		233
Foreign Currency Transactions		(2	)
Net Realized Gain		231
Change in Unrealized Appreciation (Depreciation):
Investments		118
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		118
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		349
Net Increase in Net Assets Resulting from Operations	$	430

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Discovery Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	81		$	396
Net Realized Gain		231			580
Net Change in Unrealized Appreciation (Depreciation)		118			(1,311	)
Net Increase (Decrease) in Net Assets Resulting from Operations		430			(335	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(295	)
Net Realized Gain		—			(1,086	)
Paid-in-Capital		—			(151	)
Class A:
Net Investment Income		—			(123	)
Net Realized Gain		—			(473	)
Paid-in-Capital		—			(68	)
Class L:
Net Investment Income		—			(8	)
Net Realized Gain		—			(37	)
Paid-in-Capital		—			(6	)
Total Distributions		—			(2,247	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,778			2,992
Distributions Reinvested		—			1,334
Redeemed		(1,176	)		(4,608	)
Class A:
Subscribed		824			3,257
Distributions Reinvested		—			600
Redeemed		(295	)		(1,615	)
Class L:
Subscribed		56			8
Distributions Reinvested		—			25
Redeemed		(61	)		(16	)
Class C:
Subscribed		10	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		1,136			1,977
Total Increase (Decrease) in Net Assets		1,566			(605	)
Net Assets:
Beginning of Period		9,612			10,217
End of Period (Including Distributions in Excess of Net Investment Income of $(1) and $(82))	$	11,178		$	9,612

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Discovery Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		164			220
Shares Issued on Distributions Reinvested		—			120
Shares Redeemed		(111	)		(355	)
Net Increase (Decrease) in Class I Shares Outstanding		53			(15	)
Class A:
Shares Subscribed		76			246
Shares Issued on Distributions Reinvested		—			54
Shares Redeemed		(27	)		(127	)
Net Increase in Class A Shares Outstanding		49			173
Class L:
Shares Subscribed		5			1
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(5	)		(1	)
Net Increase (Decrease) in Class L Shares Outstanding		(—	@@)		2
Class C:
Shares Subscribed		1	*		—

*  For the period April 30, 2015 through June 30, 2015.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Discovery Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.62		$	13.70		$	11.11		$	9.06		$	9.97		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.09			0.48			(0.01	)		0.25			0.13			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.39			(0.77	)		4.43			2.62			(0.92	)		(0.03	)
Total from Investment Operations		0.48			(0.29	)		4.42			2.87			(0.79	)		(0.03	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.55	)		(0.07	)		(0.30	)		(0.12	)		—
Net Realized Gain		—			(1.95	)		(1.76	)		(0.52	)		(0.00	)‡		—
Paid-in-Capital		—			(0.29	)		—			—			—			—
Total Distributions		—			(2.79	)		(1.83	)		(0.82	)		(0.12	)		—
Net Asset Value, End of Period	$	11.10		$	10.62		$	13.70		$	11.11		$	9.06		$	9.97
Total Return++		4.52	%#		(1.96	)%		40.72	%		31.64	%		(7.72	)%		(0.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,302		$	6,421		$	8,493		$	3,432		$	2,446		$	697
Ratio of Expenses to Average Net Assets (1)		1.34	%+*		1.34	%+		1.34	%+		1.35	%+		1.35	%+		1.35	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.68	%+*		3.70	%+		(0.07	)%+		2.41	%+		1.39	%+		(1.14	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		40	%#		84	%		100	%		96	%		83	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.62	%*		2.65	%		3.65	%		4.33	%		5.52	%		238.14	%*
Net Investment Income (Loss) to Average Net Assets		0.40	%*		2.39	%		(2.38	)%		(0.57	)%		(2.78	)%		(237.93	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Discovery Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.62		$	13.69		$	11.11		$	9.07		$	9.97		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.07			0.44			(0.09	)		0.22			0.12			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.39			(0.76	)		4.47			2.62			(0.92	)		(0.03	)
Total from Investment Operations		0.46			(0.32	)		4.38			2.84			(0.80	)		(0.03	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.51	)		(0.04	)		(0.28	)		(0.10	)		—
Net Realized Gain		—			(1.95	)		(1.76	)		(0.52	)		(0.00	)‡		—
Paid-in-Capital		—			(0.29	)		—			—			—			—
Total Distributions		—			(2.75	)		(1.80	)		(0.80	)		(0.10	)		—
Net Asset Value, End of Period	$	11.08		$	10.62		$	13.69		$	11.11		$	9.07		$	9.97
Total Return++		4.33	%#		(2.25	)%		40.33	%		31.40	%		(7.98	)%		(0.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,635		$	2,965		$	1,455		$	137		$	91		$	100
Ratio of Expenses to Average Net Assets (1)		1.69	%+*		1.69	%+		1.65	%+^^		1.60	%+		1.60	%+		1.60	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.29	%+*		3.35	%+		(0.66	)%+		2.16	%+		1.14	%+		(1.39	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		40	%#		84	%		100	%		96	%		83	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.96	%*		3.02	%		3.87	%		4.58	%		5.77	%		238.39	%*
Net Investment Income (Loss) to Average Net Assets		0.02	%*		2.02	%		(2.88	)%		(0.82	)%		(3.03	)%		(238.18	)%*

^  Commencement of Operations.

‡  Amount is less than $0.005 per share.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.70% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.60% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Discovery Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.59		$	13.64		$	11.11		$	9.07		$	9.97		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			0.37			(0.14	)		0.17			0.06			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.39			(0.76	)		4.45			2.61			(0.91	)		(0.03	)
Total from Investment Operations		0.44			(0.39	)		4.31			2.78			(0.85	)		(0.03	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.42	)		(0.02	)		(0.22	)		(0.05	)		—
Net Realized Gain		—			(1.95	)		(1.76	)		(0.52	)		(0.00	)‡		—
Paid-in-Capital		—			(0.29	)		—			—			—			—
Total Distributions		—			(2.66	)		(1.78	)		(0.74	)		(0.05	)		—
Net Asset Value, End of Period	$	11.03		$	10.59		$	13.64		$	11.11		$	9.07		$	9.97
Total Return++		4.15	%#		(2.81	)%		39.68	%		30.62	%		(8.41	)%		(0.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	231		$	226		$	269		$	111		$	91		$	100
Ratio of Expenses to Average Net Assets (1)		2.19	%+*		2.19	%+		2.13	%+^^		2.10	%+		2.10	%+		2.10	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.92	%+*		2.85	%+		(1.05	)%+		1.66	%+		0.64	%+		(1.89	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		40	%#		84	%		100	%		96	%		83	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.00	%*		4.08	%		4.62	%		5.08	%		6.27	%		238.89	%*
Net Investment Income (Loss) to Average Net Assets		(0.89	)%*		0.96	%		(3.54	)%		(1.32	)%		(3.53	)%		(238.68	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.20% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.10% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Discovery Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.07
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.06	)
Total from Investment Operations		(0.04	)
Net Asset Value, End of Period	$	11.03
Total Return++		(0.45	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	10
Ratios of Expenses to Average Net Assets (1)		2.45	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.90	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		40	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		17.12	%*
Net Investment Loss to Average Net Assets		(13.77	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Discovery Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and emerging franchise companies located throughout the world, with capitalizations within the range of companies included in the MSCI All Country World Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors") or quotes from a broker or dealer; (4) certain portfolio securities may be valued by an outside pricing service approved by the

Directors. The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Auto Components	$	227	$	—	$	—	$	227
Capital Markets		219		—		—		219
Chemicals		104		—		—		104
Commercial Services & Supplies		422		—		—		422
Construction Materials		—		155		—		155
Diversified Financial Services		826		—		—		826
Electrical Equipment		1,378		—		—		1,378
Health Care Technology		74		—		—		74
Hotels, Restaurants & Leisure		170		—		—		170
Household Durables		183		—		—		183
Industrial Conglomerates		387		—		—		387
Insurance		926		—		—		926
Internet & Catalog Retail		579		—		—		579
Internet Software & Services		801		—		51		852
Machinery		1,233		—		—		1,233

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Oil, Gas & Consumable Fuels	$	193	$	—	$	—	$	193
Pharmaceuticals		116		—		—		116
Real Estate Management & Development		143		—		—		143
Software		413		—		—		413
Specialty Retail		218		—		—		218
Textiles, Apparel & Luxury Goods		895		—		—		895
Total Common Stocks		9,507		155		51		9,713
Preferred Stocks		—		—		746		746
Convertible Preferred Stock		—		—		5		5
Call Option Purchased		280		—		—		280
Short-Term Investments
Investment Company		810		—		—		810
Repurchase Agreements		—		84		—		84
Total Short-Term Investments		810		84		—		894
Total Assets	$	10,597	$	239	$	802	$	11,638

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As

of June 30, 2015, securities with a total value of approximately $3,342,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

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

	Common Stock (000)			Preferred Stocks (000)		Convertible Preferred Stock (000)
Beginning Balance	$	52		$	534	$	5
Purchases		—			—		—
Sales		—			—		—
Amortization of discount		—			—		—
Transfers in		—			—		—
Transfers out		—			—		—
Corporate actions		—			—		—
Change in unrealized appreciation (depreciation)		(1	)		212		(—	@)
Realized gains (losses)		—			—		—
Ending Balance	$	51		$	746	$	5
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	(1	)	$	212	$	(—	@)

@  Value is less than $500.

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2015. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Hotels, Restaurants & Leisure
Preferred Stock	$	131	Market Transaction Method	Issuance Price of Financing	$	33.32		$	33.32		$	33.32		Increase
Internet & Catalog Retail
Market Transaction  Pending Precedent   Preferred Stocks	$	162	Method	Transaction	$	93.38		$	93.38		$	93.38		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		15.0	%		17.0	%		16.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		10.2	x		15.5	x		15.5	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
	$	272	Market Transaction Method	Issuance Price of Financing	$	119.76		$	119.76		$	119.76		Increase
				Issuance Price of Pending Financing	$	142.24		$	142.24		$	142.24		Increase

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

	Fair Value at June 30, 2015 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Internet Software & Services
Common Stock	$	51	Market Transaction Method	Third Party Tender Offer/ Series C Preferred	$	19.10		$	19.10		$	19.10		Increase
Convertible Preferred Stock	$	5	Discounted Cash Flow	Weighted Average Cost of Capital		16.0	%		18.0	%		17.0	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		6.9	x		13.5	x		12.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
Software
Preferred Stocks	$	77	Market Transaction Method	Issuance Price of Financing	$	8.43		$	8.43		$	8.43		Increase
	$	51	Market Transaction Method	Precedent Transaction of Preferred Stock	$	11.42		$	11.42		$	11.42		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		18.5	%		20.5	%		19.5	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		16.2	x		28.7	x		23.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease
	$	53	Market Transaction Method	Precedent Transaction of Preferred Stock	$	8.89		$	8.89		$	8.89		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		15.5	%		17.5	%		16.5	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		11.4	x		17.0	x		17.0	x	Increase
				Discount for Lack of Marketability		15.0	%		15.0	%		15.0	%	Decrease

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as

earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange

for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	280	(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	145	(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(243	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	280	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
UBS AG	$	280	$	—	$	—	$	280

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	1,500

6.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	288	(e)	$	—	$	(288	)(f)(g)	$	0

(e) Represents market value of loaned securities at period end.

(f) The Portfolio received cash collateral of approximately $295,000, of which approximately $289,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $6,000, which is not reflected in the Portfolio of Investments.

(g) The actual collateral received is greater than the amount shown here due to overcollateralization.

7.  Restricted Securities: The Portfolio invests in unregistered or otherwise restricted securities. The term "restricted securities" refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. As a result, restricted securities may be more difficult to value and the Portfolio may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Portfolio, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Portfolio could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Portfolio would, in either case, bear market risks during that period. Restricted securities are identified in the Portfolio of Investments.

8.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

9.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid

semiannually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.90	%		0.85	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.35% for Class I shares, 1.70% for Class A shares, 2.20% for Class L shares and 2.45% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $48,000 of advisory fees were

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

waived and approximately $19,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $5,808,000 and $3,929,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	1,198	$	4,442	$	4,830	$	1	$	810

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:						2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-In- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	941	$	1,081	$	225	$	405	$	831

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	14	$	(15	)	$	1

At December 31, 2014, the Portfolio had no distributable earnings on a tax basis.

At June 30, 2015, The aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,201,000 and the aggregate gross unrealized depreciation is approximately $1,068,000 resulting in net unrealized appreciation of approximately $133,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	17	$	148

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 37.1% and 52.2% for Class A and Class L shares, respectively.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

30

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGDSAN
1259855 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Advantage Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	17
U.S. Privacy Policy	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in International Advantage Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

International Advantage Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
International Advantage Portfolio Class I	$	1,000.00	$	1,124.60	$	1,018.60	$	6.58	*	$	6.26	*		1.25	%
International Advantage Portfolio Class A		1,000.00		1,122.10		1,016.86		8.42	*		8.00	*		1.60
International Advantage Portfolio Class L		1,000.00		1,119.40		1,014.38		11.04	*		10.49	*		2.10
International Advantage Portfolio Class C		1,000.00		998.60		1,004.43		3.92	**		3.94	**		2.35

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one- and three-year periods and the period since the end of December 2010, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that while the Portfolio's contractual management fee and total expense ratio were higher but close to its peer group averages, the actual management fee was lower than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

International Advantage Portfolio

	Shares		Value (000)
Common Stocks (83.1%)
Australia (1.2%)
Aurizon Holding Ltd.		20,207	$	80
Belgium (3.6%)
Anheuser-Busch InBev N.V.		1,944		233
Brazil (1.5%)
CETIP SA - Mercados Organizados		8,740		96
Canada (4.7%)
Brookfield Asset Management, Inc., Class A		3,118		109
Brookfield Infrastructure Partners LP		4,314		192
				301
China (4.1%)
TAL Education Group ADR (a)		7,495		265
Denmark (4.7%)
DSV A/S		9,438		306
France (9.6%)
Christian Dior SE		1,069		209
Danone SA		1,786		115
Edenred		2,610		65
Hermes International		304		113
Pernod Ricard SA		1,005		116
				618
Germany (1.9%)
Adidas AG		1,571		120
Japan (4.5%)
Calbee, Inc.		6,800		287
Korea, Republic of (8.8%)
Hotel Shilla Co., Ltd.		1,137		114
Loen Entertainment, Inc.		3,940		284
NAVER Corp.		303		172
				570
Norway (3.3%)
Telenor ASA		3,594		79
TGS Nopec Geophysical Co., ASA		5,811		135
				214
South Africa (2.8%)
Naspers Ltd., Class N		1,150		179
Switzerland (5.1%)
Kuehne & Nagel International AG (Registered)		1,220		162
Nestle SA (Registered)		2,267		164
				326
United Kingdom (13.5%)
Burberry Group PLC		11,258		278
Diageo PLC		4,191		121
Hargreaves Lansdown PLC		7,328		133
Intertek Group PLC		4,101		158
Reckitt Benckiser Group PLC		2,106		181
				871

	Shares		Value (000)
United States (13.8%)
Cognizant Technology Solutions Corp., Class A (a)		3,120	$	191
EPAM Systems, Inc. (a)		3,486		248
Greenlight Capital Re Ltd., Class A (a)		3,016		88
Luxoft Holding, Inc. (a)		3,278		186
Priceline Group, Inc. (The) (a)		154		177
				890
Total Common Stocks (Cost $4,604)				5,356
Participation Notes (11.4%)
China (11.4%)
China International Travel Service Corp., Ltd., Class A, Equity Linked Notes, expires 5/5/16 (a)		14,000		150
Foshan Haitian Flavouring & Food Company Ltd., Class A, Equity Linked Notes, expires 10/11/24 (a)		31,860		164
Kweichow Moutai Co., Ltd, Class A, Equity Linked Notes, expires 5/5/16 (a)		5,720		238
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a)		4,468		185
Total Participation Notes (Cost $599)				737
	Notional Amount
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY June 2016@ CNY 6.70		834,971		2
USD/CNY November 2015@ CNY 6.65		747,834		—	@
Total Call Options Purchased (Cost $6)				2
	Shares
Short-Term Investment (4.4%)
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $284)		284,029		284
Total Investments (98.9%) (Cost $5,493)				6,379
Other Assets in Excess of Liabilities (1.1%)				71
Net Assets (100.0%)			$	6,450

(a)  Non-income producing security.

@  Value is less than $500.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

International Advantage Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		40.2	%
Beverages		14.0
Food Products		11.4
Textiles, Apparel & Luxury Goods		11.3
Information Technology Services		9.8
Media		7.3
Road & Rail		6.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2015 (unaudited) (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,209)	$	6,095
Investment in Security of Affiliated Issuer, at Value (Cost $284)		284
Total Investments in Securities, at Value (Cost $5,493)		6,379
Foreign Currency, at Value (Cost $2)		2
Cash		3
Due from Adviser		25
Receivable for Portfolio Shares Sold		23
Tax Reclaim Receivable		8
Receivable for Investments Sold		1
Dividends Receivable		1
Receivable from Affiliate		—	@
Other Assets		50
Total Assets		6,492
Liabilities:
Payable for Professional Fees		26
Payable for Custodian Fees		2
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Administration Fees		—	@
Other Liabilities		14
Total Liabilities		42
Net Assets	$	6,450
Net Assets Consist of:
Paid-in-Capital	$	5,304
Accumulated Undistributed Net Investment Income		41
Accumulated Net Realized Gain		219
Unrealized Appreciation (Depreciation) on:
Investments		886
Foreign Currency Translations		(—	@)
Net Assets	$	6,450

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (unaudited) (000)
CLASS I:
Net Assets	$	5,133
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		369,346
Net Asset Value, Offering and Redemption Price Per Share	$	13.90
CLASS A:
Net Assets	$	1,078
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		77,633
Net Asset Value, Redemption Price Per Share	$	13.88
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.77
Maximum Offering Price Per Share	$	14.65
CLASS L:
Net Assets	$	205
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		14,866
Net Asset Value, Offering and Redemption Price Per Share	$	13.78
CLASS C:
Net Assets	$	34
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,474
Net Asset Value, Offering and Redemption Price Per Share	$	13.78

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

International Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $8 of Foreign Taxes Withheld)	$	57
Income from Securities Loaned — Net		2
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		59
Expenses:
Professional Fees		43
Advisory Fees (Note B)		25
Registration Fees		15
Custodian Fees (Note F)		8
Shareholder Reporting Fees		4
Pricing Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Administration Fees (Note C)		2
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		10
Total Expenses		115
Expenses Reimbursed by Adviser (Note B)		(50	)
Waiver of Advisory Fees (Note B)		(25	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		37
Net Investment Income		22
Realized Gain (Loss):
Investments Sold		118
Foreign Currency Transactions		(2	)
Net Realized Gain		116
Change in Unrealized Appreciation (Depreciation):
Investments		471
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		472
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		588
Net Increase in Net Assets Resulting from Operations	$	610

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	22		$	40
Net Realized Gain		116			114
Net Change in Unrealized Appreciation (Depreciation)		472			(54	)
Net Increase in Net Assets Resulting from Operations		610			100
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(18	)
Net Realized Gain		—			(73	)
Class A:
Net Investment Income		—			(2	)
Net Realized Gain		—			(16	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(3	)
Total Distributions		—			(112	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,393			1,201
Distributions Reinvested		—			61
Redeemed		(131	)		(508	)
Class A:
Subscribed		144			688
Distributions Reinvested		—			12
Redeemed		(61	)		(52	)
Class L:
Subscribed		62			26
Distributions Reinvested		—			—	@
Redeemed		(25	)		—
Class C:
Subscribed		34	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		1,416			1,428
Redemption Fees		—			—	@
Total Increase in Net Assets		2,026			1,416
Net Assets:
Beginning of Period		4,424			3,008
End of Period (Including Accumulated Undistributed Net Investment Income of $41 and $19)	$	6,450		$	4,424

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

International Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		105			97
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(10	)		(41	)
Net Increase in Class I Shares Outstanding		95			61
Class A:
Shares Subscribed		11			55
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(5	)		(4	)
Net Increase in Class A Shares Outstanding		6			52
Class L:
Shares Subscribed		5			2
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(2	)		—
Net Increase in Class L Shares Outstanding		3			2
Class C:
Shares Subscribed		2	*		—

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Advantage Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.36		$	12.36		$	11.60		$	9.65		$	9.99		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.06			0.13			0.13			0.12			0.12			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.48			0.20			1.32			1.93			(0.26	)		(0.01	)
Total from Investment Operations		1.54			0.33			1.45			2.05			(0.14	)		(0.01	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)		(0.12	)		(0.10	)		(0.11	)		—
Net Realized Gain		—			(0.26	)		(0.57	)		—			(0.09	)		—
Total Distributions		—			(0.33	)		(0.69	)		(0.10	)		(0.20	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	13.90		$	12.36		$	12.36		$	11.60		$	9.65		$	9.99
Total Return++		12.46	%#		2.58	%		12.72	%		21.27	%		(1.31	)%		(0.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,133		$	3,387		$	2,637		$	1,421		$	1,255		$	1,198
Ratio of Expenses to Average Net Assets (1)		1.25	%+*		1.24	%+		1.24	%+		1.24	%+		1.24	%+		1.25	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.85	%+*		1.05	%+		1.04	%+		1.08	%+		1.17	%+		(1.09	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.00	%§		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		16	%#		30	%		49	%		40	%		27	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.93	%*		5.47	%		6.30	%		8.89	%		7.08	%+		176.40	%*
Net Investment Loss to Average Net Assets		(1.83	)%*		(3.18	)%		(4.02	)%		(6.57	)%		(4.67	)%+		(176.24	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Advantage Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.37		$	12.38		$	11.60		$	9.65		$	9.99		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			0.09			0.04			0.09			0.09			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.48			0.19			1.38			1.94			(0.25	)		(0.01	)
Total from Investment Operations		1.51			0.28			1.42			2.03			(0.16	)		(0.01	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.07	)		(0.08	)		(0.09	)		—
Net Realized Gain		—			(0.26	)		(0.57	)		—			(0.09	)		—
Total Distributions		—			(0.29	)		(0.64	)		(0.08	)		(0.18	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	13.88		$	12.37		$	12.38		$	11.60		$	9.65		$	9.99
Total Return++		12.21	%#		2.21	%		12.43	%		20.99	%		(1.57	)%		(0.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,078		$	889		$	248		$	116		$	96		$	100
Ratio of Expenses to Average Net Assets (1)		1.60	%+*		1.59	%+		1.55	%+^^		1.49	%+		1.49	%+		1.50	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.40	%+*		0.70	%+		0.29	%+		0.83	%+		0.92	%+		(1.34	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.00	%§		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		16	%#		30	%		49	%		40	%		27	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.43	%*		6.03	%		6.89	%		9.14	%		7.33	%+		176.65	%*
Net Investment Loss to Average Net Assets		(2.43	)%*		(3.74	)%		(5.05	)%		(6.82	)%		(4.92	)%+		(176.49	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.60% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.50% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Advantage Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	12.31		$	12.36		$	11.60		$	9.65		$	9.99		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.00	)‡		0.02			0.02			0.04			0.04			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.47			0.20			1.34			1.93			(0.25	)		(0.01	)
Total from Investment Operations		1.47			0.22			1.36			1.97			(0.21	)		(0.01	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.03	)		(0.02	)		(0.04	)		—
Net Realized Gain		—			(0.26	)		(0.57	)		—			(0.09	)		—
Total Distributions		—			(0.27	)		(0.60	)		(0.02	)		(0.13	)		—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	13.78		$	12.31		$	12.36		$	11.60		$	9.65		$	9.99
Total Return++		11.94	%#		1.69	%		11.88	%		20.43	%		(2.09	)%		(0.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	205		$	148		$	123		$	116		$	97		$	100
Ratio of Expenses to Average Net Assets (1)		2.10	%+*		2.09	%+		2.03	%+^^		1.99	%+		1.99	%+		2.00	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.03	)%+*		0.20	%+		0.18	%+		0.33	%+		0.42	%+		(1.84	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.00	%§		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		16	%#		30	%		49	%		40	%		27	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.53	%*		7.42	%		7.43	%		9.64	%		7.83	%+		177.15	%*
Net Investment Loss to Average Net Assets		(3.46	)%*		(5.13	)%		(5.22	)%		(7.32	)%		(5.42	)%+		(176.99	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.00% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

International Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	13.80
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.00	)‡
Net Realized and Unrealized Loss		(0.02	)
Total from Investment Operations		(0.02	)
Net Asset Value, End of Period	$	13.78
Total Return++		(0.14	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	34
Ratios of Expenses to Average Net Assets (1)		2.35	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.12	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§
Portfolio Turnover Rate		16	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		14.26	%*
Net Investment Loss to Average Net Assets		(12.03	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the International Advantage Portfolio. The Portfolio seeks long-term capital appreciation. The Portfolio seeks to achieve the investment objective by investing primarily in established companies on an international basis, with capitalizations within the range of companies included in the MSCI All Country World ex USA Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker

dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) listed options are valued at the last reported sales price on the exchange on which they are listed (or at the exchange official closing price if such exchange reports an official closing price). If an official closing price or last reported sales price is unavailable, the listed option should be fair valued at the mean between their latest bid and asked price. Unlisted options are valued by an outside pricing service approved by the Directors or quotes from a broker or dealer; (5) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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.

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Morgan Stanley Institutional Fund, Inc.

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Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	470	$	—	$	—	$	470
Capital Markets		229		—		—		229
Commercial Services & Supplies		65		—		—		65
Diversified Consumer Services		265		—		—		265
Diversified Telecommunication Services		79		—		—		79
Electric Utilities		192		—		—		192
Energy Equipment & Services		135		—		—		135
Food Products		566		—		—		566
Household Products		181		—		—		181
Information Technology Services		625		—		—		625
Insurance		88		—		—		88
Internet & Catalog Retail		177		—		—		177
Internet Software & Services		172		—		—		172
Marine		162		—		—		162
Media		463		—		—		463
Professional Services		158		—		—		158
Real Estate Management & Development		109		—		—		109
Road & Rail		386		—		—		386
Specialty Retail		114		—		—		114
Textiles, Apparel & Luxury Goods		720		—		—		720
Total Common Stocks		5,356		—		—		5,356
Participation Notes		—		737		—		737
Call Options Purchased		—		2		—		2
Short-Term Investment
Investment Company		284		—		—		284
Total Assets	$	5,640	$	739	$	—	$	6,379

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $3,483,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are

maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Options: With respect to options, the Portfolio is subject to equity risk, interest rate risk and foreign currency exchange risk in the normal course of pursuing its investment objectives. If the Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument, at an agreed-upon price typically in exchange for a premium paid by the Portfolio. The Portfolio may purchase and/or sell put and call options. Purchasing call options tends to increase the Portfolio's exposure to the underlying (or similar) instrument. Purchasing put options tends to decrease the Portfolio's exposure to the underlying (or similar) instrument. When entering into purchased option contracts, the Portfolio bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Portfolio may not achieve the anticipated benefits of the purchased option contracts; however the risk of loss is limited to the premium paid. Purchased options are reported as part of "Total Investments in Securities" in the Statement of Assets and Liabilities. Premium paid for purchasing options which expired are treated as realized losses. If the Portfolio sells an option, it sells to another party the right to buy from or sell to the Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed-upon price typically in exchange for a premium received by the Portfolio. When options are purchased OTC, the Portfolio bears the risk that the counterparty that wrote the option will be unable or

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

unwilling to perform its obligations under the option contract. Options may also be illiquid and the Portfolio may have difficulty closing out its position. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Call Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk		$2(a)

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(2	)(b)

(b) Amounts are included in Investments Sold in the Statement of Operations.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Call Options Purchased)	$	(4	)(c)

(c) Amounts are included in Investments in the Statement of Operations.

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Call Options Purchased	$	2	(a)	$	—

(a) Amounts are included in Investments in Securities in the Statement of Assets and Liabilities.

(d) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market value in excess of the Portfolio's net liability may be delayed or denied.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following table presents derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)		Collateral Received (000)		Net Amount (not less than $0) (000)
Royal Bank of Scotland	$	2	$	—	$	—	$	2

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Call Options Purchased:
Average monthly notional amount	1,566,000

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned-Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

At June 30, 2015, the Portfolio did not have any outstanding securities on loan.

6.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

7.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares and Class C shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

8.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

9.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

10.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.90	%		0.85	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.25% for Class I shares, 1.60% for Class A shares, 2.10% for Class L shares and 2.35% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended

June 30, 2015, approximately $25,000 of advisory fees were waived and approximately $53,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $2,212,000 and $856,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	119	$	1,713	$	1,548	$	—	@	$	284

(a) Amount is less than $500.

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts

credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	36	$	76	$	38	$	123

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on partnerships sold and equalization debits, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(5	)	$	5	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	40	$	88

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,001,000 and the aggregate gross unrealized depreciation is approximately $115,000 resulting in net unrealized appreciation of approximately $886,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 53.9% and 10.5% for Class A and Class L shares, respectively.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

• Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

29

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIASAN
1260921 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Asian Equity Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	11
Notes to Financial Statements	15
U.S. Privacy Policy	22
Director and Officer Information	25

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Asian Equity Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Asian Equity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Asian Equity Portfolio Class I	$	1,000.00	$	1,084.20	$	1,017.60	$	7.49	*	$	7.25	*		1.45	%
Asian Equity Portfolio Class A		1,000.00		1,081.50		1,015.87		9.29	*		9.00	*		1.80
Asian Equity Portfolio Class L		1,000.00		1,079.30		1,013.39		11.86	*		11.48	*		2.30
Asian Equity Portfolio Class C		1,000.00		977.80		1,004.09		4.21	**		4.27	**		2.55

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Adviser (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Adviser together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one- and three-year periods and the period since the end of December 2010, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's actual management fee was lower than its peer group average. The Board also noted that the Portfolio's contractual management fee and total expense ratio were higher but close to its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Asian Equity Portfolio

	Shares		Value (000)
Common Stocks (87.6%)
China (27.5%)
BAIC Motor Corp., Ltd. H Shares (a)(b)(c)		6,500	$	8
Bank of China Ltd. H Shares (b)		714,000		464
China Construction Bank Corp. H Shares (b)		290,000		265
China Life Insurance Co., Ltd. H Shares (b)		34,000		148
China Machinery Engineering Corp. H Shares (b)		23,000		25
China Mengniu Dairy Co., Ltd. (b)		22,000		110
China Mobile Ltd. (b)		27,000		346
China Overseas Land & Investment Ltd. (b)		28,000		99
China Pacific Insurance Group Co., Ltd. H Shares (b)		28,800		138
China Taiping Insurance Holdings Co., Ltd. (b)(c)		11,400		41
Chongqing Changan Automobile Co., Ltd. B Shares		55,900		143
CSPC Pharmaceutical Group Ltd. (b)		40,000		39
Huadian Power International Corp., Ltd. H Shares (b)		80,000		89
Huatai Securities Co., Ltd. H Shares (a)(b)(c)		13,200		37
JD.com, Inc. ADR (c)		2,147		73
Nan Ya Plastics Corp.		18,000		42
NetEase, Inc. ADR		302		44
Qihoo 360 Technology Co., Ltd. ADR (c)		520		35
Shenzhen International Holdings Ltd. (b)		20,500		36
Sihuan Pharmaceutical Holdings Group Ltd. (b)(d)		113,000		61
TAL Education Group ADR (c)		870		31
Tencent Holdings Ltd. (b)		33,300		664
				2,938
Hong Kong (10.0%)
AIA Group Ltd.		6,600		43
BOC Hong Kong Holdings Ltd.		61,500		256
Cheung Kong Property Holdings Ltd. (c)		21,628		180
CK Hutchison Holdings Ltd.		21,628		318
HKT Trust & HKT Ltd.		83,520		98
L'Occitane International SA		8,750		25
Samsonite International SA		42,900		148
				1,068
India (1.6%)
HDFC Bank Ltd. ADR		2,254		137
ICICI Bank Ltd. ADR		2,882		30
				167
Indonesia (3.1%)
AKR Corporindo Tbk PT		65,800		29
Kalbe Farma Tbk PT		774,300		97
Link Net Tbk PT (c)		79,200		30
Matahari Department Store Tbk PT		59,700		74
Nippon Indosari Corpindo Tbk PT		391,700		34
Surya Citra Media Tbk PT		158,200		34
XL Axiata Tbk PT (c)		136,300		38
				336

	Shares		Value (000)
Korea, Republic of (18.9%)
Amorepacific Corp.		303	$	114
Cosmax, Inc.		1,603		290
Coway Co., Ltd.		2,090		171
Hotel Shilla Co., Ltd.		1,071		107
KB Financial Group, Inc.		6,454		214
KEPCO Plant Service & Engineering Co., Ltd.		549		58
Kia Motors Corp.		2,030		82
Korea Aerospace Industries Ltd.		807		58
LG Chem Ltd.		394		98
Lotte Chemical Corp.		369		96
NAVER Corp.		275		156
Samsung Electronics Co., Ltd.		228		259
Samsung Electronics Co., Ltd. (Preference)		87		77
Samsung Life Insurance Co., Ltd.		778		75
SK Hynix, Inc.		4,203		159
				2,014
Laos (0.7%)
Kolao Holdings		3,845		77
Malaysia (2.3%)
Astro Malaysia Holdings Bhd		29,400		24
IHH Healthcare Bhd (c)		91,200		137
IJM Corp., Bhd		21,100		36
Tune Ins Holdings Bhd		63,400		28
UEM Sunrise Bhd		73,100		19
				244
Philippines (3.4%)
Ayala Corp.		4,670		82
BDO Unibank, Inc.		10,430		25
DMCI Holdings, Inc.		79,000		23
International Container Terminal Services, Inc.		14,910		36
LT Group, Inc.		83,400		26
Metro Pacific Investments Corp.		370,000		39
Metropolitan Bank & Trust Co.		20,881		44
Rizal Commercial Banking Corp.		39,490		35
SM Investments Corp.		1,780		35
STI Education Systems Holdings, Inc.		918,000		13
				358
Singapore (2.8%)
DBS Group Holdings Ltd.		6,394		98
Keppel Infrastructure Trust (Units) (e)		135,900		55
OSIM International Ltd.		25,600		31
Oversea-Chinese Banking Corp., Ltd.		4,486		34
Raffles Medical Group Ltd.		8,381		29
Singapore Telecommunications Ltd.		15,400		48
				295
Taiwan (14.6%)
Advanced Semiconductor Engineering, Inc.		52,000		70
Catcher Technology Co., Ltd.		9,000		113
Chailease Holding Co., Ltd.		34,180		82
Delta Electronics, Inc.		12,000		61
Eclat Textile Co., Ltd.		9,320		153

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Asian Equity Portfolio

	Shares		Value (000)
Taiwan (cont'd)
Fubon Financial Holding Co., Ltd.		57,000	$	113
Hermes Microvision, Inc.		1,000		65
Largan Precision Co., Ltd.		1,000		114
momo.com, Inc.		1,546		14
Pegatron Corp.		18,000		53
Taiwan Mobile Co., Ltd.		17,000		57
Taiwan Semiconductor Manufacturing Co., Ltd.		99,000		451
Uni-President Enterprises Corp.		117,060		208
				1,554
Thailand (2.7%)
Advanced Info Service PCL (Foreign)		9,000		64
Indorama Ventures PCL (Foreign)		60,100		50
Land and Houses PCL (Foreign)		78,560		21
Land and Houses PCL NVDR		34,100		9
Minor International PCL (Foreign)		51,900		46
PTT PCL (Foreign)		5,300		56
Total Access Communication PCL NVDR		19,200		47
				293
Total Common Stocks (Cost $8,361)				9,344
Investment Companies (6.0%)
India (6.0%)
iShares MSCI India ETF		10,617		322
iShares MSCI India Index ETF (c)		42,600		319
Total Investment Companies (Cost $663)				641
Participation Notes (5.0%)
India (5.0%)
Ashok Leyland Ltd., Equity Linked Notes, expires 5/13/19 (c)		58,564		67
Bharat Petroleum Corp., Ltd., Equity Linked Notes, expires 3/13/19 (c)		3,162		44
Gateway Distriparks Ltd., Equity Linked Notes, expires 10/17/19 (c)		5,323		29
Glenmark Pharmaceuticals Ltd., Equity Linked Notes, expires 6/28/18 (c)		3,264		51
Idea Cellular Ltd., Equity Linked Notes, expires 6/7/18 (c)		6,418		18
IndusInd Bank Ltd., Equity Linked Notes, expires 8/28/18 (c)		4,317		61
Inox Leisure Ltd., Equity Linked Notes, expires 9/23/19 (c)		5,846		16
Marico Ltd., Equity Linked Notes, expires 6/10/20 (c)		700		5
Marico Ltd., Equity Linked Notes, expires 1/9/20 (c)		5,648		40
Maruti Suzuki India Ltd., Equity Linked Notes, expires 12/4/18 (c)		853		56
Oil & Natural Gas Corp., Ltd., Equity Linked Notes, expires 12/27/18 (c)		1,529		7
Shree Cement Ltd., Equity Linked Notes, expires 7/13/15 (c)		233		41
Shriram Transport Finance Co., Ltd., Equity Linked Notes, expires 1/30/19 (c)		3,097		42

	Shares		Value (000)
Sun Pharmaceutical Industries Ltd., Equity Linked Notes, expires 6/3/20 (c)		2,190	$	30
Tata Consultancy Services Ltd., Equity Linked Notes, expires 1/8/19 (c)		523		21
Total Participation Notes (Cost $461)				528
Short-Term Investment (2.0%)
Investment Company (2.0%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $214)		214,211		214
Total Investments (100.6%) (Cost $9,699)				10,727
Liabilities in Excess of Other Assets (-0.6%)				(63	)
Net Assets (100.0%)			$	10,664

(a)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(b)  Security trades on the Hong Kong exchange.

(c)  Non-income producing security.

(d)  Security has been deemed illiquid at June 30, 2015.

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

ADR  American Depositary Receipt.

NVDR  Non-Voting Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		58.2	%
Banks		15.5
Internet Software & Services		8.4
Semiconductors & Semiconductor Equipment		6.9
Investment Companies		6.0
Wireless Telecommunication Services		5.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Asian Equity Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $9,485)	$	10,513
Investment in Security of Affiliated Issuer, at Value (Cost $214)		214
Total Investments in Securities, at Value (Cost $9,699)		10,727
Foreign Currency, at Value (Cost $6)		6
Receivable for Investments Sold		82
Dividends Receivable		77
Due from Adviser		53
Receivable from Affiliate		—	@
Other Assets		49
Total Assets		10,994
Liabilities:
Payable for Investments Purchased		273
Payable for Professional Fees		27
Payable for Custodian Fees		21
Payable for Administration Fees		1
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Other Liabilities		8
Total Liabilities		330
Net Assets	$	10,664
Net Assets Consist of:
Paid-in-Capital	$	9,392
Accumulated Undistributed Net Investment Income		43
Accumulated Net Realized Gain		201
Unrealized Appreciation (Depreciation) on:
Investments		1,028
Foreign Currency Translations		(—	@)
Net Assets	$	10,664
CLASS I:
Net Assets	$	8,411
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		750,950
Net Asset Value, Offering and Redemption Price Per Share	$	11.20
CLASS A:
Net Assets	$	2,122
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		190,268
Net Asset Value, Redemption Price Per Share	$	11.15
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.62
Maximum Offering Price Per Share	$	11.77
CLASS L:
Net Assets	$	121
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,976
Net Asset Value, Offering and Redemption Price Per Share	$	11.03
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		887
Net Asset Value, Offering and Redemption Price Per Share	$	11.03

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Asian Equity Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $17 of Foreign Taxes Withheld)	$	134
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		134
Expenses:
Custodian Fees (Note F)		76
Advisory Fees (Note B)		53
Professional Fees		43
Registration Fees		15
Pricing Fees		6
Administration Fees (Note C)		4
Shareholder Services Fees — Class A (Note D)		3
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Shareholder Reporting Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Sub Transfer Agency Fees — Class I		1
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		5
Total Expenses		212
Expenses Reimbursed by Adviser (Note B)		(73	)
Waiver of Advisory Fees (Note B)		(53	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		84
Net Investment Income		50
Realized Gain (Loss):
Investments Sold		224
Foreign Currency Transactions		(27	)
Net Realized Gain		197
Change in Unrealized Appreciation (Depreciation):
Investments		642
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		642
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		839
Net Increase in Net Assets Resulting from Operations	$	889

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Asian Equity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	50		$	58
Net Realized Gain		197			783
Net Change in Unrealized Appreciation (Depreciation)		642			78
Net Increase in Net Assets Resulting from Operations		889			919
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(47	)
Net Realized Gain		—			(696	)
Class A:
Net Investment Income		—			(11	)
Net Realized Gain		—			(246	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(16	)
Total Distributions		—			(1,016	)
Capital Share Transactions:(1)
Class I:
Subscribed		5,615			5,728
Distributions Reinvested		—			560
Redeemed		(6,259	)		(2,673	)
Class A:
Subscribed		134			943
Distributions Reinvested		—			227
Redeemed		(201	)		(374	)
Class L:
Subscribed		5			62
Distributions Reinvested		—			1
Redeemed		(7	)		(57	)
Class C:
Subscribed		10	*		—
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(703	)		4,417
Redemption Fees		—			1
Total Increase in Net Assets		186			4,321
Net Assets:
Beginning of Period		10,478			6,157
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $43 and $(7), respectively)	$	10,664		$	10,478
(1) Capital Share Transactions:
Class I:
Shares Subscribed		522			531
Shares Issued on Distributions Reinvested		—			53
Shares Redeemed		(578	)		(237	)
Net Increase (Decrease) in Class I Shares Outstanding		(56	)		347
Class A:
Shares Subscribed		12			80
Shares Issued on Distributions Reinvested		—			22
Shares Redeemed		(18	)		(32	)
Net Increase (Decrease) in Class A Shares Outstanding		(6	)		70
Class L:
Shares Subscribed		1			6
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		(5	)
Net Increase (Decrease) in Class L Shares Outstanding		(—	@@)		1
Class C:
Shares Subscribed		1	*		—

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Asian Equity Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.33		$	10.33		$	10.40		$	8.47		$	10.19		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			0.09			0.05			0.04			0.00	‡		(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.82			1.44			(0.05	)		2.00			(1.72	)		0.19
Total from Investment Operations		0.87			1.53			(0.00	)‡		2.04			(1.72	)		0.19
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.07	)		(0.11	)		—			—
Net Realized Gain		—			(1.43	)		—			—			—			—
Total Distributions		—			(1.53	)		(0.07	)		(0.11	)		—			—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	11.20		$	10.33		$	10.33		$	10.40		$	8.47		$	10.19
Total Return++		8.42	%#		15.15	%		(0.05	)%		24.08	%		(16.88	)%		1.90	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,411		$	8,340		$	4,753		$	3,996		$	1,201		$	1,223
Ratio of Expenses to Average Net Assets (1)		1.45	%+*		1.45	%+		1.45	%+		1.45	%+		1.45	%+		1.45	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.96	%+*		0.81	%+		0.52	%		0.39	%+		0.01	%+		(1.34	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		69	%#		86	%		114	%		80	%		38	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.75	%*		4.68	%		4.28	%		5.79	%		11.86	%		176.73	%*
Net Investment Loss to Average Net Assets		(1.34	)%*		(2.42	)%		(2.31	)%		(3.95	)%		(10.40	)%		(176.62	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Asian Equity Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.31		$	10.31		$	10.37		$	8.45		$	10.19		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)† 0.04		0.05			0.01			0.01			(0.02	)		(0.00	)		‡
Net Realized and Unrealized Gain (Loss)		0.80			1.44			(0.03	)		2.00			(1.72	)		0.19
Total from Investment Operations		0.84			1.49			(0.02	)		2.01			(1.74	)		0.19
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		(0.04	)		(0.09	)		—			—
Net Realized Gain		—			(1.43	)		—			—			—			—
Total Distributions		—			(1.49	)		(0.04	)		(0.09	)		—			—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	11.15		$	10.31		$	10.31		$	10.37		$	8.45		$	10.19
Total Return++		8.15	%#		14.71	%		(0.15	)%		23.76	%		(17.08	)%		1.90	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,122		$	2,024		$	1,302		$	1,201		$	84		$	102
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.80	%+		1.73	%+^^		1.70	%+		1.70	%+		1.70	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.71	%+*		0.46	%+		0.09	%+		0.14	%+		(0.24	)%+		(1.59	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		69	%#		86	%		114	%		80	%		38	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.11	%*		5.05	%		4.68	%		6.04	%		12.11	%		176.98	%*
Net Investment Loss to Average Net Assets		(1.60	)%*		(2.79	)%		(2.86	)%		(4.20	)%		(10.65	)%		(176.87	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.80% for Class A Shares. Prior to September 16, 2013, the maximum ratio was 1.70% for Class A Shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Asian Equity Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,												Period from December 28, 2010^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2011			December 31, 2010
Net Asset Value, Beginning of Period	$	10.22		$	10.23		$	10.31		$	8.40		$	10.19		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.00	)‡		(0.04	)		(0.03	)		(0.07	)		(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.80			1.42			(0.03	)		1.98			(1.72	)		0.19
Total from Investment Operations		0.81			1.42			(0.07	)		1.95			(1.79	)		0.19
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		(0.01	)		(0.04	)		—			—
Net Realized Gain		—			(1.43	)		—			—			—			—
Total Distributions		—			(1.43	)		(0.01	)		(0.04	)		—			—
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	11.03		$	10.22		$	10.23		$	10.31		$	8.40		$	10.19
Total Return++		7.93	%#		13.97	%		(0.56	)%		23.18	%		(17.57	)%		1.90	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	121		$	114		$	102		$	103		$	84		$	102
Ratio of Expenses to Average Net Assets (1)		2.30	%+*		2.30	%+		2.22	%+^^		2.20	%+		2.20	%+		2.20	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.20	%+*		(0.04	)%+		(0.35	)%+		(0.36	)%+		(0.74	)%+		(2.09	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		69	%#		86	%		114	%		80	%		38	%		0.00	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.83	%*		6.75	%		5.59	%		6.54	%		12.61	%		177.48	%*
Net Investment Loss to Average Net Assets		(3.33	)%*		(4.49	)%		(3.72	)%		(4.70	)%		(11.15	)%		(177.37	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.30% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.20% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Asian Equity Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.05
Net Realized and Unrealized Loss		(0.30	)
Total from Investment Operations		(0.25	)
Net Asset Value, End of Period	$	11.03
Total Return++		(2.22	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	10
Ratios of Expenses to Average Net Assets (1)		2.55	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.65	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		69	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		19.43	%*
Net Investment Loss to Average Net Assets		(14.23	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Asian Equity Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser") and sub-adviser, Morgan Stanley Investment Management Company ("MSIM Company") (the "Sub-Adviser"), seek long-term capital appreciation by investing primarily in equity securities of companies in the Asia-Pacific region, excluding Japan.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker dealer market price

quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	58	$	—	$	—	$	58
Automobiles		233		—		—		233
Banks		1,602		—		—		1,602
Beverages		26		—		—		26
Capital Markets		37		—		—		37
Chemicals		236		50		—		286
Commercial Services & Supplies		58		—		—		58
Construction & Engineering		61		—		—		61
Diversified Consumer Services		31		—		—		31
Diversified Financial Services		329		—		—		329

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Diversified Telecommunication Services	$	214	$	—	$	—	$	214
Electronic Equipment, Instruments & Components		175		—		—		175
Food Products		352		—		—		352
Health Care Providers & Services		166		—		—		166
Hotels, Restaurants & Leisure		—		46		—		46
Household Durables		171		—		—		171
Independent Power Producers & Energy Traders		89		—		—		89
Industrial Conglomerates		376		—		—		376
Insurance		473		—		—		473
Internet & Catalog Retail		87		—		—		87
Internet Software & Services		899		—		—		899
Media		58		—		—		58
Multi-Utilities		55		—		—		55
Multi-line Retail		74		—		—		74
Oil, Gas & Consumable Fuels		—		56		—		56
Personal Products		404		—		—		404
Pharmaceuticals		136		61		—		197
Real Estate Management & Development		307		21		—		328
Semiconductors & Semiconductor Equipment		745		—		—		745
Specialty Retail		240		—		—		240
Tech Hardware, Storage & Peripherals		502		—		—		502
Textiles, Apparel & Luxury Goods		301		—		—		301
Trading Companies & Distributors		29		—		—		29
Transportation Infrastructure		72		—		—		72
Wireless Telecommunication Services		450		64		—		514
Total Common Stocks		9,046		298		—		9,344
Investment Companies		641		—		—		641
Participation Notes		—		528		—		528
Short-Term Investment
Investment Company		214		—		—		214
Total Assets	$	9,901	$	826	$	—	$	10,727

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $7,560,000 transferred from Level 2 to Level 1.

Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the

underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

5.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares, and Class C shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.95	%		0.90	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.45% for Class I shares, 1.80% for Class A shares, 2.30% for Class L shares and 2.55% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $53,000 of advisory fees were waived and approximately $75,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Adviser, a wholly-owned subsidiary of Morgan Stanley. The Sub-Adviser provides the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $7,534,000 and $8,094,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	419	$	6,515	$	6,720	$	—	@	$	214

@ Amount is less than $500.

During the six months ended June 30, 2015, the Portfolio incurred approximately $3,000 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator, Sub-Adviser and Distributor, for portfolio transactions executed on behalf of the Portfolio.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and

distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	656	$	360	$	38	$	3

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

adjustments on certain equity securities designated as passive foreign investment companies and foreign taxes paid on capital gains, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions In Excess of Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	11	$	(11	)	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	4	$	87

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,279,000 and the aggregate gross unrealized depreciation is approximately $251,000 resulting in net unrealized appreciation of approximately $1,028,000.

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	7

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 18.2% and 85.4% for Class I and Class A shares, respectively.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Adviser

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

25

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIAESAN
1260895 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Insight Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	12
Notes to Financial Statements	16
U.S. Privacy Policy	23
Director and Officer Information	26

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Insight Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Insight Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Insight Portfolio Class I	$	1,000.00	$	999.30	$	1,019.64	$	5.16	*	$	5.21	*		1.04	%
Insight Portfolio Class A		1,000.00		997.10		1,017.90		6.88	*		6.95	*		1.39
Insight Portfolio Class L		1,000.00		994.80		1,015.42		9.35	*		9.44	*		1.89
Insight Portfolio Class C		1,000.00		997.00		1,004.78		3.57	**		3.58	**		2.14

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was below its peer group average for the one-year period but better than its peer group average for the three-year period and the period since the end of December 2011, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's contractual management fee was higher but close to its peer group average. The Board also noted that the Portfolio's actual management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Insight Portfolio

	Shares		Value (000)
Common Stocks (90.3%)
Aerospace & Defense (1.8%)
United Technologies Corp.		441	$	49
Air Freight & Logistics (2.0%)
Expeditors International of Washington, Inc.		1,156		53
Beverages (0.3%)
Big Rock Brewery, Inc. (Canada)		1,422		8
Chemicals (5.4%)
Mosaic Co. (The)		2,757		129
Rayonier Advanced Materials, Inc.		1,038		17
				146
Commercial Services & Supplies (2.0%)
Copart, Inc. (a)		1,489		53
Diversified Financial Services (9.8%)
Berkshire Hathaway, Inc., Class B (a)		711		97
Leucadia National Corp.		4,492		109
McGraw Hill Financial, Inc.		566		57
				263
Electrical Equipment (6.5%)
Babcock & Wilcox Co. (The)		5,328		175
Energy Equipment & Services (2.6%)
Dresser-Rand Group, Inc. (a)		831		71
Food Products (1.9%)
Nestle SA ADR (Switzerland)		709		51
Health Care Equipment & Supplies (7.6%)
Abbott Laboratories		1,177		57
Intuitive Surgical, Inc. (a)		305		148
				205
Health Care Technology (0.4%)
Castlight Health, Inc., Class B (a)(b)		1,512		12
Hotels, Restaurants & Leisure (1.2%)
Bojangles', Inc. (a)		796		19
Ignite Restaurant Group, Inc. (a)		1,733		8
Wingstop, Inc. (a)		161		5
				32
Household Durables (6.7%)
Garmin Ltd.		2,832		125
NVR, Inc. (a)		42		56
				181
Industrial Conglomerates (4.3%)
Koninklijke Philips N.V. (Netherlands)		4,544		116
Insurance (13.3%)
Arch Capital Group Ltd. (a)		1,258		84
Progressive Corp. (The)		5,791		161
RenaissanceRe Holdings Ltd.		1,103		112
				357
Internet & Catalog Retail (1.6%)
Amazon.com, Inc. (a)		36		15
zulily, Inc., Class A (a)(b)		2,211		29
				44

	Shares		Value (000)
Internet Software & Services (5.9%)
eBay, Inc. (a)		1,932	$	117
Pandora Media, Inc. (a)		2,720		42
				159
Leisure Products (0.4%)
Vista Outdoor, Inc. (a)		248		11
Machinery (5.5%)
Manitowoc Co., Inc. (The)		7,502		147
Media (6.0%)
News Corp., Class A (a)		3,400		50
Time Warner, Inc.		1,274		111
				161
Software (3.3%)
Solera Holdings, Inc.		1,966		88
Trading Companies & Distributors (1.8%)
Fastenal Co.		1,159		49
Total Common Stocks (Cost $2,354)				2,431
	No. of Warrants
Warrants (0.0%)
Real Estate Management & Development (0.0%)
Tejon Ranch Co., expires 8/31/16 (a) (Cost $1)		119		—	@
	Shares
Short-Term Investments (9.2%)
Securities held as Collateral on Loaned Securities (1.5%)
Investment Company (1.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		29,276		29
	Face Amount (000)
Repurchase Agreements (0.4%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $10; fully collateralized by various U.S. Government obligations; 0.88% - 2.00% due 2/28/17 - 10/31/21; valued at $10)	$	10		10
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $1; fully collateralized by various U.S. Government agency securities; 2.35% - 5.50% due 12/22/15 - 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $1)		1		1
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $1; fully collateralized by various U.S. Government obligations; Zero Coupon - 0.25% due 5/15/16 - 2/15/24; valued at $1)		1		1
				12
Total Securities held as Collateral on Loaned Securities (Cost $41)				41

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Insight Portfolio

	Shares		Value (000)
Investment Company (7.7%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $207)		206,769	$	207
Total Short-Term Investments (Cost $248)				248
Total Investments (99.5%) (Cost $2,603) Including $41 of Securities Loaned				2,679
Other Assets in Excess of Liabilities (0.5%)				12
Net Assets (100.0%)			$	2,691

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2015.

@  Value is less than $500.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		24.2	%
Insurance		13.5
Diversified Financial Services		10.0
Short-Term Investment		7.8
Health Care Equipment & Supplies		7.8
Household Durables		6.9
Electrical Equipment		6.6
Media		6.1
Internet Software & Services		6.0
Machinery		5.6
Chemicals		5.5
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Insight Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $2,367)	$	2,443
Investment in Security of Affiliated Issuer, at Value (Cost $236)		236
Total Investments in Securities, at Value (Cost $2,603)		2,679
Cash		2
Due from Adviser		33
Receivable from Affiliate		—	@
Other Assets		46
Total Assets		2,760
Liabilities:
Collateral on Securities Loaned, at Value		42
Payable for Professional Fees		23
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees- Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Administration Fees		—	@
Other Liabilities		4
Total Liabilities		69
Net Assets	$	2,691
Net Assets Consist Of:
Paid-in-Capital	$	2,365
Accumulated Undistributed Net Investment Income		21
Accumulated Net Realized Gain		229
Unrealized Appreciation (Depreciation) on:
Investments		76
Net Assets	$	2,691
CLASS I:
Net Assets	$	2,115
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		155,006
Net Asset Value, Offering and Redemption Price Per Share	$	13.64
CLASS A:
Net Assets	$	442
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		32,464
Net Asset Value, Redemption Price Per Share	$	13.62
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.75
Maximum Offering Price Per Share	$	14.37
CLASS L:
Net Assets	$	95
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		7,044
Net Asset Value, Offering and Redemption Price Per Share	$	13.43
CLASS C:
Net Assets	$	39
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,938
Net Asset Value, Offering and Redemption Price Per Share	$	13.43
(1) Including: Securities on Loan, at Value:	$	41

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $—@ of Foreign Taxes Withheld)	$	31
Dividends from Security of Affiliated Issuer (Note G)		—	@
Income from Securities Loaned — Net		—	@
Total Investment Income		31
Expenses:
Professional Fees		42
Registration Fees		14
Advisory Fees (Note B)		10
Shareholder Reporting Fees		6
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Custodian Fees (Note F)		2
Administration Fees (Note C)		1
Pricing Fees		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		4
Total Expenses		83
Expenses Reimbursed by Adviser (Note B)		(57	)
Waiver of Advisory Fees (Note B)		(10	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		13
Net Investment Income		18
Realized Gain:
Investments Sold		97
Foreign Currency Transactions		(—	@)
Net Realized Gain		97
Change in Unrealized Appreciation (Depreciation):
Investments		(122	)
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		(122	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(25	)
Net Decrease in Net Assets Resulting from Operations	$	(7	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	18		$	8
Net Realized Gain		97			353
Net Change in Unrealized Appreciation (Depreciation)		(122	)		(220	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(7	)		141
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(5	)
Net Realized Gain		—			(331	)
Class A:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(38	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(9	)
Total Distributions		—			(383	)
Capital Share Transactions:(1)
Class I:
Subscribed		156			—
Distributions Reinvested		—			335
Redeemed		(6	)		(11	)
Class A:
Subscribed		304			25
Distributions Reinvested		—			35
Redeemed		(89	)		(16	)
Class L:
Subscribed		48			—
Distributions Reinvested		—			6
Redeemed		—			(70	)
Class C:
Subscribed		40	*		—
Redeemed		(—	@)*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		453			304
Total Increase in Net Assets		446			62
Net Assets:
Beginning of Period		2,245			2,183
End of Period (Including Accumulated Undistributed Net Investment Income of $21 and $3)	$	2,691		$	2,245

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Insight Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		11			—
Shares Issued on Distributions Reinvested		—			24
Shares Redeemed		(—	@@)		(1	)
Net Increase in Class I Shares Outstanding		11			23
Class A:
Shares Subscribed		22			2
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(6	)		(1	)
Net Increase in Class H Shares Outstanding		16			3
Class L:
Shares Subscribed		4			—
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(4	)
Net Increase (Decrease) in Class L Shares Outstanding		4			(4	)
Class C:
Shares Subscribed		3	*		—
Shares Redeemed		(—	@@)*		—
Net Increase in Class C Shares Outstanding		3	*		—

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Insight Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	13.65		$	15.40		$	11.86		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.10			0.06			0.18			0.17			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		(0.11	)		0.87			4.52			2.59			0.06
Total from Investment Operations		(0.01	)		0.93			4.70			2.76			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)		(0.16	)		(0.14	)		—
Net Realized Gain		—			(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(2.68	)		(1.16	)		(0.96	)		—
Net Asset Value, End of Period	$	13.64		$	13.65		$	15.40		$	11.86		$	10.06
Total Return++		(0.07	)%#		6.66	%		40.20	%		27.47	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,115		$	1,968		$	1,859		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.04	%+*		1.04	%+		1.04	%+		1.04	%+		1.05	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.42	%+*		0.44	%+		1.25	%+		1.47	%+		(0.94	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		23	%#		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		6.49	%*		7.69	%		10.83	%		11.61	%		380.17	%*
Net Investment Loss to Average Net Assets		(4.03	)%*		(6.21	)%		(8.54	)%		(9.10	)%		(380.06	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Insight Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	13.66		$	15.43		$	11.86		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.08			0.01			0.07			0.14			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		(0.12	)		0.87			4.58			2.59			0.06
Total from Investment Operations		(0.04	)		0.88			4.65			2.73			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.08	)		(0.11	)		—
Net Realized Gain		—			(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(2.65	)		(1.08	)		(0.93	)		—
Net Asset Value, End of Period	$	13.62		$	13.66		$	15.43		$	11.86		$	10.06
Total Return++		(0.29	)%#		6.41	%		39.73	%		27.21	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	442		$	230		$	209		$	1,144		$	815
Ratio of Expenses to Average Net Assets (1)		1.39	%+*		1.39	%+		1.30	%+^^		1.29	%+		1.30	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.15	%+*		0.09	%+		0.50	%+		1.22	%+		(1.19	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		23	%#		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		7.15	%*		8.91	%		13.79	%		11.86	%		380.42	%*
Net Investment Loss to Average Net Assets		(4.61	)%*		(7.43	)%		(11.99	)%		(9.35	)%		(380.31	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.40% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.30% for Class A shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Insight Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	13.50		$	15.35		$	11.85		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			(0.06	)		0.08			0.08			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		(0.12	)		0.86			4.49			2.58			0.06
Total from Investment Operations		(0.07	)		0.80			4.57			2.66			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.07	)		(0.05	)		—
Net Realized Gain		—			(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(2.65	)		(1.07	)		(0.87	)		—
Net Asset Value, End of Period	$	13.43		$	13.50		$	15.35		$	11.85		$	10.06
Total Return++		(0.52	)%#		5.83	%		39.13	%		26.52	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	95		$	47		$	115		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.89	%+*		1.89	%+		1.84	%+^^		1.79	%+		1.80	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.69	%+*		(0.41	)%+		0.54	%+		0.72	%+		(1.70	)%*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		N/A
Portfolio Turnover Rate		23	%#		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		9.09	%*		10.64	%		12.31	%		12.36	%		380.92	%*
Net Investment Loss to Average Net Assets		(6.51	)%*		(9.16	)%		(9.93	)%		(9.85	)%		(380.82	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.90% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.80% for Class L shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	13.47
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.01	)
Net Realized and Unrealized Loss		(0.03	)
Total from Investment Operations		(0.04	)
Net Asset Value, End of Period	$	13.43
Total Return++		(0.30	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	39
Ratios of Expenses to Average Net Assets (1)		2.14	%+*
Ratio of Net Investment loss to Average Net Assets (1)		(0.65	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		15.44	%*
Net Investment Loss to Average Net Assets		(13.95	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Insight Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and cyclical franchise companies with market capitalizations within the range of companies included in the Russell 3000® Value Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors").

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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	49	$	—	$	—	$	49
Air Freight & Logistics		53		—		—		53
Beverages		8		—		—		8
Chemicals		146		—		—		146
Commercial Services & Supplies		53		—		—		53
Diversified Financial Services		263		—		—		263
Electrical Equipment		175		—		—		175
Energy Equipment & Services		71		—		—		71
Food Products		51		—		—		51
Health Care Equipment & Supplies		205		—		—		205
Health Care Technology		12		—		—		12
Hotels, Restaurants & Leisure		32		—		—		32
Household Durables		181		—		—		181
Industrial Conglomerates		116		—		—		116
Insurance		357		—		—		357

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Internet & Catalog Retail	$	44		$	—	$	—	$	44
Internet Software & Services		159			—		—		159
Leisure Products		11			—		—		11
Machinery		147			—		—		147
Media		161			—		—		161
Software		88			—		—		88
Trading Companies & Distributors		49			—		—		49
Total Common Stocks		2,431			—		—		2,431
Warrants		—	@		—		—		—	@
Short-Term Investments
Investment Company		236			—		—		236
Repurchase Agreements		—			12		—		12
Total Short-Term Investments		236			12		—		248
Total Assets	$	2,667		$	12	$	—	$	2,679

@  Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, the Portfolio did not have any investments transfer between investment levels.

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the

agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation

to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	41	(a)	$	—	$	(41	)(b)(c)	$	0

(a) Represents market value of loaned securities at period end.

(b) The Portfolio received cash collateral of approximately $42,000, of which approximately $41,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $1,000, which is not reflected in the Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.05% for Class I shares, 1.40% for Class A shares, 1.90% for Class L shares and 2.15% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $10,000 of advisory fees were waived and approximately $60,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $1,060,000 and $499,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	206	$	822	$	792	$	—	@	$	236

@ Amount is less than $500.

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded

with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	82	$	301	$	79	$	74

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(1	)	$	1	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	47	$	90

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $215,000 and the aggregate gross unrealized depreciation is approximately $139,000 resulting in net unrealized appreciation of approximately $76,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 18.6%, 42.9% and 73.4% for Class I, Class A and Class L shares, respectively.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

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Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

Morgan Stanley Investment Management Inc.
522 Fifth Avenue
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© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIINSGTSAN
1259831 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Insight Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	12
Notes to Financial Statements	16
U.S. Privacy Policy	23
Director and Officer Information	26

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Insight Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Insight Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Insight Portfolio Class I	$	1,000.00	$	1,032.00	$	1,018.15	$	6.75	*	$	6.71	*		1.34	%
Global Insight Portfolio Class A		1,000.00		1,030.20		1,016.41		8.51	*		8.45	*		1.69
Global Insight Portfolio Class L		1,000.00		1,027.80		1,013.93		11.01	*		10.94	*		2.19
Global Insight Portfolio Class C		1,000.00		976.00		1,004.26		4.05	**		4.10	**		2.45

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the three-year period and the period since the end of December 2011, the month of the Portfolio's inception, but below its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. When a fund's management fee and/or its total expense ratio are higher than its peers, the Board and the Adviser discuss the reasons for this and, where appropriate, they discuss possible waivers and/or caps. The Board noted that the Portfolio's contractual management fee was higher than its peer group average. The Board also noted that while the Portfolio's actual management fee was lower than its peer group average, the total expense ratio was higher but close to its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes a breakpoint. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Insight Portfolio

	Shares		Value (000)
Common Stocks (94.9%)
Australia (0.9%)
Kathmandu Holdings Ltd.		16,308	$	19
Brazil (1.6%)
JHSF Participacoes SA		27,643		17
Tegma Gestao Logistica (a)		2,182		8
Vale SA (Preference)		1,674		8
				33
Canada (1.6%)
Dominion Diamond Corp.		2,313		33
China (2.0%)
Jumei International Holding Ltd. ADR (a)		1,758		40
France (8.4%)
Christian Dior SE		537		105
Eurazeo SA		1,016		67
				172
Germany (5.2%)
ThyssenKrupp AG		3,068		80
windeln.de AG (a)(b)		628		8
Zalando SE (a)(b)		570		19
				107
Greece (0.7%)
Titan Cement Co., SA (Preference) (a)		1,462		15
Italy (4.0%)
Brunello Cucinelli SpA		1,064		20
Moncler SpA		1,092		20
Tamburi Investment Partners SpA		10,789		42
				82
Netherlands (3.6%)
Koninklijke Philips N.V.		2,875		73
Singapore (2.0%)
Mandarin Oriental International Ltd.		25,000		40
Spain (1.5%)
Baron de Ley (a)		303		30
Sweden (3.3%)
Investment AB Kinnevik		2,150		68
Switzerland (3.7%)
Nestle SA (Registered)		1,044		75
United Kingdom (6.6%)
Anglo American PLC		2,424		35
Daily Mail & General Trust PLC		3,357		49
Just Eat PLC (a)		8,183		52
				136
United States (49.8%)
Amazon.com, Inc. (a)		24		10
Arch Capital Group Ltd. (a)		578		39
Babcock & Wilcox Co. (The)		4,326		134
Castlight Health, Inc., Class B (a)(c)		995		8
Cosan Ltd., Class A		5,952		37
eBay, Inc. (a)		1,918		116
Garmin Ltd.		2,171		95

	Shares		Value (000)
Intuitive Surgical, Inc. (a)		198	$	96
Leucadia National Corp.		1,500		36
Manitowoc Co., Inc. (The)		5,928		116
Mosaic Co. (The)		657		31
News Corp., Class A (a)		1,745		25
Progressive Corp. (The)		3,135		87
Rayonier Advanced Materials, Inc.		663		11
RenaissanceRe Holdings Ltd.		959		97
Solera Holdings, Inc.		668		30
Time Warner, Inc.		465		41
zulily, Inc., Class A (a)(c)		860		11
				1,020
Total Common Stocks (Cost $1,923)				1,943
Short-Term Investments (5.6%)
Securities held as Collateral on Loaned Securities (0.9%)
Investment Company (0.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		13,790		14
	Face Amount (000)
Repurchase Agreements (0.2%)
Barclays Capital, Inc., (0.10%, dated 6/30/15, due 7/1/15; proceeds $3; fully collateralized by various U.S. Government obligations; 0.88% – 2.00% due 2/28/17 – 10/31/21; valued at $5)	$	3		3
BNP Paribas Securities Corp., (0.10%, dated 6/30/15, due 7/1/15; proceeds $1; fully collateralized by various U.S. Government agency securities; 2.35% – 5.50% due 12/22/15 – 6/15/43 and a U.S. Government obligation; 0.63% due 7/15/16; valued at $1)		1		1
Merrill Lynch & Co., Inc., (0.11%, dated 6/30/15, due 7/1/15; proceeds $1; fully collateralized by various U.S. Government obligations; Zero Coupon – 0.25% due 5/15/16 – 2/15/24; valued at $1)		1		1
				5
Total Securities held as Collateral on Loaned Securities (Cost $19)				19

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Global Insight Portfolio

	Shares		Value (000)
Investment Company (4.7%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $97)		96,838	$	97
Total Short-Term Investments (Cost $116)				116
Total Investments (100.5%) (Cost $2,039) Including $19 of Securities Loaned				2,059
Liabilities in Excess of Other Assets (-0.5%)				(11	)
Net Assets (100.0%)			$	2,048

(a)  Non-income producing security.

(b)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(c)  All or a portion of this security was on loan at June 30, 2015.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		39.8	%
Insurance		10.9
Diversified Financial Services		8.4
Internet Software & Services		8.2
Metals & Mining		7.7
Textiles, Apparel & Luxury Goods		7.1
Electrical Equipment		6.6
Machinery		5.7
Media		5.6
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2015.

**  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $1,928)	$	1,948
Investment in Security of Affiliated Issuer, at Value (Cost $111)		111
Total Investments in Securities, at Value (Cost $2,039)		2,059
Foreign Currency, at Value (Cost $—@)		—	@
Cash		1
Due from Adviser		38
Receivable for Investments Sold		8
Dividends Receivable		1
Tax Reclaim Receivable		1
Receivable from Affiliate		—	@
Other Assets		49
Total Assets		2,157
Liabilities:
Payable for Investments Purchased		60
Payable for Professional Fees		23
Collateral on Securities Loaned, at Value		20
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees- Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Custodian Fees		—	@
Payable for Administration Fees		—	@
Other Liabilities		6
Total Liabilities		109
Net Assets	$	2,048
Net Assets Consist of:
Paid-in-Capital	$	1,932
Distributions in Excess of Net Investment Income		(6	)
Accumulated Net Realized Gain		102
Unrealized Appreciation (Depreciation) on:
Investments		20
Foreign Currency Translations		(—	@)
Net Assets	$	2,048

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	1,634
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		136,978
Net Asset Value, Offering and Redemption Price Per Share	$	11.93
CLASS A:
Net Assets	$	364
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,449
Net Asset Value, Redemption Price Per Share	$	11.94
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.66
Maximum Offering Price Per Share	$	12.60
CLASS L:
Net Assets	$	32
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,728
Net Asset Value, Offering and Redemption Price Per Share	$	11.82
CLASS C:
Net Assets	$	18
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,558
Net Asset Value, Offering and Redemption Price Per Share	$	11.81
(1) Including: Securities on Loan, at Value:	$	19

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1 of Foreign Taxes Withheld)	$	23
Income from Securities Loaned — Net		2
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		25
Expenses:
Professional Fees		45
Registration Fees		15
Advisory Fees (Note B)		9
Custodian Fees (Note F)		6
Shareholder Reporting Fees		5
Pricing Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Administration Fees (Note C)		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Directors' Fees and Expenses		—	@
Other Expenses		6
Total Expenses		93
Expenses Reimbursed by Adviser (Note B)		(68	)
Waiver of Advisory Fees (Note B)		(9	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		13
Net Investment Income		12
Realized Gain (Loss):
Investments Sold		67
Foreign Currency Transactions		(1	)
Net Realized Gain		66
Change in Unrealized Appreciation (Depreciation):
Investments		(28	)
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		(28	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		38
Net Increase in Net Assets Resulting from Operations	$	50

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	12		$	26
Net Realized Gain		66			166
Net Change in Unrealized Appreciation (Depreciation)		(28	)		(240	)
Net Increase (Decrease) in Net Assets Resulting from Operations		50			(48	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(13	)
Net Realized Gain		—			(164	)
Class A:
Net Investment Income		—			(1	)
Net Realized Gain		—			(22	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(2	)
Total Distributions		—			(202	)
Capital Share Transactions:(1)
Class I:
Subscribed		104			155
Distributions Reinvested		—			175
Redeemed		(6	)		(18	)
Class A:
Subscribed		183			29
Distributions Reinvested		—			21
Redeemed		(23	)		(12	)
Class L:
Subscribed		6			15
Distributions Reinvested		—			1
Class C:
Subscribed		19	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		283			366
Total Increase in Net Assets		333			116
Net Assets:
Beginning of Period		1,715			1,599
End of Period (Including Distributions in Excess of Net Investment Income of $(6) and $(18))	$	2,048		$	1,715
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		9			11
Shares Issued on Distributions Reinvested		—			15
Shares Redeemed		(1	)		(1	)
Net Increase in Class I Shares Outstanding		8			25
Class A:
Shares Subscribed		15			2
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(2	)		(1	)
Net Increase in Class A Shares Outstanding		13			3
Class L:
Shares Subscribed		—	@@		1
Shares Issued on Distributions Reinvested		—			—	@@
Net Increase in Class L Shares Outstanding		—	@@		1
Class C:
Shares Subscribed		2	*		—

*  For the period April 30, 2015 through June 30, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Insight Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.55		$	13.42		$	11.99		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.08			0.20			0.30			0.31			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.30			(0.56	)		3.32			2.53			0.07
Total from Investment Operations		0.38			(0.36	)		3.62			2.84			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.11	)		(0.45	)		(0.49	)		—
Net Realized Gain		—			(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(1.51	)		(2.19	)		(0.92	)		—
Net Asset Value, End of Period	$	11.93		$	11.55		$	13.42		$	11.99		$	10.07
Total Return++		3.20	%#		(2.65	)%		30.89	%		28.31	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,634		$	1,490		$	1,397		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.34	%+*		1.35	%+		1.35	%+		1.35	%+		1.35	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.33	%+*		1.49	%+		2.17	%+		2.74	%+		(1.27	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		31	%#		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		9.77	%*		10.82	%		14.22	%		16.10	%		381.10	%*
Net Investment Loss to Average Net Assets		(7.10	)%*		(7.98	)%		(10.70	)%		(12.01	)%		(381.02	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Insight Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.58		$	13.45		$	11.99		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.06			0.15			0.01			0.28			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.30			(0.55	)		3.36			2.53			0.07
Total from Investment Operations		0.36			(0.40	)		3.57			2.81			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)		(0.37	)		(0.46	)		—
Net Realized Gain		—			(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(1.47	)		(2.11	)		(0.89	)		—
Net Asset Value, End of Period	$	11.94		$	11.58		$	13.45		$	11.99		$	10.07
Total Return++		3.02	%#		(2.97	)%#		30.52	%		28.04	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	364		$	199		$	189		$	1,151		$	816
Ratio of Expenses to Average Net Assets (1)		1.69	%+*		1.70	%+		1.60	%+^^		1.60	%+		1.60	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.04	%+*		1.14	%+		0.07	%+		2.49	%+		(1.52	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.00	%§		N/A
Portfolio Turnover Rate		31	%#		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		10.50	%*		12.14	%		13.62	%		16.35	%		381.35	%*
Net Investment Loss to Average Net Assets		(7.77	)%*		(9.30	)%		(11.95	)%		(12.26	)%		(381.27	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.70% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.60% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Insight Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,									Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.49		$	13.39		$	11.98		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			0.08			0.12			0.23			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.30			(0.54	)		3.37			2.51			0.07
Total from Investment Operations		0.33			(0.46	)		3.49			2.74			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)		(0.34	)		(0.40	)		—
Net Realized Gain		—			(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(1.44	)		(2.08	)		(0.83	)		—
Net Asset Value, End of Period	$	11.82		$	11.49		$	13.39		$	11.98		$	10.07
Total Return++		2.78	%#		(3.43	)%		29.82	%		27.36	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	32		$	26		$	13		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		2.19	%+*		2.20	%+		2.13	%+^^		2.10	%+		2.10	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.48	%+*		0.64	%+		0.93	%+		1.99	%+		(2.01	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		31	%#		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		15.51	%*		20.95	%		17.73	%		16.85	%		381.85	%*
Net Investment Loss to Average Net Assets		(12.84	)%*		(18.11	)%		(14.67	)%		(12.76	)%		(381.76	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.20% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.10% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	12.10
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.30	)
Total from Investment Operations		(0.29	)
Net Asset Value, End of Period	$	11.81
Total Return++		(2.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	18
Ratios of Expenses to Average Net Assets (1)		2.45	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.25	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		20.54	%*
Net Investment Loss to Average Net Assets		(17.84	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Insight Portfolio. The Portfolio seeks long-term capital appreciation by investing primarily in established and cyclical franchise companies located throughout the world with market capitalizations within the range of companies included in the MSCI All Country World Index.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	30	$	—	$	—	$	30
Capital Markets		42		—		—		42
Chemicals		42		—		—		42
Construction Materials		—		15		—		15
Diversified Financial Services		171		—		—		171
Electrical Equipment		134		—		—		134
Food Products		75		—		—		75
Health Care Equipment & Supplies		96		—		—		96
Health Care Technology		8		—		—		8
Hotels, Restaurants & Leisure		40		—		—		40
Household Durables		95		—		—		95
Industrial Conglomerates		73		—		—		73
Insurance		223		—		—		223
Internet & Catalog Retail		88		—		—		88
Internet Software & Services		168		—		—		168
Machinery		116		—		—		116
Media		115		—		—		115
Metals & Mining		156		—		—		156

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Oil, Gas & Consumable Fuels	$	37	$	—	$	—	$	37
Real Estate Management & Development		17		—		—		17
Road & Rail		8		—		—		8
Software		30		—		—		30
Specialty Retail		19		—		—		19
Textiles, Apparel & Luxury Goods		145		—		—		145
Total Common Stocks		1,928		15		—		1,943
Short-Term Investments
Investment Company		111		—		—		111
Repurchase Agreements		—		5		—		5
Total Short-Term Investments		111		5		—		116
Total Assets	$	2,039	$	20	$	—	$	2,059

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $753,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Repurchase Agreements: The Portfolio may enter into repurchase agreements under which the Portfolio lends cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Portfolio takes possession of the underlying securities which are held as collateral, with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by

the counterparty to the agreement, realization of the collateral proceeds may be subject to cost and delays. The Portfolio, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into repurchase agreements.

4.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

5.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income

from Securities Loaned-Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Gross Asset Amounts Presented in Statement of Assets and Liabilities (000)			Financial Instrument (000)		Collateral Received (000)			Net Amount (not less than $0) (000)
$	19,000	(a)	$	—	$	(19,000	)(b)(c)	$	0

(a) Represents market value of loaned securities at period end.

(b) The Portfolio received cash collateral of approximately $20,000, of which approximately $19,000 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. As of June 30, 2015, there was uninvested cash of approximately $1,000, which is not reflected in the Portfolio of Investments.

(c) The actual collateral received is greater than the amount shown here due to overcollateralization.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services fees, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	1.00	%		0.95	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.35% for Class I shares, 1.70% for Class A shares, 2.20% for Class L shares and 2.45% for Class C shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $9,000 of advisory fees were waived and approximately $71,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $803,000 and $548,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	135	$	595	$	619	$	—	@	$	111

@ Amount is less than $500.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally, each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	93	$	109	$	91	$	132

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and basis adjustments on certain equity securities designated as passive foreign investment companies, resulted in the following

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	6	$	(6	)	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	34	$	17

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $211,000 and the aggregate gross unrealized depreciation is approximately $191,000 resulting in net unrealized appreciation of approximately $20,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 10.37% and 46.27% for Class I and Class A shares, respectively.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1. WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

26

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGISAN
1260891 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets External Debt Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	10
Statement of Operations	12
Statements of Changes in Net Assets	13
Financial Highlights	15
Notes to Financial Statements	20
U.S. Privacy Policy	28
Director and Officer Information	31

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Emerging Markets External Debt Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Emerging Markets External Debt Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Emerging Markets External Debt Portfolio Class I	$	1,000.00	$	1,012.80	$	1,020.68	$	4.14	*	$	4.16	*		0.83	%
Emerging Markets External Debt Portfolio Class A		1,000.00		1,011.80		1,018.84		5.99	*		6.01	*		1.20
Emerging Markets External Debt Portfolio Class L		1,000.00		1,010.20		1,017.60		7.23	*		7.25	*		1.45
Emerging Markets External Debt Portfolio Class C		1,000.00		966.40		1,005.10		3.20	**		3.27	**		1.95
Emerging Markets External Debt Portfolio Class IS		1,000.00		1,013.90		1,020.73		4.09	*		4.11	*		0.82

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one-year period but below its peer group average for the period since the end of May 2012, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Emerging Markets External Debt Portfolio

	Face Amount (000)		Value (000)
Fixed Income Securities (95.2%)
Argentina (0.5%)
Sovereign (0.5%)
Republic of Argentina, 2.50%, 12/31/38 (a)(b)(c)	$	345	$	186
Brazil (6.9%)
Corporate Bonds (3.2%)
Banco Safra SA,
6.75%, 1/27/21		200		220
CIMPOR Financial Operations BV,
5.75%, 7/17/24 (d)		200		163
Embraer Netherlands Finance BV,
5.05%, 6/15/25		200		200
Odebrecht Offshore Drilling Finance Ltd.,
6.75%, 10/1/22 (d)		827		595
				1,178
Sovereign (3.7%)
Brazil Minas SPE via State of Minas Gerais,
5.33%, 2/15/28 (d)		550		522
Brazilian Government International Bond,
4.88%, 1/22/21		400		419
5.00%, 1/27/45		450		392
				1,333
				2,511
Chile (3.4%)
Corporate Bond (0.5%)
Empresa Electrica Angamos SA,
4.88%, 5/25/29 (d)		200		197
Sovereign (2.9%)
Corporación Nacional del Cobre de Chile,
4.88%, 11/4/44 (d)		400		384
Empresa Nacional del Petroleo,
4.75%, 12/6/21		150		156
5.25%, 8/10/20		470		499
				1,039
				1,236
China (3.9%)
Sovereign (3.9%)
Sinopec Group Overseas Development 2013 Ltd.,
4.38%, 10/17/23		960		1,009
Sinopec Group Overseas Development 2014 Ltd.,
4.38%, 4/10/24		200		210
Three Gorges Finance I Cayman Islands Ltd.,
3.70%, 6/10/25 (d)		200		202
				1,421
Colombia (2.6%)
Corporate Bond (0.3%)
Ecopetrol SA,
5.88%, 5/28/45		114		101

	Face Amount (000)		Value (000)
Sovereign (2.3%)
Colombia Government International Bond,
4.38%, 7/12/21	$	200	$	210
5.00%, 6/15/45		366		340
11.75%, 2/25/20		220		300
				850
				951
Croatia (1.5%)
Sovereign (1.5%)
Croatia Government International Bond,
5.50%, 4/4/23		520		537
Dominican Republic (2.1%)
Sovereign (2.1%)
Dominican Republic International Bond,
6.85%, 1/27/45 (d)		624		639
7.45%, 4/30/44 (d)		100		110
				749
Ecuador (0.7%)
Sovereign (0.7%)
Ecuador Government International Bond,
10.50%, 3/24/20		260		262
El Salvador (0.5%)
Sovereign (0.5%)
El Salvador Government International Bond,
6.38%, 1/18/27 (d)		180		175
Ethiopia (0.6%)
Sovereign (0.6%)
Federal Democratic Republic of Ethiopia,
6.63%, 12/11/24 (d)		200		198
Gabon (0.6%)
Sovereign (0.6%)
Gabonese Republic,
6.95%, 6/16/25 (d)		200		199
Honduras (0.6%)
Sovereign (0.6%)
Republic of Honduras,
8.75%, 12/16/20		200		227
Hungary (3.6%)
Sovereign (3.6%)
Hungary Government International Bond,
4.00%, 3/25/19		20		21
5.38%, 3/25/24		162		176
5.75%, 11/22/23		880		979
6.38%, 3/29/21		108		123
				1,299
Indonesia (9.2%)
Sovereign (9.2%)
Indonesia Government International Bond,
5.13%, 1/15/45 (d)		200		191
5.88%, 1/15/24 (d)		310		344
7.75%, 1/17/38		307		392

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets External Debt Portfolio

	Face Amount (000)		Value (000)
Indonesia (cont'd)
Majapahit Holding BV,
7.75%, 1/20/20	$	329	$	381
Pertamina Persero PT,
4.30%, 5/20/23		1,260		1,210
6.45%, 5/30/44 (d)		400		396
Perusahaan Listrik Negara PT,
5.50%, 11/22/21		400		425
				3,339
Iraq (0.6%)
Sovereign (0.6%)
Republic of Iraq,
5.80%, 1/15/28		250		203
Ivory Coast (1.4%)
Sovereign (1.4%)
Ivory Coast Government International Bond,
5.38%, 7/23/24 (d)		200		189
5.75%, 12/31/32		330		313
				502
Jamaica (0.6%)
Sovereign (0.6%)
Jamaica Government International Bond,
7.63%, 7/9/25		200		225
Kazakhstan (3.8%)
Sovereign (3.8%)
Kazakhstan Government International Bond,
3.88%, 10/14/24 (d)		200		189
KazMunayGas National Co., JSC,
6.00%, 11/7/44 (d)		450		388
6.38%, 4/9/21		775		815
				1,392
Kenya (1.1%)
Sovereign (1.1%)
Kenya Government International Bond,
6.88%, 6/24/24 (d)		400		408
Lithuania (1.0%)
Sovereign (1.0%)
Lithuania Government International Bond,
7.38%, 2/11/20		300		358
Mexico (13.6%)
Corporate Bonds (3.4%)
Alfa SAB de CV,
6.88%, 3/25/44		400		411
Cemex Finance LLC,
9.38%, 10/12/22		200		224
Fermaca Enterprises S de RL de CV,
6.38%, 3/30/38 (d)		198		202
Nemak SA de CV,
5.50%, 2/28/23		400		412
				1,249

	Face Amount (000)		Value (000)
Sovereign (10.2%)
Mexico Government International Bond,
3.63%, 3/15/22	$	450	$	456
6.05%, 1/11/40		494		563
Petroleos Mexicanos,
3.50%, 1/30/23		150		143
4.88%, 1/24/22		1,108		1,155
5.63%, 1/23/46 (d)		910		853
6.50%, 6/2/41		190		199
6.63%, 6/15/35		330		354
				3,723
				4,972
Mozambique (0.5%)
Sovereign (0.5%)
EMATUM Via Mozambique EMATUM Finance 2020 BV,
6.31%, 9/11/20		200		187
Panama (2.0%)
Sovereign (2.0%)
Panama Government International Bond,
4.00%, 9/22/24		200		202
4.30%, 4/29/53		200		176
5.20%, 1/30/20		204		225
8.88%, 9/30/27		76		108
				711
Paraguay (1.1%)
Sovereign (1.1%)
Republic of Paraguay,
6.10%, 8/11/44 (d)		400		408
Peru (2.6%)
Corporate Bonds (1.2%)
Banco de Credito del Peru,
6.13%, 4/24/27 (d)(e)		212		227
Union Andina de Cementos SAA,
5.88%, 10/30/21 (d)		200		203
				430
Sovereign (1.4%)
Peruvian Government International Bond,
5.63%, 11/18/50		100		112
6.55%, 3/14/37		55		69
7.35%, 7/21/25		250		327
				508
				938
Philippines (4.6%)
Sovereign (4.6%)
Philippine Government International Bond,
3.95%, 1/20/40		772		782
4.20%, 1/21/24		580		634
9.50%, 2/2/30		166		269
				1,685

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets External Debt Portfolio

	Face Amount (000)		Value (000)
Poland (2.0%)
Sovereign (2.0%)
Poland Government International Bond,
3.00%, 3/17/23	$	705	$	694
4.00%, 1/22/24		40		42
				736
Russia (7.5%)
Sovereign (7.5%)
Russian Foreign Bond — Eurobond,
4.50%, 4/4/22		2,200		2,164
5.63%, 4/4/42		600		566
				2,730
Serbia (0.9%)
Sovereign (0.9%)
Republic of Serbia,
4.88%, 2/25/20		320		324
South Africa (2.8%)
Corporate Bond (0.6%)
MTN Mauritius Investments Ltd.,
4.76%, 11/11/24 (d)		200		199
Sovereign (2.2%)
Eskom Holdings SOC Ltd.,
7.13%, 2/11/25 (d)		660		669
South Africa Government International Bond,
4.67%, 1/17/24		130		134
				803
				1,002
Sri Lanka (0.5%)
Sovereign (0.5%)
Sri Lanka Government International Bond,
5.88%, 7/25/22		200		198
Tunisia (0.5%)
Sovereign (0.5%)
Banque Centrale de Tunisie SA,
5.75%, 1/30/25 (d)		200		196
Turkey (5.7%)
Sovereign (5.7%)
Export Credit Bank of Turkey,
5.88%, 4/24/19 (d)		200		212

	Face Amount (000)		Value (000)
Turkey Government International Bond,
3.25%, 3/23/23	$	1,180	$	1,102
4.88%, 4/16/43		200		183
5.63%, 3/30/21		250		271
6.88%, 3/17/36		260		302
				2,070
Venezuela (5.7%)
Sovereign (5.7%)
Petroleos de Venezuela SA,
6.00%, 11/15/26		3,106		1,111
8.50%, 11/2/17		987		681
9.00%, 11/17/21		240		99
Venezuela Government International Bond,
9.00%, 5/7/23		280		110
11.75%, 10/21/26		196		85
				2,086
Total Fixed Income Securities (Cost $36,062)				34,621
	Shares
Short-Term Investment (3.2%)
Investment Company (3.2%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $1,169)		1,168,731		1,169
Total Investments (98.4%) (Cost $37,231) (f)				35,790
Other Assets in Excess of Liabilities (1.6%)				598
Net Assets (100.0%)			$	36,388

(a)  Multi-step — Coupon rate changes in predetermined increments to maturity. Rate disclosed is as of June 30, 2015. Maturity date disclosed is the ultimate maturity date.

(b)  Issuer in bankruptcy.

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

(d)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(e)  Variable/Floating Rate Security — Interest rate changes on these instruments are based on changes in a designated base rate. The rates shown are those in effect on June 30, 2015.

(f)  Securities are available for collateral in connection with an open futures contract.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets External Debt Portfolio

Futures Contract:

The Portfolio had the following futures contract open at June 30, 2015:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Appreciation (000)
Short:
U.S. Treasury 10 yr. Note		16	$	(2,019	)	Sep-15	$	18

Portfolio Composition

Classification	Percentage of Total Investments
Sovereign		87.3	%
Corporate Bonds		9.4
Other*		3.3
Total Investments		100.0	%**

*  Industries and/or investment types representing less than 5% of total investments.

**  Does not include an open short futures contract with an underlying face amount of approximately $2,019,000 with unrealized appreciation of approximately $18,000.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets External Debt Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $36,062)	$	34,621
Investment in Security of Affiliated Issuer, at Value (Cost $1,169)		1,169
Total Investments in Securities, at Value (Cost $37,231)		35,790
Cash		9
Interest Receivable		535
Receivable for Variation Margin on Futures Contracts		52
Receivable from Affiliate		—	@
Other Assets		59
Total Assets		36,445
Liabilities:
Payable for Professional Fees		27
Payable for Advisory Fees		17
Payable for Custodian Fees		3
Payable for Administration Fees		2
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Deferred Capital Gain Country Tax		1
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class I		—	@
Other Liabilities		7
Total Liabilities		57
Net Assets	$	36,388
Net Assets Consist Of:
Paid-in-Capital	$	38,456
Accumulated Undistributed Net Investment Income		302
Accumulated Net Realized Loss		(946	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $1 of Deferred Capital Gain Country Tax)		(1,442	)
Futures Contracts		18
Net Assets	$	36,388

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets External Debt Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	18,541
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,010,390
Net Asset Value, Offering and Redemption Price Per Share	$	9.22
CLASS A:
Net Assets	$	281
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,493
Net Asset Value, Redemption Price Per Share	$	9.21
Maximum Sales Load		4.25	%
Maximum Sales Charge	$	0.41
Maximum Offering Price Per Share	$	9.62
CLASS L:
Net Assets	$	99
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,699
Net Asset Value, Offering and Redemption Price Per Share	$	9.21
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,050
Net Asset Value, Offering and Redemption Price Per Share	$	9.20
CLASS IS:
Net Assets	$	17,457
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,891,577
Net Asset Value, Offering and Redemption Price Per Share	$	9.23

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets External Debt Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers	$	856
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		857
Expenses:
Advisory Fees (Note B)		104
Professional Fees		51
Registration Fees		20
Administration Fees (Note C)		11
Custodian Fees (Note F)		9
Shareholder Reporting Fees		8
Pricing Fees		5
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Directors' Fees and Expenses		—	@
Other Expenses		8
Total Expenses		220
Waiver of Advisory Fees (Note B)		(102	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		114
Net Investment Income		743
Realized Gain (Loss):
Investments Sold		(36	)
Foreign Currency Forward Exchange Contracts		(—	@)
Foreign Currency Transactions		77
Futures Contracts		(3	)
Net Realized Gain		38
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $1)		(698	)
Foreign Currency Translations		—	@
Futures Contracts		17
Net Change in Unrealized Appreciation (Depreciation)		(681	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(643	)
Net Increase in Net Assets Resulting from Operations	$	100

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Emerging Markets External Debt Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	743		$	1,053
Net Realized Gain (Loss)		38			(374	)
Net Change in Unrealized Appreciation (Depreciation)		(681	)		15
Net Increase in Net Assets Resulting from Operations		100			694
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(241	)		(1,013	)
Class A:
Net Investment Income		(3	)		(13	)
Class L:
Net Investment Income		(1	)		(5	)
Class IS:
Net Investment Income		(219	)		(1	)
Total Distributions		(464	)		(1,032	)
Capital Share Transactions:(1)
Class I:
Subscribed		202			241
Distributions Reinvested		4			30
Redeemed		(169	)		(852	)
Class A:
Subscribed		27			181
Distributions Reinvested		1			3
Redeemed		(38	)		(80	)
Class L:
Distributions Reinvested		—	@		—	@
Class C:
Subscribed		10	*		—
Class IS:
Subscribed		17,890			—
Distributions Reinvested		219			—
Redeemed		(285	)		—
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		17,861			(477	)
Total Increase (Decrease) in Net Assets		17,497			(815	)
Net Assets:
Beginning of Period		18,891			19,706
End of Period (Including Accumulated Undistributed Net Investment Income of $302 and $23)	$	36,388		$	18,891

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Emerging Markets External Debt Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		22			25
Shares Issued on Distributions Reinvested		1			3
Shares Redeemed		(19	)		(86	)
Net Increase (Decrease) in Class I Shares Outstanding		4			(58	)
Class A:
Shares Subscribed		3			19
Shares Issued on Distributions Reinvested		—	@@		—	@@
Shares Redeemed		(4	)		(8	)
Net Increase (Decrease) in Class A Shares Outstanding		(1	)		11
Class L:
Shares Issued on Distributions Reinvested		—	@@		—	@@
Class C:
Shares Subscribed		1	*		—
Class IS:
Shares Subscribed		1,899			—
Shares Issued on Distributions Reinvested		23			—
Shares Redeemed		(31	)		—
Net Increase in Class IS Shares Outstanding		1,891			—

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets External Debt Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.22		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.25			0.51			0.53			0.30
Net Realized and Unrealized Gain (Loss)		(0.13	)		(0.19	)		(1.50	)		1.18
Total from Investment Operations		0.12			0.32			(0.97	)		1.48
Distributions from and/or in Excess of:
Net Investment Income		(0.12	)		(0.50	)		(0.48	)		(0.30	)
Net Realized Gain		—			—			(0.26	)		(0.07	)
Total Distributions		(0.12	)		(0.50	)		(0.74	)		(0.37	)
Redemption Fees		—			—			0.00	‡		—
Net Asset Value, End of Period	$	9.22		$	9.22		$	9.40		$	11.11
Total Return++		1.28	%#		3.38	%		(8.79	)%		14.83	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	18,541		$	18,492		$	19,400		$	22,597
Ratio of Expenses to Average Net Assets (1)		0.83	%+*		0.83	%+		0.84	%+		0.84	%+*
Ratio of Net Investment Income to Average Net Assets (1)		5.43	%+*		5.23	%+		5.14	%+		4.63	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.60	%*		1.91	%		2.15	%		2.02	%*
Net Investment Income to Average Net Assets		4.66	%*		4.15	%		3.83	%		3.45	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets External Debt Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.21		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.23			0.47			0.49			0.29
Net Realized and Unrealized Gain (Loss)		(0.12	)		(0.19	)		(1.49	)		1.17
Total from Investment Operations		0.11			0.28			(1.00	)		1.46
Distributions from and/or in Excess of:
Net Investment Income		(0.11	)		(0.47	)		(0.45	)		(0.28	)
Net Realized Gain		—			—			(0.26	)		(0.07	)
Total Distributions		(0.11	)		(0.47	)		(0.71	)		(0.35	)
Redemption Fees		—			—			0.00	‡		—
Net Asset Value, End of Period	$	9.21		$	9.21		$	9.40		$	11.11
Total Return++		1.18	%#		2.90	%		(9.05	)%		14.66	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	281		$	291		$	196		$	111
Ratio of Expenses to Average Net Assets (1)		1.20	%+*		1.20	%+		1.14	%+^^		1.09	%+*
Ratio of Net Investment Income to Average Net Assets (1)		5.08	%+*		4.88	%+		4.88	%+		4.38	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.47	%*		2.85	%		2.76	%		2.27	%*
Net Investment Income to Average Net Assets		3.81	%*		3.23	%		3.26	%		3.20	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.20% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.10% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets External Debt Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.22		$	9.39		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.22			0.45			0.47			0.25
Net Realized and Unrealized Gain (Loss)		(0.12	)		(0.18	)		(1.51	)		1.18
Total from Investment Operations		0.10			0.27			(1.04	)		1.43
Distributions from and/or in Excess of:
Net Investment Income		(0.11	)		(0.44	)		(0.42	)		(0.25	)
Net Realized Gain		—			—			(0.26	)		(0.07	)
Total Distributions		(0.11	)		(0.44	)		(0.68	)		(0.32	)
Redemption Fees		—			—			0.00	‡		—
Net Asset Value, End of Period	$	9.21		$	9.22		$	9.39		$	11.11
Total Return++		1.02	%#		2.85	%		(9.41	)%		14.33	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	99		$	98		$	100		$	111
Ratio of Expenses to Average Net Assets (1)		1.45	%+*		1.45	%+		1.41	%+^^		1.59	%+*
Ratio of Net Investment Income to Average Net Assets (1)		4.81	%+*		4.62	%+		4.57	%+		3.88	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.69	%*		4.10	%		3.07	%		2.77	%*
Net Investment Income to Average Net Assets		2.57	%*		1.97	%		2.91	%		2.70	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.45% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.35% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets External Debt Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	9.52
Income (Loss) from Investment Operations:
Net Investment Income†		0.06
Net Realized and Unrealized Loss		(0.38	)
Total from Investment Operations		(0.32	)
Net Asset Value, End of Period	$	9.20
Total Return++		(3.36	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	10
Ratios of Expenses to Average Net Assets (1)		1.95	%+*
Ratio of Net Investment Income to Average Net Assets (1)		4.01	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		16.40	%*
Net Investment Loss to Average Net Assets		(10.44	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets External Debt Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	9.22		$	9.40		$	9.65
Income (Loss) from Investment Operations:
Net Investment Income†		0.24			0.51			0.15
Net Realized and Unrealized Gain (Loss)		(0.11	)		(0.19	)		0.04
Total from Investment Operations		0.13			0.32			0.19
Distributions from and/or in Excess of:
Net Investment Income		(0.12	)		(0.50	)		(0.24	)
Net Realized Gain		—			—			(0.20	)
Total Distributions		(0.12	)		(0.50	)		(0.44	)
Redemption Fees		0.00	‡		—			0.00	‡
Net Asset Value, End of Period	$	9.23		$	9.22		$	9.40
Total Return++		1.39	%#		3.39	%		1.92	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	17,457		$	10		$	10
Ratio of Expenses to Average Net Assets (1)		0.82	%+*		0.82	%+		0.81	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		5.12	%+*		5.25	%+		5.36	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		23	%#		95	%		94	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.49	%*		21.21	%		7.70	%*
Net Investment Income (Loss) to Average Net Assets		4.45	%*		(15.14	)%		(1.53	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.82% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Emerging Markets External Debt Portfolio. The Portfolio seeks high total return by investing primarily in fixed income securities of government and government-related issuers and corporate issuers in emerging market countries. The securities in which the Portfolio may invest will primarily be denominated in U.S. dollars. The Portfolio may invest, to a lesser extent, in securities denominated in currencies other than U.S. dollars.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (2) futures are valued at the latest price published by the commodities exchange on which they trade; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices

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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Fixed Income Securities
Corporate Bonds	$	—	$	3,354	$	—	$	3,354
Sovereign		—		31,267		—		31,267
Total Fixed Income Securities		—		34,621		—		34,621
Short-Term Investment
Investment Company		1,169		—		—		1,169
Futures Contract		18		—		—		18
Total Assets	$	1,187	$	34,621	$	—	$	35,808

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, the Portfolio did not have any investments transfer between investment levels.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities

are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

As of June 30, 2015, the Portfolio did not have any open foreign currency forward exchange contracts.

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Portfolio's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a broker with which the Portfolio has open positions in the futures contract.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Futures Contract	Variation Margin on Futures Contracts	Interest Rate Risk	$	18	(a)

(a) This amount represents the cumulative appreciation (depreciation) as reported in the Portfolio of Investments. The Statement of Assets and Liabilities only reflects the current day's net variation margin.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(—	@)
Interest Rate Risk	Futures Contracts		(3	)
Total		$	(3	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Interest Rate Risk	Futures Contracts	$	17

@ Amount is less than $500.

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Futures Contracts:
Average monthly original value	$	7,534,000

5.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net in-

vestment income, if any, are declared and paid quarterly. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.75	%		0.70	%		0.65	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.02% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 0.85% for Class I shares, 1.20% for Class A shares, 1.45% for Class L shares, 1.95% for Class C shares and 0.82% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $102,000 of advisory fees were waived and approximately $3,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.25% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly,

at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $23,273,000 and $6,467,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $1,000 relating to the Portfolio's investment in the Liquidity Funds.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	120	$	22,372	$	21,323	$	1	$	1,169

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax years in the three-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	1,031	$	—	$	1,545	$	22

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions gains (losses) on paydowns and tax adjustments on debt securities sold by the Portfolio, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	4	$	(4	)	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	25	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $217,000 and the aggregate gross unrealized depreciation is approximately $1,658,000 resulting in net unrealized depreciation of approximately $1,441,000.

At December 31, 2014, the Portfolio had available unused short-term capital losses of approximately $339,000 and long-term capital losses of approximately $569,000 that do not have an expiration date.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 11.6% and 97.4% for Class A nd Class IS shares, respectively.

J. Subsequent Event: Effective upon the consummation of a reorganization of the Emerging Markets Domestic Debt Portfolio of Morgan Stanley Institutional Fund, Inc. (the "Fund") into the Portfolio or, if the reorganization is not consummated, on or about September 28, 2015 (the "Effective Date"), the Board of Directors of the Fund, on behalf of the Portfolio, has approved various changes with respect to the Portfolio, including (i) changing the Portfolio's name to Emerging Markets Fixed Income Opportunities Portfolio; (ii) changing the Portfolio's principal investment policy; and (iii) changing the Portfolio's primary benchmark index to a blend of three broad indices comprised of (a) 1/3 JP Morgan EMBI Global Index, (b) 1/3 JP Morgan GBI-EM Global Diversified Index and (c) 1/3 JP Morgan CEMBI Broad Diversified Index.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

31

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Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMEDSAN
1259825 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Multi-Asset
Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	21
Statement of Operations	23
Statements of Changes in Net Assets	24
Financial Highlights	26
Notes to Financial Statements	31
U.S. Privacy Policy	42
Director and Officer Information	45

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Multi-Asset Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Multi-Asset Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period****
Multi-Asset Portfolio Class I	$	1,000.00	$	935.90	$	1,019.64	$	4.99	*	$	5.21	*		1.04	%
Multi-Asset Portfolio Class A		1,000.00		933.90		1,018.20		6.38	*		6.66	*		1.33
Multi-Asset Portfolio Class L		1,000.00		932.40		1,015.87		8.62	*		9.00	*		1.80
Multi-Asset Portfolio Class C		1,000.00		957.60		1,004.71		3.57	**		3.65	**		2.18
Multi-Asset Portfolio Class IS		1,000.00		974.80		1,003.28		0.82	***		0.83	***		1.01

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 30/365 (to reflect the actual days in the period).

****  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the period since the end of June 2012, the month of the Portfolio's inception, but lower than its peer group average for the one-year period. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's contractual management fee and total expense ratio were lower than its peer group averages. The Board also noted that the actual management fee was higher than its peer group average. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; (ii) management fee was acceptable; and (iii) total expense ratio was competitive with its peer group average.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Multi-Asset Portfolio

	Shares		Value (000)
Common Stocks (39.7%)
Australia (0.1%)
AGL Energy Ltd.		473	$	6
ALS Ltd.		384		2
Alumina Ltd.		2,302		3
Amcor Ltd.		900		10
AMP Ltd.		2,048		9
APA Group		1,025		7
Arrium Ltd.		1,334		—	@
Asciano Ltd.		1,125		6
ASX Ltd.		226		7
Aurizon Holding Ltd.		1,907		8
Australia & New Zealand Banking Group Ltd.		1,751		43
Bank of Queensland Ltd.		529		5
Bendigo and Adelaide Bank Ltd.		636		6
BHP Billiton Ltd.		1,945		41
BlueScope Steel Ltd.		476		1
Boral Ltd.		759		3
Brambles Ltd.		1,026		8
carsales.com Ltd.		259		2
Coca-Cola Amatil Ltd.		566		4
Commonwealth Bank of Australia		939		62
Computershare Ltd.		434		4
Crown Resorts Ltd.		383		4
CSL Ltd.		301		20
Flight Centre Travel Group Ltd.		96		3
Fortescue Metals Group Ltd.		1,239		2
Goodman Group REIT		1,678		8
Iluka Resources Ltd.		391		2
Incitec Pivot Ltd.		1,483		4
Insurance Australia Group Ltd.		1,578		7
James Hardie Industries PLC CDI		430		6
Lend Lease Group REIT		547		6
Macquarie Group Ltd.		225		14
Mirvac Group REIT		4,373		6
National Australia Bank Ltd.		1,482		38
Newcrest Mining Ltd. (a)		532		5
Oil Search Ltd.		1,105		6
Orica Ltd.		285		5
Origin Energy Ltd.		726		7
Qantas Airways Ltd. (a)		2,647		6
QBE Insurance Group Ltd.		806		8
Rio Tinto Ltd.		287		12
Santos Ltd.		786		5
Scentre Group REIT		4,516		13
Seek Ltd.		315		3
Sonic Healthcare Ltd.		363		6
South32 Ltd. (a)		11,882		16
South32 Ltd. (a)		1,945		3
Stockland REIT		2,129		7
Suncorp Group Ltd.		832		9
Sydney Airport		1,573		6
Tatts Group Ltd.		2,566		7

	Shares		Value (000)
Telstra Corp., Ltd.		7,362	$	35
Transurban Group		1,135		8
Treasury Wine Estates Ltd.		648		2
Wesfarmers Ltd.		683		21
Westfield Corp. REIT		1,283		9
Westpac Banking Corp.		1,847		46
Woodside Petroleum Ltd.		431		11
Woolworths Ltd.		767		16
WorleyParsons Ltd.		295		2
				631
Austria (0.1%)
Erste Group Bank AG (a)		21,132		600
Belgium (1.2%)
Ageas		2,069		80
Anheuser-Busch InBev N.V.		33,110		3,968
Colruyt SA		2,459		110
Delhaize Group SA		718		59
Groupe Bruxelles Lambert SA		1,920		155
KBC Groep N.V.		24,767		1,655
Proximus		1,959		69
Solvay SA		1,336		184
Telenet Group Holding N.V. (a)		830		45
UCB SA		1,437		103
Umicore SA		2,116		100
Viohalco SA (a)		2,990		8
				6,536
Canada (0.1%)
Lululemon Athletica, Inc. (a)		10,000		653
Chile (0.0%)
Antofagasta PLC		6,695		73
China (0.1%)
CRRC Corp., Ltd. H Shares (a)(b)		64,000		98
Hanergy Thin Film Power Group Ltd. (a)(b)		178,000		90
				188
Denmark (0.2%)
AP Moeller - Maersk A/S Series A		83		146
AP Moeller - Maersk A/S Series B		83		150
Danske Bank A/S		2,838		83
DSV A/S		3,457		112
Novo Nordisk A/S Series B		8,270		450
Novozymes A/S Series B		1,360		65
Pandora A/S		902		97
Vestas Wind Systems A/S		998		50
				1,153
Finland (0.3%)
Elisa Oyj		2,462		78
Fortum Oyj		4,729		84
Kone Oyj, Class B		3,142		127
Metso Oyj		1,570		43
Nokia Oyj		153,136		1,040
Orion Oyj, Class B		1,627		57

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
Finland (cont'd)
Sampo Oyj, Class A		3,125	$	147
Wartsila Oyj		1,871		88
				1,664
France (8.4%)
Aeroports de Paris (ADP)		797		90
Air Liquide SA		18,304		2,315
Airbus Group SE		28,268		1,834
Arkema SA		797		57
Atos SE		1,136		85
AXA SA		105,906		2,672
BNP Paribas SA		54,225		3,274
Bouygues SA		3,105		116
Cap Gemini SA		1,463		129
Carrefour SA		28,465		911
Casino Guichard Perrachon SA		1,100		83
Christian Dior SE		774		151
Cie de Saint-Gobain		20,818		935
Cie Generale des Etablissements Michelin		749		78
Credit Agricole SA		146,811		2,183
Danone SA		26,313		1,701
Electricite de France SA		9,403		210
Essilor International SA		8,198		978
GDF Suez		82,317		1,527
Groupe Eurotunnel SE		5,499		80
Hermes International		563		210
Iliad SA		314		70
Imerys SA		1,486		114
Kering		664		119
L'Oreal SA		10,815		1,929
Lafarge SA		2,188		144
Legrand SA		1,595		90
LVMH Moet Hennessy Louis Vuitton SE		13,879		2,432
Natixis SA		10,900		78
Numericable-SFR SAS (a)		1,306		69
Orange SA		84,258		1,297
Publicis Groupe SA		688		51
Renault SA		930		97
Rexel SA		2,671		43
Safran SA		1,208		82
Sanofi		57,216		5,629
Schneider Electric SE		28,699		1,981
Societe Generale SA		38,750		1,809
Suez Environnement Co.		3,649		68
Total SA		100,240		4,869
Unibail-Rodamco SE REIT		4,125		1,043
Vinci SA		26,304		1,521
Vivendi SA		65,177		1,644
Zodiac Aerospace		1,595		52
				44,850
Germany (7.3%)
Adidas AG		1,100		84
Allianz SE (Registered)		22,171		3,453

	Shares		Value (000)
BASF SE		43,880	$	3,856
Bayer AG (Registered)		39,098		5,473
Bayerische Motoren Werke AG		14,104		1,544
Brenntag AG		978		56
Commerzbank AG (a)		70,573		902
Continental AG		688		163
Daimler AG (Registered)		47,236		4,299
Deutsche Annington Immobilien SE		1,414		40
Deutsche Bank AG (Registered)		63,645		1,912
Deutsche Post AG (Registered)		43,757		1,278
Deutsche Telekom AG (Registered)		153,175		2,638
E.ON SE		98,243		1,309
Fraport AG Frankfurt Airport Services Worldwide		1,051		66
Fresenius SE & Co., KGaA		1,620		104
Fuchs Petrolub SE (Preference)		1,208		51
HeidelbergCement AG		1,752		139
Hugo Boss AG		544		61
K&S AG (Registered)		2,030		85
Lanxess AG		869		51
Linde AG		978		185
Metro AG		1,958		62
Muenchener Rueckversicherungs AG (Registered)		6,540		1,159
RWE AG		21,519		463
SAP SE		45,019		3,142
Siemens AG (Registered)		39,053		3,934
Symrise AG		1,208		75
Telefonica Deutschland Holding AG		18,115		104
ThyssenKrupp AG		1,874		49
Volkswagen AG		1,076		249
Volkswagen AG (Preference)		7,368		1,709
				38,695
Greece (0.2%)
Aegean Airlines SA		3,255		19
Alpha Bank AE (a)		208,823		63
Athens Water Supply & Sewage Co., SA (The)		2,222		12
Attica Bank SA (a)		138,815		9
Ellaktor SA (a)		10,372		18
Eurobank Ergasias SA (a)		508,419		69
FF Group (a)		3,070		70
Fourlis Holdings SA (a)		4,363		12
Frigoglass SAIC (a)		1,494		3
GEK Terna Holding Real Estate Construction SA (a)		8,891		15
Grivalia Properties REIC AE REIT		2,964		21
Hellenic Exchanges - Athens Stock Exchange SA Holding		12,586		55
Hellenic Petroleum SA (a)		6,639		29
Hellenic Telecommunications Organization SA		15,328		119
Intralot SA-Integrated Lottery Systems & Services (a)		3,813		6
JUMBO SA		12,647		89

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
Greece (cont'd)
Lamda Development SA (a)		1,030	$	4
Marfin Investment Group Holdings SA (a)		59,935		8
Metka SA		2,058		15
Motor Oil Hellas Corinth Refineries SA (a)		4,327		35
Mytilineos Holdings SA (a)		10,269		56
National Bank of Greece SA (a)		93,517		104
OPAP SA		13,239		98
Piraeus Bank SA (a)		115,039		43
Piraeus Port Authority SA		366		5
Public Power Corp. SA (a)		21,817		97
Sarantis SA		527		4
Terna Energy SA (a)		2,749		8
Thrace Plastics Co., SA		1,803		2
Titan Cement Co., SA		2,124		43
				1,131
Ireland (0.2%)
Bank of Ireland (a)		1,939,746		783
CRH PLC		3,963		112
				895
Italy (3.0%)
Assicurazioni Generali SpA		57,393		1,034
Atlantia SpA		4,133		102
Banca Monte dei Paschi di Siena SpA (a)		13,962		27
Banco Popolare SC (a)		18,673		307
Enel Green Power SpA		58,420		114
Enel SpA		337,569		1,529
Eni SpA		116,691		2,071
Intesa Sanpaolo SpA		1,575,333		5,711
Luxottica Group SpA		1,983		132
Snam SpA		26,829		128
Telecom Italia SpA (a)		71,606		91
Telecom Italia SpA		51,506		53
UniCredit SpA		606,303		4,073
Unione di Banche Italiane SCPA		51,381		412
				15,784
Japan (0.6%)
Advantest Corp.		2,000		21
Aeon Co., Ltd.		1,200		17
Alps Electric Co., Ltd.		900		28
Asahi Group Holdings Ltd.		900		29
Astellas Pharma, Inc.		4,000		57
Bridgestone Corp.		900		33
Canon, Inc.		1,300		42
Casio Computer Co., Ltd.		1,000		20
Central Japan Railway Co.		200		36
Chiyoda Corp.		1,000		9
Chugai Pharmaceutical Co., Ltd.		900		31
COMSYS Holdings Corp.		1,100		16
Credit Saison Co., Ltd.		1,100		24
Daiichi Sankyo Co., Ltd.		1,000		19
Daikin Industries Ltd.		800		58

	Shares		Value (000)
Daiwa House Industry Co., Ltd.		1,000	$	23
Denso Corp.		800		40
Dentsu, Inc.		900		47
Dowa Holdings Co., Ltd.		1,000		9
Eisai Co., Ltd.		900		60
FANUC Corp.		800		164
Fast Retailing Co., Ltd.		800		363
Fuji Heavy Industries Ltd.		900		33
FUJIFILM Holdings Corp.		1,000		36
Hino Motors Ltd.		1,000		12
Hitachi Construction Machinery Co., Ltd.		1,000		18
Honda Motor Co., Ltd.		1,700		55
Isetan Mitsukoshi Holdings Ltd.		1,100		20
ITOCHU Corp.		1,300		17
Japan Tobacco, Inc.		800		29
JGC Corp.		1,000		19
JTEKT Corp.		900		17
Kao Corp.		1,000		47
KDDI Corp.		4,800		116
Kikkoman Corp.		1,000		31
Kirin Holdings Co., Ltd.		1,000		14
Komatsu Ltd.		1,000		20
Konami Corp.		900		17
Kubota Corp.		1,000		16
Kuraray Co., Ltd.		1,600		20
Kyocera Corp.		1,700		88
Marui Group Co., Ltd.		1,300		18
Matsui Securities Co., Ltd.		1,300		11
Minebea Co., Ltd.		1,000		17
Mitsubishi Corp.		1,100		24
Mitsubishi Electric Corp.		1,000		13
Mitsubishi Estate Co., Ltd.		1,000		22
Mitsubishi Logistics Corp.		1,000		13
Mitsui & Co., Ltd.		1,200		16
Mitsui Fudosan Co., Ltd.		1,000		28
Mitsui OSK Lines Ltd.		3,000		10
Mitsumi Electric Co., Ltd.		1,000		7
NGK Insulators Ltd.		1,000		26
NH Foods Ltd.		1,000		23
Nikon Corp.		900		10
Nippon Kayaku Co., Ltd.		1,000		11
Nissan Chemical Industries Ltd.		1,200		27
Nisshinbo Holdings, Inc.		2,000		22
Nitto Denko Corp.		900		74
NSK Ltd.		1,000		15
NTT Data Corp.		900		39
Odakyu Electric Railway Co., Ltd.		2,000		19
OKUMA Corp.		1,000		11
Olympus Corp.		800		28
Panasonic Corp.		900		12
Ricoh Co., Ltd.		1,000		10
Secom Co., Ltd.		900		58
Sekisui House Ltd.		1,100		17

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
Japan (cont'd)
Seven & I Holdings Co., Ltd.		900	$	39
Shin-Etsu Chemical Co., Ltd.		900		56
Shionogi & Co., Ltd.		900		35
Shiseido Co., Ltd.		1,000		23
Shizuoka Bank Ltd. (The)		3,000		31
Showa Shell Sekiyu KK		1,200		10
Softbank Corp.		2,400		141
Sony Corp. (a)		900		25
Sumitomo Corp.		1,400		16
Sumitomo Dainippon Pharma Co., Ltd.		900		10
Sumitomo Electric Industries Ltd.		1,300		20
Sumitomo Metal Mining Co., Ltd.		1,000		15
Sumitomo Realty & Development Co., Ltd.		1,000		35
Suzuki Motor Corp.		900		30
Taiyo Yuden Co., Ltd.		1,100		15
Takeda Pharmaceutical Co., Ltd.		800		39
TDK Corp.		900		69
Terumo Corp.		1,800		43
Tokio Marine Holdings, Inc.		900		37
Tokyo Electron Ltd.		800		51
Tokyo Gas Co., Ltd.		2,000		11
Tokyo Tatemono Co., Ltd.		500		7
TOTO Ltd.		1,000		18
Toyo Seikan Group Holdings Ltd.		1,300		21
Toyota Motor Corp.		800		54
Toyota Tsusho Corp.		1,000		27
Trend Micro, Inc.		900		31
Yamaha Corp.		1,100		22
Yamato Holdings Co., Ltd.		1,000		19
Yaskawa Electric Corp.		1,000		13
Yokogawa Electric Corp.		1,000		13
Yokohama Rubber Co., Ltd. (The)		500		10
				3,338
Luxembourg (0.0%)
Altice SA (a)		679		94
Mexico (0.0%)
Fresnillo PLC		3,979		43
Netherlands (1.8%)
Akzo Nobel N.V.		2,260		165
ArcelorMittal		5,728		56
ASML Holding N.V.		18,106		1,871
Boskalis Westminster N.V.		1,160		57
CNH Industrial N.V.		6,551		60
Fiat Chrysler Automobiles N.V. (a)		4,193		61
ING Groep N.V. CVA		182,144		3,007
Koninklijke Ahold N.V.		3,782		71
Koninklijke DSM N.V.		1,281		74
Koninklijke KPN N.V.		14,937		57
Koninklijke Philips N.V.		47,761		1,215
OCI N.V. (a)		1,669		47
Unilever N.V. CVA		68,978		2,873
				9,614

	Shares		Value (000)
Norway (0.1%)
DNB ASA		8,224	$	137
Gjensidige Forsikring ASA		5,384		87
Norsk Hydro ASA		10,181		43
Telenor ASA		12,697		278
Yara International ASA		2,213		115
				660
Portugal (0.1%)
Banco Comercial Portugues SA (a)		2,803,496		244
Banco Espirito Santo SA (Registered) (a)(c)		570,338		3
EDP - Energias de Portugal SA		31,047		118
				365
South Africa (0.0%)
Mota-Engil Africa N.V.		122		1
SABMiller PLC		1,157		60
				61
Spain (3.5%)
Abertis Infraestructuras SA		3,420		56
ACS Actividades de Construccion y Servicios SA		2,211		71
Amadeus IT Holding SA, Class A		1,486		59
Banco Bilbao Vizcaya Argentaria SA		283,443		2,778
Banco de Sabadell SA		244,631		591
Banco Popular Espanol SA		137,241		665
Banco Santander SA		593,252		4,143
Bankia SA (a)		726,599		922
Bankinter SA		55,086		407
CaixaBank SA		386,143		1,789
Enagas SA		4,037		110
Ferrovial SA		3,010		65
Gas Natural SDG SA		7,710		175
Iberdrola SA		261,332		1,760
Inditex SA		54,639		1,776
International Consolidated Airlines Group SA (a)		3,776		29
Repsol SA		36,247		637
Telefonica SA		198,018		2,815
				18,848
Sweden (0.3%)
Alfa Laval AB		3,904		69
Atlas Copco AB, Class A		4,544		127
Atlas Copco AB, Class B		3,130		78
Hennes & Mauritz AB, Class B		4,424		170
ICA Gruppen AB		1,136		40
Millicom International Cellular SA SDR		895		66
Nordea Bank AB		14,551		182
Sandvik AB		8,025		89
Skandinaviska Enskilda Banken AB, Class A		8,278		106
Skanska AB, Class B		5,837		118
SKF AB, Class B		3,468		79
Svenska Handelsbanken AB, Class A		5,621		82
Swedbank AB, Class A		2,489		58

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
Sweden (cont'd)
Tele2 AB, Class B		4,858	$	57
TeliaSonera AB		32,461		191
Volvo AB, Class B		10,562		131
				1,643
Switzerland (0.8%)
ABB Ltd. (Registered) (a)		11,880		249
Cie Financiere Richemont SA (Registered)		2,369		193
Coca-Cola HBC AG (a)		3,057		66
Credit Suisse Group AG (Registered) (a)		6,913		190
EMS-Chemie Holding AG (Registered)		158		67
Givaudan SA (Registered) (a)		72		124
Holcim Ltd. (Registered) (a)		2,417		178
Julius Baer Group Ltd. (a)		955		53
Kuehne & Nagel International AG (Registered)		822		109
Novartis AG (Registered)		9,849		971
Roche Holding AG (Genusschein)		2,852		799
SGS SA (Registered)		24		44
Swatch Group AG (The)		1,692		214
Swiss Re AG		1,002		89
Swisscom AG (Registered)		181		101
Syngenta AG (Registered)		688		280
UBS Group AG (Registered) (a)		16,013		340
Zurich Insurance Group AG (a)		664		202
				4,269
United Arab Emirates (0.0%)
Orascom Construction Ltd. (a)		325		4
United Kingdom (2.5%)
Aberdeen Asset Management PLC		9,075		58
Admiral Group PLC		2,489		54
Aggreko PLC		2,647		60
Anglo American PLC		8,609		124
ARM Holdings PLC		7,811		127
Ashtead Group PLC		4,496		78
Associated British Foods PLC		435		20
AstraZeneca PLC		6,973		440
Aviva PLC		31,142		241
Babcock International Group PLC		5,813		99
BAE Systems PLC		13,669		97
Barclays PLC		82,162		336
BG Group PLC		3,981		66
BHP Billiton PLC		11,882		233
BP PLC		21,549		142
British American Tobacco PLC		2,250		121
BT Group PLC		51,381		363
Bunzl PLC		4,472		122
Burberry Group PLC		4,576		113
Capita PLC		2,599		51
Centrica PLC		41,345		171
Compass Group PLC		8,222		136
Croda International PLC		2,260		98
Diageo PLC		3,086		89
Direct Line Insurance Group PLC		9,495		50

	Shares		Value (000)
Dixons Carphone PLC		7,021	$	50
Experian PLC		6,662		121
G4S PLC		12,388		52
GKN PLC		16,721		88
GlaxoSmithKline PLC		28,740		597
Glencore PLC (a)		64,016		257
Hargreaves Lansdown PLC		4,835		88
HSBC Holdings PLC		102,935		922
Imperial Tobacco Group PLC		1,226		59
Indivior PLC (a)		800		3
Inmarsat PLC		4,991		72
Intertek Group PLC		1,183		46
ITV PLC		21,464		89
J Sainsbury PLC		16,085		67
Johnson Matthey PLC		2,719		130
Kingfisher PLC		8,580		47
Land Securities Group PLC REIT		4,544		86
Legal & General Group PLC		52,368		205
Lloyds Banking Group PLC		354,215		474
London Stock Exchange Group PLC		3,601		134
Lonmin PLC (a)		562		1
Marks & Spencer Group PLC		11,257		95
Melrose Industries PLC		17,060		66
National Grid PLC		29,049		373
Next PLC		1,381		162
Old Mutual PLC		36,629		116
Pearson PLC		4,038		76
Prudential PLC		18,468		445
Randgold Resources Ltd.		664		45
Reckitt Benckiser Group PLC		800		69
Reed Elsevier PLC		10,301		167
Rio Tinto PLC		7,360		302
Rolls-Royce Holdings PLC (a)		10,779		147
Royal Bank of Scotland Group PLC (a)		21,939		121
Royal Dutch Shell PLC, Class A		7,411		208
RSA Insurance Group PLC		9,644		60
Schroders PLC		2,394		119
Severn Trent PLC		5,957		195
Shire PLC		3,092		248
Signet Jewelers Ltd.		6,400		821
Sky PLC		9,486		155
Smiths Group PLC		7,251		129
Sports Direct International PLC (a)		4,037		46
SSE PLC		7,306		176
Standard Chartered PLC		13,165		211
Standard Life PLC		15,012		105
Tesco PLC		47,709		159
Travis Perkins PLC		4,193		139
Tullow Oil PLC		1,439		8
Unilever PLC		1,617		69
United Utilities Group PLC		9,354		131
Verizon Communications, Inc.		1,444		67
Vodafone Group PLC		152,486		551

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
United Kingdom (cont'd)
Weir Group PLC (The)		2,345	$	63
Whitbread PLC		346		27
WM Morrison Supermarkets PLC		27,529		78
Wolseley PLC		3,983		254
WPP PLC		9,552		214
				13,494
United States (8.8%)
AAON, Inc.		2,000		45
Aaron's, Inc.		2,500		91
Abaxis, Inc.		1,700		88
Actuant Corp., Class A		3,700		85
Acuity Brands, Inc.		500		90
Advance Auto Parts, Inc.		600		96
Aflac, Inc.		32,900		2,046
Alexander & Baldwin, Inc.		2,100		83
Allegion PLC		1,400		84
American Vanguard Corp.		1,800		25
AMETEK, Inc.		1,600		88
Analogic Corp.		1,000		79
ArcBest Corp.		2,500		79
Balchem Corp.		1,300		72
Ball Corp.		1,200		84
Bed Bath & Beyond, Inc. (a)		12,100		835
Belden, Inc.		1,000		81
Best Buy Co., Inc.		24,900		812
Bloomin' Brands, Inc.		8,700		186
Cabot Oil & Gas Corp.		2,600		82
California Resources Corp.		11,200		68
Callaway Golf Co.		5,800		52
Cantel Medical Corp.		1,600		86
Carter's, Inc.		3,700		393
Cash America International, Inc.		2,300		60
Celadon Group, Inc.		3,800		79
Charles Schwab Corp. (The)		2,600		85
Chemed Corp.		700		92
Cigna Corp.		600		97
Cimarex Energy Co.		700		77
CIRCOR International, Inc.		1,100		60
Citigroup, Inc.		1,600		88
Cooper Cos., Inc. (The)		500		89
CR Bard, Inc.		500		85
CST Brands, Inc.		2,200		86
Cubic Corp.		1,800		86
Curtiss-Wright Corp.		1,200		87
Danaher Corp.		1,000		86
Darden Restaurants, Inc.		8,900		633
Deltic Timber Corp.		200		14
DENTSPLY International, Inc.		1,700		88
Dollar General Corp.		20,900		1,625
Dollar Tree, Inc. (a)		14,600		1,153
Eagle Materials, Inc.		1,100		84
EMCOR Group, Inc.		1,900		91

	Shares		Value (000)
Encore Wire Corp.		700	$	31
Energen Corp.		1,200		82
Ensign Group, Inc. (The)		1,700		87
EQT Corp.		1,000		81
Expedia, Inc.		800		87
Fair Isaac Corp.		1,000		91
Family Dollar Stores, Inc.		8,100		638
FedEx Corp.		500		85
Financial Engines, Inc.		2,000		85
G-III Apparel Group Ltd. (a)		3,200		225
Gap, Inc. (The)		29,500		1,126
Global Payments, Inc.		800		83
Goodyear Tire & Rubber Co. (The)		2,800		84
H&R Block, Inc.		19,100		566
Hanesbrands, Inc.		28,100		936
Heartland Express, Inc.		4,100		83
Heartland Payment Systems, Inc.		1,600		86
Humana, Inc.		400		77
IMI PLC		2,369		42
Interface, Inc.		4,000		100
International Speedway Corp., Class A		1,500		55
Invacare Corp.		2,200		48
Jones Lang LaSalle, Inc.		500		85
KB Home		6,000		100
Kohl's Corp.		13,800		864
L Brands, Inc.		20,700		1,775
Landstar System, Inc.		1,300		87
Lennar Corp., Class A		1,900		97
Lincoln National Corp.		19,100		1,131
Lithia Motors, Inc., Class A		800		91
Loews Corp.		2,200		85
Macy's, Inc.		23,900		1,613
Marriott International, Inc., Class A		19,500		1,451
Mastercard, Inc., Class A		900		84
MAXIMUS, Inc.		1,400		92
McKesson Corp.		400		90
Men's Wearhouse, Inc. (The)		3,400		218
Methode Electronics, Inc.		1,800		49
MetLife, Inc.		84,100		4,709
Minerals Technologies, Inc.		1,300		89
Newmont Mining Corp.		3,400		79
Nordstrom, Inc.		13,500		1,006
Olympic Steel, Inc.		1,900		33
Peabody Energy Corp.		27,700		61
PerkinElmer, Inc.		1,700		89
Perrigo Co., PLC		500		92
Pioneer Natural Resources Co.		600		83
Precision Castparts Corp.		400		80
Principal Financial Group, Inc.		20,700		1,062
PrivateBancorp, Inc.		2,200		88
Prudential Financial, Inc.		34,200		2,993
PVH Corp.		800		92
QEP Resources, Inc.		4,700		87
Range Resources Corp.		1,600		79

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	Shares		Value (000)
United States (cont'd)
Roper Industries, Inc.		500	$	86
Ross Stores, Inc.		28,700		1,395
Ryland Group, Inc. (The)		2,100		97
Sigma-Aldrich Corp.		600		84
Skyworks Solutions, Inc.		800		83
SM Energy Co.		1,800		83
Sonic Automotive, Inc., Class A		3,200		76
Southwest Airlines Co.		2,300		76
Standex International Corp.		600		48
Steven Madden Ltd. (a)		4,400		188
Stewart Information Services Corp.		900		36
SYNNEX Corp.		1,100		81
Talmer Bancorp, Inc., Class A		3,500		59
Target Corp.		44,800		3,657
Textron, Inc.		2,000		89
Thermo Fisher Scientific, Inc.		700		91
Titan International, Inc.		4,400		47
TJX Cos., Inc. (The)		48,200		3,189
Torchmark Corp.		9,600		559
Towers Watson & Co., Class A		600		75
Tractor Supply Co.		1,000		90
Triumph Group, Inc.		1,300		86
Twenty-First Century Fox, Inc., Class B		161		5
UniFirst Corp.		700		78
Universal Health Services, Inc., Class B		700		99
Unum Group		18,900		676
Urban Outfitters, Inc. (a)		9,100		318
Visa, Inc., Class A		1,300		87
Vulcan Materials Co.		1,000		84
Wabtec Corp.		900		85
Werner Enterprises, Inc.		3,100		81
Williams-Sonoma, Inc.		6,500		535
Woodward, Inc.		1,700		93
World Fuel Services Corp.		1,800		86
Zions Bancorporation		2,800		89
Zoetis, Inc.		1,800		87
				46,665
Total Common Stocks (Cost $215,971)				211,951
Participation Note (1.8%)
United States (1.8%)
BNP Paribas SA, Equity Linked Notes, expires 6/1/16 (a) (Cost $10,200)		102,000		9,745
Investment Company (0.0%)
United States (0.0%)
SPDR S&P 500 ETF Trust (Cost $50)		303		62
	No. of Rights
Rights (0.0%)
United States (0.0%)
Safeway Casa Ley CVR (a)		1,077		1
Safeway PDC, LLC CVR (a)		1,077		—	@
Total Rights (Cost $1)				1

	Face Amount (000)		Value (000)
Fixed Income Securities (20.7%)
Brazil (2.9%)
Sovereign (2.9%)
Brazil Notas do Tesouro Nacional, Series F, 10.00%, 1/1/25	BRL	57,830	$	15,194
Greece (0.6%)
Sovereign (0.6%)
Hellenic Republic Government Bond, 3.00%, 2/24/23 - 2/24/42 (d)	EUR	7,640		3,365
U.S. Treasury Security (17.2%)
United States (17.2%)
U.S. Treasury Inflation Indexed Bond, 0.25%, 1/15/25 (Cost $93,103)	$	93,173		91,535
Total Fixed Income Securities (Cost $114,637)				110,094
	Shares
Short-Term Investments (38.0%)
Investment Company (33.8%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $180,310)		180,310,048		180,310
	Face Amount (000)
U.S. Treasury Security (4.2%)
U.S. Treasury Bill, 0.09%, 12/10/15 (e)(f) (Cost $22,550)	$	22,559		22,555
Total Short-Term Investments (Cost $202,860)				202,865
Total Investments (100.2%) (Cost $543,719) (g)				534,718
Liabilities in Excess of Other Assets (-0.2%)				(890	)
Net Assets (100.0%)			$	533,828

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  Security has been deemed illiquid at June 30, 2015.

(d)  Multi-step — Coupon rate changes in predetermined increments to maturity. Rate disclosed is as of June 30, 2015. Maturity date disclosed is the ultimate maturity date.

(e)  Rate shown is the yield to maturity at June 30, 2015.

(f)  All or a portion of the security was pledged to cover margin requirements for swap agreements.

(g)  Securities are available for collateral in connection with open foreign currency forward exchange contracts, futures contracts and swap agreements.

@  Value is less than $500.

CDI  CHESS Depositary Interest.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

SDR  Swedish Depositary Receipt.

SPDR  Standard & Poor's Depository Receipt.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2015:

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Appreciation (Depreciation) (000)
Bank of America NA	EUR	28,527	$	31,812	7/23/15	USD	32,063	$	32,063	$	251
Bank of America NA	PLN	743		197	7/23/15	USD	201		201		4
Bank of America NA	USD	7,433		7,433	7/23/15	EUR	6,665		7,433		(—	@)
Bank of America NA	USD	16,105		16,105	7/23/15	GBP	10,309		16,197		92
Bank of America NA	USD	1,707		1,707	7/23/15	GBP	1,085		1,705		(2	)
Bank of Montreal	AUD	20,632		15,900	7/23/15	USD	15,967		15,967		67
Bank of Montreal	NZD	24,012		16,241	7/23/15	USD	16,700		16,700		459
Bank of Montreal	TRY	2,370		878	7/23/15	USD	857		857		(21	)
Bank of Montreal	USD	100		100	7/23/15	CAD	124		99		(1	)
Bank of Montreal	USD	378		378	7/23/15	MXN	5,852		371		(7	)
Bank of Montreal	USD	778		778	7/23/15	TRY	2,095		777		(1	)
Bank of New York Mellon	USD	9,037		9,037	7/23/15	EUR	7,938		8,852		(185	)
Bank of New York Mellon	USD	8,094		8,094	7/23/15	JPY	997,266		8,150		56
Barclays Bank PLC	AUD	9,230		7,113	7/23/15	USD	7,144		7,144		31
Barclays Bank PLC	BRL	13,342		4,259	7/23/15	USD	4,259		4,259		(—	@)
Barclays Bank PLC	CLP	483,879		755	7/23/15	USD	764		764		9
Barclays Bank PLC	EUR	19,891		22,181	7/23/15	USD	22,357		22,357		176
Barclays Bank PLC	GBP	462		726	7/23/15	USD	727		727		1
Barclays Bank PLC	USD	4,607		4,607	7/23/15	BRL	14,706		4,695		88
Barclays Bank PLC	USD	4,819		4,819	7/23/15	GBP	3,085		4,846		27
Barclays Bank PLC	USD	420		420	7/23/15	SGD	565		419		(1	)
Citibank NA	EUR	9,814		10,944	7/23/15	USD	11,031		11,031		87
Citibank NA	EUR	492		549	7/23/15	USD	551		551		2
Citibank NA	IDR	22,496,299		1,681	7/23/15	USD	1,678		1,678		(3	)
Citibank NA	THB	534,378		15,810	7/23/15	USD	15,812		15,812		2
Citibank NA	USD	1,522		1,522	7/23/15	IDR	20,382,168		1,522		—	@
Citibank NA	USD	5,425		5,425	7/23/15	INR	346,207		5,414		(11	)
Citibank NA	USD	1,653		1,653	7/23/15	MYR	6,249		1,654		1
Citibank NA	USD	1,828		1,828	7/23/15	THB	61,801		1,829		1
Commonwealth Bank of Australia	AUD	37,864		29,180	7/23/15	USD	29,306		29,306		126
Commonwealth Bank of Australia	USD	2,031		2,031	7/23/15	AUD	2,646		2,039		8
Credit Suisse International	NZD	8,021		5,425	7/23/15	USD	5,579		5,579		154
Credit Suisse International	NZD	753		509	7/23/15	USD	508		508		(1	)
Deutsche Bank AG	HKD	86,143		11,113	7/23/15	USD	11,109		11,109		(4	)
Deutsche Bank AG	HUF	44,905		159	7/23/15	USD	162		162		3
Deutsche Bank AG	ILS	94		25	7/23/15	USD	25		25		(—	@)
Deutsche Bank AG	JPY	628,108		5,133	7/23/15	USD	5,091		5,091		(42	)
Deutsche Bank AG	MYR	7,056		1,867	7/23/15	USD	1,881		1,881		14
Deutsche Bank AG	PLN	2,513		668	7/23/15	USD	680		680		12
Deutsche Bank AG	USD	9,217		9,217	7/23/15	HKD	71,445		9,217		(—	@)
Goldman Sachs International	HKD	18,859		2,433	7/23/15	USD	2,432		2,432		(1	)
Goldman Sachs International	USD	2,030		2,030	7/23/15	EUR	1,810		2,019		(11	)
Goldman Sachs International	USD	2,368		2,368	7/23/15	HKD	18,354		2,368		(—	@)
JPMorgan Chase Bank NA	KRW	19,973,541		17,898	7/23/15	USD	17,894		17,894		(4	)
JPMorgan Chase Bank NA	KRW	3,953,563		3,543	7/23/15	USD	3,534		3,534		(9	)
JPMorgan Chase Bank NA	RUB	120,054		2,159	7/23/15	USD	2,141		2,141		(18	)
JPMorgan Chase Bank NA	USD	321		321	7/23/15	INR	20,677		323		2
JPMorgan Chase Bank NA	USD	3,080		3,080	7/23/15	RUB	170,923		3,073		(7	)
JPMorgan Chase Bank NA	USD	1,338		1,338	7/23/15	TWD	41,363		1,341		3
State Street Bank and Trust Co.	EUR	1,483		1,654	7/23/15	USD	1,667		1,667		13
State Street Bank and Trust Co.	JPY	1,021,727		8,351	7/23/15	USD	8,282		8,282		(69	)
State Street Bank and Trust Co.	JPY	299,890		2,451	7/23/15	USD	2,454		2,454		3
State Street Bank and Trust Co.	SEK	2,330		281	7/23/15	USD	284		284		3
State Street Bank and Trust Co.	THB	287,179		8,497	7/23/15	USD	8,494		8,494		(3	)
State Street Bank and Trust Co.	USD	1,230		1,230	7/23/15	GBP	788		1,237		7
State Street Bank and Trust Co.	USD	225		225	7/23/15	MXN	3,487		221		(4	)
UBS AG	CHF	9,711		10,394	7/23/15	USD	10,438		10,438		44
UBS AG	CHF	486		519	7/23/15	USD	517		517		(2	)

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Foreign Currency Forward Exchange Contracts (cont'd):

Counterparty	Currency to Deliver (000)		Value (000)		Settlement Date	In Exchange For (000)		Value (000)		Unrealized Appreciation (Depreciation) (000)
UBS AG	CHF	1,040	$	1,113	7/23/15	USD	1,112	$	1,112	$	(1	)
UBS AG	EUR	33,172		36,992	7/23/15	USD	37,283		37,283		291
UBS AG	USD	5,425		5,425	7/23/15	INR	347,071		5,428		3
UBS AG	USD	522		522	7/23/15	MXN	8,079		513		(9	)
UBS AG	USD	1,580		1,580	7/23/15	ZAR	19,703		1,614		34
UBS AG	ZAR	11,440		937	7/23/15	USD	938		938		1
Citibank NA	CNY	36,293		5,741	5/19/16	USD	5,816		5,816		75
Citibank NA	CNY	106,316		16,817	5/19/16	USD	17,034		17,034		217
Deutsche Bank AG	CNY	70,878		11,211	5/19/16	USD	11,358		11,358		147
			$	407,389				$	409,486	$	2,097

Futures Contracts:

The Portfolio had the following futures contracts open at June 30, 2015:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
Brent Crude Futures (United Kingdom)		163	$	10,717		Nov-15	$	508
Euro Stoxx 50 Index (Germany)		75		2,873		Sep-15		(13	)
MSCI Emerging Market E Mini (United States)		123		5,900		Sep-15		13
NIKKEI 225 Index (Japan)		272		22,458		Sep-15		(283	)
S&P 500 E MINI Index (United States)		206		21,161		Sep-15		(510	)
SGX S&P CNX Nifty (Singapore)		648		10,867		Jul-15		112
Short:
FTSE 100 Index (United Kingdom)		25		(2,551	)	Sep-15		(1	)
FTSE China A50 Index (Singapore)		1,360		(16,877	)	Jul-15		(332	)
SPI 200 Index (Australia)		6		(625	)	Sep-15		1
U.S. Treasury 10 yr. Note (United States)		580		(73,180	)	Sep-15		(714	)
U.S. Treasury Long Bond (United States)		122		(18,403	)	Sep-15		(178	)
							$	(1,397	)

Credit Default Swap Agreements:

The Portfolio had the following credit default swap agreements open at June 30, 2015:

Swap Counterparty and Reference Obligation	Buy/Sell Protection	Notional Amount (000)		Pay/Receive Fixed Rate			Termination Date	Upfront Payment Paid (Received) (000)			Unrealized Appreciation (Depreciation) (000)			Value (000)			Credit Rating of Reference Obligation†
Goldman Sachs International People's Republic of China	Buy	$	382		1.00	%	6/20/20	$	(—	@)	$	(2	)	$	(2	)	AA-
Goldman Sachs International People's Republic of China	Buy		1,178		1.00		6/20/20		(2	)		(6	)		(8	)	AA-
JPMorgan Chase Bank NA People's Republic of China	Buy		1,797		1.00		6/20/20		—	@		(11	)		(11	)	AA-
JPMorgan Chase Bank NA People's Republic of China	Buy		3,545		1.00		6/20/20		(3	)		(19	)		(22	)	AA-
JPMorgan Chase Bank NA People's Republic of China	Buy		2,132		1.00		6/20/20		(2	)		(11	)		(13	)	AA-
JPMorgan Chase Bank NA People's Republic of China	Buy		731		1.00		6/20/20		(1	)		(4	)		(5	)	AA-
Morgan Stanley & Co., LLC* CDX.NA.IG.24	Buy		160,740		1.00		6/20/20		(2,533	)		200			(2,333	)	NR
Morgan Stanley & Co., LLC* CDX.NA.HY.24	Buy		63,390		5.00		6/20/20		(4,058	)		12			(4,046	)	NR
		$	233,895					$	(6,599	)	$	159		$	(6,440	)

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Interest Rate Swap Agreements:

The Portfolio had the following interest rate swap agreements open at June 30, 2015:

Swap Counterparty	Floating Rate Index	Pay/Receive Floating Rate	Fixed Rate			Termination Date	Notional Amount (000)		Unrealized Appreciation (Depreciation) (000)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		0.93	%	6/29/17	$	194,085	$	(176	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		0.95		6/10/17		104,330		(206	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		0.97		6/9/17		243,400		(565	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.56		4/13/20		113,984		589
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.64		5/5/20		57,965		139
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.73		5/28/20		58,005		(9	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.79		7/1/20		35,525		(30	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.79		7/1/20		35,525		(24	)
									$	(282	)

Total Return Swap Agreements:

The Portfolio had the following total return swap agreements open at June 30, 2015:

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Unrealized Appreciation (Depreciation) (000)
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index	$	9,072	3 Month USD LIBOR minus 0.24%	Pay	2/19/16	$	477
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index		3,005	3 Month USD LIBOR minus 0.24%	Pay	2/19/16		158
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index		6,022	3 Month USD LIBOR minus 0.24%	Pay	2/19/16		317
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index		6,139	3 Month USD LIBOR minus 0.24%	Pay	2/19/16		323
Bank of America NA	MSCI Daily Total Return Europe Net Household & Personal Products Index		1,537	3 Month USD LIBOR minus 0.25%	Pay	2/19/16		101
Bank of America NA	MSCI Daily Total Return Europe Net Household & Personal Products Index		333	3 Month USD LIBOR minus 0.25%	Pay	2/19/16		22
Bank of America NA	MSCI Daily Total Return Europe Net Household & Personal Products Index		666	3 Month USD LIBOR minus 0.25%	Pay	2/19/16		44
Bank of America NA	MSCI Daily Total Return Europe Net Household & Personal Products Index		674	3 Month USD LIBOR minus 0.25%	Pay	2/19/16		44
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index		5,753	3 Month USD LIBOR minus 0.24%	Pay	2/23/16		44
Bank of America NA	MSCI Daily Total Return Europe Net Food Beverage & Tobacco Index		3,801	3 Month USD LIBOR minus 0.24%	Pay	2/23/16		(1	)
Bank of America NA	MSCI Daily Total Return Europe Net Household & Personal Products Index		710	3 Month USD LIBOR minus 0.25%	Pay	2/23/16		20
Bank of America NA	MSCI U.S. REIT Index		4,512	3 Month USD LIBOR plus 0.12%	Pay	7/5/16		26
Bank of America NA	MSCI U.S. REIT Index		9,024	3 Month USD LIBOR plus 0.12%	Pay	7/5/16		13

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Total Return Swap Agreements (cont'd):

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Unrealized Appreciation (Depreciation) (000)
Barclays Bank PLC	Barclays Elevators Index††	$	5,978	3 Month USD LIBOR minus 0.20%	Pay	4/2/16	$	258
Citibank NA	S&P 500 Consumer Staples Index		42,124	3 Month USD LIBOR minus 0.17%	Pay	6/9/16		(224	)
Citibank NA	Citi Copper Miners Index††		2,780	3 Month USD LIBOR minus 0.095%	Pay	6/13/16		148
Deutsche Bank AG	DB Global Machinery Index††		9,516	3 Month USD LIBOR minus 0.35%	Pay	11/5/15		410
Deutsche Bank AG	DB Global Machinery Index††		1,403	3 Month USD LIBOR minus 0.35%	Pay	11/5/15		60
Deutsche Bank AG	DB Global Machinery Index††		2,420	3 Month USD LIBOR minus 0.35%	Pay	11/5/15		103
Goldman Sachs International	GS Auto Components Index††		8,584	3 Month USD LIBOR minus 0.25%	Pay	12/12/15		291
Goldman Sachs International	GS China Exposed Autos Index††		12,312	3 Month USD LIBOR minus 0.10%	Pay	5/26/16		826
Goldman Sachs International	GS China Exposed Autos Index††		27,671	3 Month USD LIBOR minus 0.10%	Pay	5/26/16		127
JPMorgan Chase Bank NA	JPM Aerospace Index††		10,267	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		504
JPMorgan Chase Bank NA	JPM Aerospace Index††		3,485	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		171
JPMorgan Chase Bank NA	JPM Aerospace Index††		3,662	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		180
JPMorgan Chase Bank NA	JPM Aerospace Index††		6,714	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		329
JPMorgan Chase Bank NA	JPM Aerospace Index††		946	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		46
JPMorgan Chase Bank NA	JPM Aerospace Index††		3,683	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		181
JPMorgan Chase Bank NA	JPM Aerospace Index††		2,344	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		115
JPMorgan Chase Bank NA	JPM Aerospace Index††		10,213	3 Month USD LIBOR minus 0.26%	Pay	9/2/15		501
JPMorgan Chase Bank NA	JPM U.S. Machinery Index††		850	3 Month USD LIBOR minus 0.245%	Pay	11/4/15		11
JPMorgan Chase Bank NA	JPM U.S. Machinery Index††		2,097	3 Month USD LIBOR minus 0.245%	Pay	11/4/15		32
JPMorgan Chase Bank NA	JPM U.S. Machinery Index††		2,571	3 Month USD LIBOR minus 0.245%	Pay	11/4/15		39
JPMorgan Chase Bank NA	JPM U.S. Machinery Index††		8,651	3 Month USD LIBOR minus 0.245%	Pay	11/5/15		135
JPMorgan Chase Bank NA	JPMorgan Chase U.S. Refiners Index††		5,619	3 Month USD LIBOR minus 0.025%	Pay	4/9/16		(290	)
JPMorgan Chase Bank NA	JPMorgan Chase U.S. Refiners Index††		6,061	3 Month USD LIBOR minus 2.50%	Pay	4/9/16		(430	)
JPMorgan Chase Bank NA	JPMorgan Chase U.S. Refiners Index††		1,515	3 Month USD LIBOR minus 0.025%	Pay	4/9/16		(94	)
JPMorgan Chase Bank NA	JPMorgan Chase U.S. Refiners Index††		6,337	3 Month USD LIBOR minus 0.05%	Pay	4/18/16		(333	)
JPMorgan Chase Bank NA	JPMorgan Chase U.S. Dividend Basket Index††		8,346	3 Month USD LIBOR minus 0.18%	Pay	6/13/16		104
							$	4,788

††  See tables below for details of the equity basket holdings underlying the swap.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

The following table represents the equity basket holdings underlying the total return swap with Barclays Elevators Index as of June 30, 2015.

Security Description	Index Weight
Barclays Elevators Index
Fujitec Co., Ltd.		2.37	%
Kone Oyj		37.35
Schindler Holding AG		25.86
United Technologies Corp.		34.42
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with Citi Copper Miners Index as of June 30, 2015.

Security Description	Index Weight
Citi Copper Miners Index
Antofagasta PLC		7.44	%
Aurubis AG		3.39
Boliden AB		8.79
Freeport-McMoRan, Inc.		32.75
Glencore PLC		24.30
Jiangxi Copper Co., Ltd.		3.74
KAZ Minerals PLC		1.59
KGHM Polska Miedz SA		6.93
MMG Ltd.		1.07
OZ Minerals Ltd.		1.64
Southern Copper Corp.		8.36
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with DB Global Machinery Index as of June 30, 2015.

Security Description	Index Weight
DB Global Machinery Index
Alfa Laval AB		2.46	%
Atlas Copco AB		4.03
Atlas Copco AB		7.78
CNH Industrial N.V.		3.72
Daewoo Shipbuilding & Marine Engineering		0.69
Doosan Infracore Co., Ltd.		0.54
GEA Group AG		3.19
Hino Motors Ltd.		1.28
Hitachi Construction Machinery Co., Ltd.		0.75
Hiwin Technologies Corp.		0.63
Hyundai Heavy Industries Co., Ltd.		2.43
Hyundai Mipo Dockyard Co., Ltd.		0.42
IMI PLC		2.23
JTEKT Corp.		1.62
Kawasaki Heavy Industries Ltd.		2.60
Komatsu Ltd.		7.36
Kone Oyj		4.93
Kubota Corp.		6.66
MAN SE		1.51
Melrose Industries PLC		1.85
Metso Oyj		1.50
NGK Insulators Ltd.		3.25
Samsung Heavy Industries Co., Ltd.		1.06
Sandvik AB		5.39
Schindler Holding AG		1.50
Schindler Holding AG		3.15

Security Description	Index Weight
DB Global Machinery Index (cont'd)
Sembcorp Marine Ltd.		0.78	%
SMC Corp.		6.29
Sulzer AG		1.15
Sumitomo Heavy Industries Ltd.		1.22
United Tractors Tbk PT		1.27
Vallourec SA		1.06
Volvo AB		7.97
Wartsila Oyj		3.01
Weichai Power Co., Ltd.		0.69
Weir Group PLC (The)		2.73
Yangzijiang Shipbuilding Holdings Ltd.		0.85
Zoomlion Heavy Industry Science & Tech		0.45
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with GS Auto Components Index as of June 30, 2015.

Security Description	Index Weight
GS Auto Components Index
Aisin Seiki Co., Ltd.		2.70	%
Autoliv, Inc.		3.59
BorgWarner, Inc.		4.29
Bridgestone Corp.		7.98
Cheng Shin Rubber Industry Co., Ltd.		1.18
Cie Generale des Etablissements Michelin		6.47
Continental AG		8.61
Delphi Automotive PLC		8.44
Denso Corp.		8.03
GKN PLC		2.86
Halla Visteon Climate Control Corp.		0.43
Hankook Tire Co., Ltd.		0.92
Hyundai Mobis Co., Ltd.		4.27
Hyundai Wia Corp.		0.50
Johnson Controls, Inc.		10.92
Koito Manufacturing Co., Ltd.		1.25
Magna International, Inc.		7.89
NGK Spark Plug Co., Ltd.		1.64
NHK Spring Co., Ltd.		0.58
NOK Corp.		0.98
Nokian Renkaat Oyj		1.18
Pirelli & C. SpA		1.33
Stanley Electric Co., Ltd.		0.99
Sumitomo Electric Industries Ltd.		3.88
Sumitomo Rubber Industries Ltd.		0.88
Toyoda Gosei Co., Ltd.		0.52
Toyota Industries Corp.		3.08
Valeo SA		3.93
Yokohama Rubber Co., Ltd (The)		0.68
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with GS China Exposed Autos Index as of June 30, 2015.

Security Description	Index Weight
GS China Exposed Autos Index
Bayerische Motoren Werke AG		11.74	%
Daimler AG		27.35
Ford Motor Co.		17.40

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
GS China Exposed Autos Index (cont'd)
General Motors Co.		13.70	%
Hyundai Motor Co.		6.29
Kia Motors Corp.		3.60
Nissan Motor Co., Ltd.		8.29
Volkswagen AG		11.63
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM Aerospace Index as of June 30, 2015.

Security Description	Index Weight
JPM Aerospace Index
Airbus Group SE		14.04	%
B/E Aerospace, Inc.		1.75
Boeing Co. (The)		32.67
Bombardier, Inc.		0.97
KLX, Inc.		0.70
Precision Castparts Corp.		9.90
Rolls-Royce Holdings PLC		7.28
Safran SA		7.89
Textron, Inc.		5.36
Thales SA		2.29
TransDigm Group, Inc.		3.63
United Technologies Corp.		10.89
Zodiac Aerospace		2.63
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPM U.S. Machinery Index as of June 30, 2015.

Security Description	Index Weight
JPM U.S. Machinery Index
AGCO Corp.		2.00	%
Caterpillar, Inc.		21.72
Cummins, Inc.		9.23
Deere & Co.		12.75
Dover Corp.		4.68
Flowserve Corp.		2.81
Illinois Tool Works, Inc.		13.85
Ingersoll-Rand PLC		7.27
Joy Global, Inc.		1.50
PACCAR, Inc.		8.92
Parker-Hannifin Corp.		6.47
Pentair PLC		5.17
SPX Corp.		1.08
Xylem, Inc.		2.55
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPMorgan Chase U.S. Refiners Index as of June 30, 2015.

Security Description	Index Weight
JPMorgan Chase U.S. Refiners Index
Delek U.S. Holdings, Inc.		1.30	%
Holly Frontier Corp.		6.96
Marathon Petroleum Corp.		20.15
PBF Energy, Inc.		2.70

Security Description	Index Weight
JPMorgan Chase U.S. Refiners Index (cont'd)
Phillips 66		23.57	%
Tesoro Corp.		15.05
Valero Energy Corp.		27.16
Western Refining, Inc.		3.11
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with JPMorgan Chase U.S. Dividend Basket Index as of June 30, 2015.

Security Description	Index Weight
JPMorgan Chase U.S. Dividend Basket Index
AbbVie, Inc.		0.53	%
Abercrombie & Fitch Co.		0.49
Acadia Realty Trust		0.50
AES Corp.		0.54
Alexandria Real Estate Equities, Inc.		0.50
ALLETE, Inc.		0.50
Alliant Energy Corp.		0.52
American Campus Communities, Inc.		0.51
American Eagle Outfitters, Inc.		0.54
American Electric Power Co., Inc.		0.51
American Financial Group, Inc.		0.54
Apartment Investment & Management Co.		0.53
Arthur J Gallagher & Co.		0.52
Associated Estates Realty Corp.		0.53
Atmos Energy Corp.		0.52
Atwood Oceanic's, Inc.		0.47
AvalonBay Communities, Inc.		0.52
Avon Products, Inc.		0.52
Bank of Hawaii Corp.		0.55
Baxter International, Inc.		0.57
Black Hills Corp		0.50
Brady Corp.		0.53
Brookline Bancorp, Inc.		0.31
Brooks Automation, Inc.		0.33
CA, Inc.		0.52
Camden Property Trust		0.53
Caterpillar, Inc.		0.53
Cato Corp. (The)		0.55
CDI Corp.		0.09
Cedar Realty Trust, Inc.		0.38
Cincinnati Financial Corp.		0.52
Cisco Systems, Inc.		0.51
City Holding Co.		0.28
Cleco Corp.		0.53
CMS Energy Corp.		0.52
Coach, Inc.		0.51
Coca-Cola Co.		0.51
Commercial Metals Co.		0.52
Community Bank System, Inc.		0.46
Compass Minerals International, Inc.		0.50
Comtech Telecommunications Corp.		0.30
CoreSite Realty Corp.		0.51
Cousins Properties, Inc.		0.53
Crown Castle International Corp.		0.51
CVB Financial Corp.		0.56
Cypress Semiconductor Corp.		0.47

The accompanying notes are an integral part of the financial statements.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
JPMorgan Chase U.S. Dividend Basket Index (cont'd)
Daktronics, Inc.		0.47	%
Darden Restaurants, Inc.		0.58
Denbury Resources, Inc.		0.48
Diamond Rock Hospitality Co.		0.52
Diebold, Inc.		0.52
Dime Community Bancshares, Inc.		0.30
Dine Equity, Inc.		0.53
Dominion Resources, Inc.		0.52
Domtar Corp.		0.50
Douglas Emmett, Inc.		0.50
Dow Chemical Co. (The)		0.51
DTE Energy Co.		0.51
Duke Realty Corp.		0.51
East Group Properties, Inc.		0.53
Eaton Corp PLC		0.50
Edison International		0.50
El Paso Electric Co.		0.52
Emerson Electric Co.		0.50
Equity One, Inc.		0.51
Equity Residential		0.52
Eversource Energy		0.51
Exelon Corp.		0.50
Exxon Mobil Corp.		0.52
Federated Investors, Inc.		0.51
First Commonwealth Financial Corp.		0.51
First Financial Bancorp		0.40
First Merit Corp.		0.55
First Niagara Financial Group, Inc.		0.55
FNB Corp. (The)		0.56
Ford Motor Co.		0.53
General Cable Corp.		0.50
General Electric Co.		0.52
General Mills, Inc.		0.54
General Motors Co.		0.50
Great Plains Energy, Inc.		0.51
Gulf Island Fabrication, Inc.		0.17
Hancock Holding Co.		0.56
Hawaiian Electric Industries, Inc.		0.51
Helmerich & Payne, Inc.		0.52
Highwoods Properties, Inc.		0.51
Home Properties, Inc.		0.52
Horace Mann Educators Corp.		0.56
Host Hotels & Resorts, Inc.		0.53
IDACORP, Inc.		0.52
Innophos Holdings, Inc.		0.53
Intel Corp.		0.50
International Paper Co.		0.49
Intersil Corp.		0.50
Kellogg Co.		0.53
Kimberly-Clark Corp.		0.52
Kimco Realty Corp.		0.51
Kite Realty Group Trust		0.48
KLA-Tencor Corp.		0.52
Koppers Holdings, Inc.		0.50
Laclede Group, Inc. (The)		0.52
Landauer, Inc.		0.27
LaSalle Hotel Properties		0.52
Leidos Holdings, Inc.		0.50
Lexmark International, Inc.		0.53

Security Description	Index Weight
JPMorgan Chase U.S. Dividend Basket Index (cont'd)
Lockheed Martin Corp.		0.51	%
Lumos Networks Corp.		0.26
Macerich Co. (The)		0.49
Mack-Cali Realty Corp.		0.56
ManTech International Corp.		0.54
Marathon Oil Corp.		0.53
McDonald's Corp.		0.53
MDC Holdings, Inc.		0.57
MDU Resources Group, Inc.		0.51
Merck & Co, Inc.		0.51
Meredith Corp.		0.52
Microchip Technology, Inc.		0.53
Mid-America Apartment Communities, Inc.		0.51
Murphy Oil Corp.		0.52
Myers Industries, Inc.		0.21
National Oilwell Varco, Inc.		0.52
National Penn Bancshares, Inc.		0.55
Navient Corp.		0.51
NBT Bancorp, Inc.		0.31
New Jersey Resources Corp.		0.51
Next Era Energy, Inc.		0.52
NIC, Inc.		0.38
Northwestern Corp.		0.51
Nucor Corp.		0.47
Nutrisystem, Inc.		0.54
Occidental Petroleum Corp.		0.53
OFG Bancorp		0.43
OGE Energy Corp.		0.51
Old National Bancorp		0.55
ONE Gas, Inc.		0.54
Owens & Minor, Inc.		0.54
PACCAR, Inc.		0.53
Packaging Corp of America		0.49
Paychex, Inc.		0.51
Pennsylvania Real Estate Investment Trust		0.50
Pepco Holdings, Inc.		0.53
Pet Med Express, Inc.		0.41
Pfizer, Inc.		0.52
PG&E Corp.		0.50
Piedmont Natural Gas Co, Inc.		0.51
Pinnacle West Capital Corp.		0.51
Pitney Bowes, Inc.		0.51
PNM Resources, Inc.		0.51
Post Properties, Inc.		0.51
Potlatch Corp.		0.52
Procter & Gamble Co. (The)		0.53
Prologis, Inc.		0.49
Provident Financial Services, Inc.		0.36
Public Service Enterprise Group, Inc.		0.51
Public Storage		0.51
Questar Corp.		0.51
Rayonier, Inc.		0.53
Regency Centers Corp.		0.50
Rent-A-Center, Inc.		0.47
Reynolds American, Inc.		0.70
Saul Centers, Inc.		0.27
Schweitzer-Mauduit International, Inc.		0.52
Scotts Miracle-Gro Co. (The)		0.52
Seagate Technology PLC		0.46

The accompanying notes are an integral part of the financial statements.
19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Security Description	Index Weight
JPMorgan Chase U.S. Dividend Basket Index (cont'd)
Simon Property Group, Inc.		0.51	%
Sonoco Products Co.		0.51
South Jersey Industries, Inc.		0.51
Southside Bancshares, Inc.		0.39
Sovran Self Storage, Inc.		0.52
Spok Holdings, Inc.		0.31
Stage Stores, Inc.		0.55
Staples, Inc.		0.49
Summit Hotel Properties, Inc.		0.52
Superior Industries International, Inc.		0.20
Sysco Corp.		0.51
Tanger Factory Outlet Centers, Inc.		0.50
Taubman Centers, Inc.		0.50
Tessera Technologies, Inc.		0.52
Time, Inc.		0.52
Tompkins Financial Corp.		0.21
TrustCo Bank Corp.		0.17
Trustmark Corp.		0.54
Tupperware Brands Corp.		0.52
UDR, Inc.		0.53
UIL Holdings Corp.		0.49
Umpqua Holdings Corp.		0.53
United Bankshares, Inc.		0.56
United Parcel Service, Inc.		0.52
Universal Corp.		0.58
Urban Edge Properties		0.50
Vectren Corp.		0.50
Waddell & Reed Financial, Inc.		0.53
Waste Management, Inc.		0.50
WEC Energy Group, Inc.		0.90
Weingarten Realty Investors		0.52
Westamerica Bancorporation		0.57
Westar Energy, Inc.		0.52
Western Refining, Inc.		0.55
Western Union Co. (The)		0.49
Weyerhaeuser Co.		0.53
WGL Holdings, Inc.		0.52
Xcel Energy, Inc.		0.52
		100.00	%

@  Value is less than $500.

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

*  Cleared swap agreement, the broker is Morgan Stanley & Co., LLC.

LIBOR  London Interbank Offered Rate.

AUD  —  Australian Dollar

BRL  —  Brazilian Real

CAD  —  Canadian Dollar

CHF  —  Swiss Franc

CLP  —  Chilean Peso

CNY  —  Chinese Yuan Renminbi

EUR  —  Euro

GBP  —  British Pound

HKD  —  Hong Kong Dollar

HUF  —  Hungarian Forint

IDR  —  Indonesian Rupiah

ILS  —  Israeli Shekel

INR  —  Indian Rupee

JPY  —  Japanese Yen

KRW  —  South Korean Won

MXN  —  Mexican Peso

MYR  —  Malaysian Ringgit

NZD  —  New Zealand Dollar

PLN  —  Polish Zloty

RUB  —  Russian Ruble

SEK  —  Swedish Krona

SGD  —  Singapore Dollar

THB  —  Thai Baht

TRY  —  Turkish Lira

TWD  —  Taiwan Dollar

USD  —  United States Dollar

ZAR  —  South African Rand

Portfolio Composition

Classification	Percentage of Total Investments
Common Stocks		39.7	%
Short-Term Investments		37.9
Fixed Income Securities		20.6
Other**		1.8
Total Investments		100.0	%***

**  Industries and/or investment types representing less than 5% of total investments.

***  Does not include open long/short futures contracts with an underlying face amount of approximately $185,612,000 with net unrealized depreciation of approximately $1,397,000. Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $2,097,000 and does not include open swap agreements with net unrealized appreciation of approximately $4,665,000.

The accompanying notes are an integral part of the financial statements.
20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Multi-Asset Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $363,409)	$	354,408
Investment in Security of Affiliated Issuer, at Value (Cost $180,310)		180,310
Total Investments in Securities, at Value (Cost $543,719)		534,718
Foreign Currency, at Value (Cost $383)		461
Cash		—	@
Unrealized Appreciation on Swap Agreements		6,160
Receivable for Variation Margin on Futures Contracts		5,121
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		2,514
Receivable for Investments Sold		1,119
Interest Receivable		1,104
Receivable for Portfolio Shares Sold		297
Dividends Receivable		247
Tax Reclaim Receivable		144
Receivable from Affiliate		29
Premium Paid on Open Swap Agreements		—	@
Other Assets		103
Total Assets		552,017
Liabilities:
Payable for Investments Purchased		13,167
Unrealized Depreciation on Swap Agreements		1,425
Payable for Advisory Fees		1,166
Payable for Portfolio Shares Redeemed		1,145
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		417
Payable for Swap Agreements Termination		387
Due to Broker		260
Payable for Custodian Fees		92
Payable for Administration Fees		36
Payable for Shareholder Services Fees — Class A		10
Payable for Distribution and Shareholder Services Fees — Class L		19
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Variation Margin on Swap Agreements		24
Payable for Professional Fees		19
Premium Received on Open Swap Agreements		8
Payable for Sub Transfer Agency Fees — Class I		4
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		10
Total Liabilities		18,189
Net Assets	$	533,828
Net Assets Consist Of:
Paid-in-Capital	$	582,509
Accumulated Undistributed Net Investment Income		5,351
Accumulated Net Realized Loss		(50,469	)
Unrealized Appreciation (Depreciation) on:
Investments		(9,001	)
Futures Contracts		(1,397	)
Swap Agreements		4,665
Foreign Currency Forward Exchange Contracts		2,097
Foreign Currency Translations		73
Net Assets	$	533,828

The accompanying notes are an integral part of the financial statements.
21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Multi-Asset Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	457,515
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		42,330,509
Net Asset Value, Offering and Redemption Price Per Share	$	10.81
CLASS A:
Net Assets	$	46,667
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,345,192
Net Asset Value, Redemption Price Per Share	$	10.74
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.60
Maximum Offering Price Per Share	$	11.34
CLASS L:
Net Assets	$	29,436
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,773,093
Net Asset Value, Offering and Redemption Price Per Share	$	10.61
CLASS C:
Net Assets	$	200
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		18,828
Net Asset Value, Offering and Redemption Price Per Share	$	10.62
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		902
Net Asset Value, Offering and Redemption Price Per Share	$	10.81

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Multi-Asset Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $485 of Foreign Taxes Withheld)	$	4,175
Interest from Securities of Unaffiliated Issuers		1,372
Dividends from Security of Affiliated Issuer (Note G)		219
Total Investment Income		5,766
Expenses:
Advisory Fees (Note B)		2,479
Administration Fees (Note C)		233
Shareholder Services Fees — Class A (Note D)		64
Distribution and Shareholder Services Fees — Class L (Note D)		139
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Custodian Fees (Note F)		203
Sub Transfer Agency Fees — Class I		87
Sub Transfer Agency Fees — Class A		7
Sub Transfer Agency Fees — Class L		9
Professional Fees		50
Pricing Fees		30
Registration Fees		29
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		14
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		—	@
Shareholder Reporting Fees		13
Directors' Fees and Expenses		7
Other Expenses		14
Total Expenses		3,381
Rebate from Morgan Stanley Affiliate (Note G)		(139	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Net Expenses		3,240
Net Investment Income		2,526
Realized Gain (Loss):
Investments Sold		(8,707	)
Foreign Currency Forward Exchange Contracts		5,254
Foreign Currency Transactions		(717	)
Futures Contracts		(9,896	)
Swap Agreements		(17,204	)
Net Realized Loss		(31,270	)
Change in Unrealized Appreciation (Depreciation):
Investments		(9,830	)
Foreign Currency Forward Exchange Contracts		295
Foreign Currency Translations		148
Futures Contracts		(817	)
Swap Agreements		1,056
Net Change in Unrealized Appreciation (Depreciation)		(9,148	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(40,418	)
Net Decrease in Net Assets Resulting from Operations	$	(37,892	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Multi-Asset Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	2,526		$	(887	)
Net Realized Loss		(31,270	)		(4,348	)
Net Change in Unrealized Appreciation (Depreciation)		(9,148	)		2,506
Net Decrease in Net Assets Resulting from Operations		(37,892	)		(2,729	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(8,445	)
Net Realized Gain		—			(180	)
Class A:
Net Investment Income		—			(857	)
Net Realized Gain		—			(21	)
Class L:
Net Investment Income		—			(498	)
Net Realized Gain		—			(16	)
Total Distributions		—			(10,017	)
Capital Share Transactions:(1)
Class I:
Subscribed		96,738			497,148
Distributions Reinvested		—			8,613
Redeemed		(102,605	)		(107,022	)
Class A:
Subscribed		7,355			57,577
Distributions Reinvested		—			773
Redeemed		(12,031	)		(16,062	)
Class L:
Subscribed		4,318			39,846
Distributions Reinvested		—			515
Redeemed		(13,714	)		(7,612	)
Class C:
Subscribed		206	*		—
Class IS:
Subscribed		10	**		—
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(19,723	)		473,776
Total Increase (Decrease) in Net Assets		(57,615	)		461,030
Net Assets:
Beginning of Period		591,443			130,413
End of Period (Including Accumulated Undistributed Net Investment Income of $5,351 and $2,825)	$	533,828		$	591,443

The accompanying notes are an integral part of the financial statements.
24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Multi-Asset Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		8,500			42,063
Shares Issued on Distributions Reinvested		—			744
Shares Redeemed		(9,053	)		(9,127	)
Net Increase (Decrease) in Class I Shares Outstanding		(553	)		33,680
Class A:
Shares Subscribed		646			4,919
Shares Issued on Distributions Reinvested		—			67
Shares Redeemed		(1,065	)		(1,378	)
Net Increase (Decrease) in Class A Shares Outstanding		(419	)		3,608
Class L:
Shares Subscribed		382			3,417
Shares Issued on Distributions Reinvested		—			45
Shares Redeemed		(1,231	)		(665	)
Net Increase (Decrease) in Class L Shares Outstanding		(849	)		2,797
Class C:
Shares Subscribed		19	*		—
Class IS:
Shares Subscribed		1	**		—

*  For the period April 30, 2015 through June 30, 2015.

**  For the period May 29, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Multi-Asset Portfolio

	Class I
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	11.55		$	11.68		$	10.30		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			(0.02	)		0.03			(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.79	)		0.11			1.84			0.47
Total from Investment Operations		(0.74	)		0.09			1.87			0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.22	)		—			—
Net Realized Gain		—			(0.00	)‡		(0.49	)		(0.15	)
Total Distributions		—			(0.22	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	10.81		$	11.55		$	11.68		$	10.30
Total Return++		(6.41	)%#		0.77	%		18.24	%		4.53	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	457,515		$	495,419		$	107,463		$	20,496
Ratio of Expenses to Average Net Assets (1)		1.04	%+*		1.01	%+		1.03	%+		1.01	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.95	%+*		(0.14	)%+		0.25	%+		(0.30	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		149	%#		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.09	%*		1.21	%		1.97	%		2.41	%*
Net Investment Income (Loss) to Average Net Assets		0.90	%*		(0.34	)%		(0.69	)%		(1.70	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Multi-Asset Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	11.50		$	11.63		$	10.29		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.04			(0.05	)		0.01			(0.03	)
Net Realized and Unrealized Gain (Loss)		(0.80	)		0.11			1.82			0.47
Total from Investment Operations		(0.76	)		0.06			1.83			0.44
Distributions from and/or in Excess of:
Net Investment Income		—			(0.19	)		—			—
Net Realized Gain		—			(0.00	)‡		(0.49	)		(0.15	)
Total Distributions		—			(0.19	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	10.74		$	11.50		$	11.63		$	10.29
Total Return++		(6.61	)%#		0.55	%		17.86	%		4.43	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	46,667		$	54,771		$	13,437		$	103
Ratio of Expenses to Average Net Assets (1)		1.33	%+*		1.30	%+		1.30	%+^^		1.26	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.63	%+*		(0.43	)%+		0.07	%+		(0.55	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		149	%#		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.38	%*		1.46	%		2.24	%		2.66	%*
Net Investment Income (Loss) to Average Net Assets		0.58	%*		(0.59	)%		(0.87	)%		(1.95	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.45% for Class A shares. Prior to September 16, 2013, the maximum ratio was 1.35% for Class A shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Multi-Asset Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	11.39		$	11.53		$	10.26		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.10	)		(0.05	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		(0.79	)		0.10			1.81			0.47
Total from Investment Operations		(0.78	)		0.00	‡		1.76			0.41
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)		—			—
Net Realized Gain		—			(0.00	)‡		(0.49	)		(0.15	)
Total Distributions		—			(0.14	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	10.61		$	11.39		$	11.53		$	10.26
Total Return++		(6.76	)%#		0.02	%		17.23	%		4.13	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	29,436		$	41,253		$	9,513		$	337
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.77	%+		1.79	%+^^		1.76	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.13	%+*		(0.90	)%+		(0.46	)%+		(1.05	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		149	%#		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.85	%*		1.93	%		2.73	%		3.16	%*
Net Investment Income (Loss) to Average Net Assets		0.08	%*		(1.06	)%		(1.40	)%		(2.45	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.95% for Class L shares. Prior to September 16, 2013, the maximum ratio was 1.85% for Class L shares.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Multi-Asset Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.09
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.49	)
Total from Investment Operations		(0.47	)
Net Asset Value, End of Period	$	10.62
Total Return++		(4.24	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	200
Ratios of Expenses to Average Net Assets (1)		2.18	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.83	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%*
Portfolio Turnover Rate		149	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.26	%*
Net Investment Loss to Average Net Assets		(0.25	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Multi-Asset Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from May 29, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.09
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.29	)
Total from Investment Operations		(0.28	)
Net Asset Value, End of Period	$	10.81
Total Return++		(2.52	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	10
Ratio of Expenses to Average Net Assets (1)		1.01	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.51	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.04	%*
Portfolio Turnover Rate		149	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		14.97	%*
Net Investment Loss to Average Net Assets		(12.45	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Multi- Asset Portfolio. The Portfolio seeks total return. The Portfolio's ("Adviser"), Morgan Stanley Investment Management Inc., seeks to achieve this objective with an emphasis on positive absolute return and controlling downside portfolio risk. To implement this approach, the Adviser will take long and short positions in a range of securities, other instruments and asset classes to express its investment themes. The Adviser may implement these positions either directly by purchasing securities or (specifically in the case of short positions) through the use of derivatives.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS shares. On April, 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions. On May 29, 2015, the Portfolio commenced offering Class IS shares.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (2) an equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price

if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (3) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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) futures are valued at the latest price published by the commodities exchange on which they trade; (5) swaps are marked-to-market daily based upon quotations from market makers; (6) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (7) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (8) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (9) short-term taxable debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such price does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser. Other taxable short-term debt securities with maturities of more than 60 days will be valued on a mark-to-market basis until such time as they reach a maturity of 60 days, whereupon they will be valued at amortized cost using their value on the

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

61st day unless the Adviser determines such price does not reflect the securities' fair value, in which case these securities will be valued at their fair market value as determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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.

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Aerospace & Defense	$	2,640	$	—	$	—	$	2,640
Air Freight & Logistics		1,382		—		—		1,382
Airlines		111		19		—		130
Auto Components		516		—		—		516
Automobiles		8,131		—		—		8,131
Banks		39,627		291		—		39,918
Beverages		4,166		66		—		4,232
Biotechnology		20		—		—		20
Building Products		1,140		—		—		1,140
Capital Markets		2,955		—		—		2,955
Chemicals		8,591		2		—		8,593
Commercial Services & Supplies		455		—		—		455
Communications Equipment		1,040		—		—		1,040
Construction & Engineering		2,088		33		—		2,121
Construction Materials		864		43		—		907
Consumer Finance		84		—		—		84
Containers & Packaging		115		—		—		115
Diversified Consumer Services		566		—		—		566
Diversified Financial Services		296		63		—		359
Diversified Telecommunication Services		8,379		119		—		8,498
Electric Utilities		3,877		97		—		3,974
Electrical Equipment		2,592		—		—		2,592
Electronic Equipment, Instruments & Components		444		—		—		444
Energy Equipment & Services		2		—		—		2
Food & Staples Retailing		1,733		—		—		1,733
Food Products		4,648		—		—		4,648
Gas Utilities		431		—		—		431
Health Care Equipment & Supplies		1,612		—		—		1,612
Health Care Providers & Services		652		—		—		652
Hotels, Restaurants & Leisure		2,502		104		—		2,606
Household Durables		378		—		—		378
Household Products		69		—		—		69
Independent Power Producers & Energy Traders		114		8		—		122
Industrial Conglomerates		5,472		—		—		5,472
Information Technology Services		748		—		—		748
Insurance		23,566		—		—		23,566
Internet & Catalog Retail		87		—		—		87
Internet Software & Services		2		—		—		2
Leisure Products		74		—		—		74

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Life Sciences Tools & Services	$	180	$	—	$	—	$	180
Machinery		1,894		18		—		1,912
Marine		415		—		—		415
Media		2,656		—		—		2,656
Metals & Mining		1,447		64		—		1,511
Multi-Utilities		3,917		—		—		3,917
Multi-line Retail		10,851		—		—		10,851
Oil, Gas & Consumable Fuels		8,909		64		—		8,973
Paper & Forest Products		14		—		—		14
Personal Products		2,068		4		—		2,072
Pharmaceuticals		15,200		—		—		15,200
Professional Services		342		—		—		342
Real Estate Investment Trusts (REITs)		1,172		21		—		1,193
Real Estate Management & Development		329		4		—		333
Road & Rail		590		—		—		590
Semiconductors & Semiconductor Equipment		2,243		—		—		2,243
Software		3,281		—		—		3,281
Specialty Retail		14,006		171		—		14,177
Tech Hardware, Storage & Peripherals		88		—		—		88
Textiles, Apparel & Luxury Goods		6,293		—		—		6,293
Tobacco		209		—		—		209
Trading Companies & Distributors		792		—		—		792
Transportation Infrastructure		421		5		—		426
Water Utilities		326		12		—		338
Wireless Telecommunication Services		931		—		—		931
Total Common Stocks		210,743		1,208		—		211,951
Participation Note		—		9,745		—		9,745
Investment Company		62		—		—		62
Rights		—		1		—		1
Fixed Income Securities
Sovereign		—		18,559		—		18,559
U.S. Treasury Security		—		91,535		—		91,535
Total Fixed Income Securities		—		110,094		—		110,094
Short-Term Investments
Investment Company		180,310		—		—		180,310
U.S. Treasury Security		—		22,555		—		22,555
Total Short-Term Investments		180,310		22,555		—		202,865
Foreign Currency Forward Exchange Contracts		—		2,514		—		2,514
Futures Contracts		634		—		—		634
Credit Default Swap Agreements		—		212		—		212

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)		Total (000)
Interest Rate Swap Agreements	$	—		$	728		$	—	$	728
Total Return Swap Agreements		—			6,160			—		6,160
Total Assets		391,749			153,217			—		544,966
Liabilities:
Foreign Currency Forward Exchange Contracts		—			(417	)		—		(417	)
Futures Contracts		(2,031	)		—			—		(2,031	)
Credit Default Swap Agreements		—			(53	)		—		(53	)
Interest Rate Swap Agreements		—			(1,010	)		—		(1,010	)
Total Return Swap Agreements		—			(1,372	)		—		(1,372	)
Total Liabilities		(2,031	)		(2,852	)		—		(4,883	)
Total	$	389,718		$	150,365		$	—	$	540,083

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $123,115,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015. Securities with a total value of approximately $3,000 transferred from Level 1 to Level 2. Securities that were valued using unadjusted quoted prices at December 31, 2014 were valued using other significant observable inputs at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations

arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns,

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset, interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser

seeks to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Foreign Currency Forward Exchange Contracts: In connection with its investments in foreign securities, the Portfolio also entered into contracts with banks, brokers or dealers to purchase or sell securities or foreign currencies at a future date. A foreign currency forward exchange contract ("currency contract") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the contract. Currency contracts may be used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. To the extent hedged by the use of currency contracts, the precise matching of the currency contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Furthermore, such transactions may reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is additional risk to the extent that currency contracts create exposure to currencies in which the Portfolio's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for the Portfolio than if it had not entered into such contracts. The use of currency contracts involves the risk of loss from the insolvency or bankruptcy of the counterparty to the contract or the failure of the counterparty to make payments or otherwise comply with the terms of the contract. A currency contract is marked-to-market daily and the change in market value is recorded by the Portfolio as unrealized gain or loss. The Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

of the currency contract at the time it was opened and the value at the time it was closed.

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Portfolio's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a broker with which the Portfolio has open positions in the futures contract.

Swaps: The Portfolio may enter into OTC swap contracts or cleared swap transactions. A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indices, reference rates, currencies or other instruments. Typically swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Portfolio's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each party. Cleared swap transactions

may help reduce counterparty credit risk. In a cleared swap, the Portfolio's ultimate counterparty is a clearinghouse rather than a swap dealer, bank or other financial institution. OTC swap agreements are not entered into or traded on exchanges and often there is no central clearing or guaranty function for OTC swaps. These OTC swaps are often subject to credit risk or the risk of default or non-performance by the counterparty. Both OTC and cleared swaps could result in losses if interest rates, foreign currency exchange rates or other factors are not correctly anticipated by the Portfolio or if the reference index, security or investments do not perform as expected. During the period swap agreements are open, payments are received from or made to the clearinghouse or counterparty based upon changes in the value of the contract (variation margin). The Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulatory developments require the clearing and exchange-trading of certain standardized swap transactions. Mandatory exchange-trading and clearing is occurring on a phased-in basis.

The Portfolio's use of swaps during the period included those based on the credit of an underlying security commonly referred to as "credit default swaps." The Portfolio may be either the buyer or seller in a credit default swap. Where the Portfolio is the buyer of a credit default swap contract, it would typically be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract only in the event of a default or similar event by the issuer of the debt obligation. If no default occurs, the Portfolio would have paid to the counterparty a periodic stream of payments over the term of the contract and received no benefit from the contract. When the Portfolio is the seller of a credit default swap contract, it typically receives the stream of payments but is obligated to pay an amount equal to the par (or other agreed-upon) value of a referenced debt obligation upon the default or similar event by the issuer of the referenced debt obligation. The use of credit default swaps could result in losses to the Portfolio if the Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

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

36

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

and serves as an indicator of the current status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.

When the Portfolio has an unrealized loss on a swap agreement, the Portfolio has instructed the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. If applicable, cash collateral is included with "Due from (to) Broker" in the Statement of Assets and Liabilities.

Upfront payments received or paid by the Portfolio will be reflected as an asset or liability, respectively, in the Statement of Assets and Liabilities.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following tables set forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2015.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	2,514
Futures Contract	Variation Margin on Futures Contract	Commodity Risk		508	(a)
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		126	(a)
Swap Agreements	Variation Margin on Swap Agreements	Credit Risk		212	(a)
Swap Agreements	Unrealized Appreciation on Swap Agreements	Equity Risk		6,160
Swap Agreements	Variation Margin on Swap Agreements	Interest Rate Risk		728	(a)
Total			$	10,248

	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts	Currency Risk	$	(417	)
Futures Contracts	Variation Margin on Futures Contracts	Interest Rate Risk		(892	)(a)
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		(1,139	)(a)
Swap Agreements	Unrealized Depreciation on Swap Agreements	Credit Risk		(53	)
Swap Agreements	Unrealized Depreciation on Swap Agreements	Equity Risk		(1,372	)
Swap Agreements	Variation Margin on Swap Agreements	Interest Rate Risk		(1,010	)(a)
Total			$	(4,883	)

(a) This amount represents the cumulative appreciation (depreciation) as reported in the Portfolio of Investments. The Statement of Assets and Liabilities only reflects the current day's net variation margin.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	5,254
Commodity Risk	Futures Contracts		43
Equity Risk	Futures Contracts		(11,665	)
Interest Rate Risk	Futures Contracts		1,726
Credit Risk	Swap Agreements		1,773
Equity Risk	Swap Agreements		(439	)
Interest Rate Risk	Swap Agreements		(18,538	)
Total		$	(21,846	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	295
Commodity Risk	Futures Contracts		550
Equity Risk	Futures Contracts		(475	)
Interest Rate Risk	Futures Contracts		(892	)
Credit Risk	Swap Agreements		710
Equity Risk	Swap Agreements		1,140
Interest Rate Risk	Swap Agreements		(794	)
Total		$	534

37

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

At June 30, 2015, the Portfolio's derivative assets and liabilities are as follows:

Gross Amounts of Assets and Liabilities Presented in the Statement of Assets and Liabilities
Derivatives(b)	Assets(c) (000)		Liabilities(c) (000)
Foreign Currency Forward Exchange Contracts	$	2,514	$	(417	)
Swap Agreements		6,160		(1,425	)
Total	$	8,674	$	(1,842	)

(b) Excludes exchange traded derivatives.

(c) Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities.

The Portfolio typically enters into International Swaps and Derivatives Association, Inc. Master Agreements ("ISDA Master Agreements") or similar master agreements (collectively, "Master Agreements") with its contract counterparties for certain OTC derivatives in order to, among other things, reduce its credit risk to counterparties. ISDA Master Agreements include provisions for general obligations, representations, collateral and events of default or termination. Under an ISDA Master Agreement, the Portfolio typically may offset with the counterparty certain OTC derivative financial instruments' payables and/or receivables with collateral held and/or posted and create one single net payment (close-out netting) in the event of default, termination and/or potential deterioration in the credit quality of the counterparty. Various Master Agreements govern the terms of certain transactions with counterparties, including transactions such as swap, forward, repurchase and reverse repurchase agreements. These Master Agreements typically attempt to reduce the counterparty risk associated with such transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Cross-termination provisions under Master Agreements typically provide that a default in connection with one transaction between the Portfolio and a counterparty gives the non-defaulting party the right to terminate any other transactions in place with the defaulting party to create one single net payment due to/due from the defaulting party and may be a feature in certain Master Agreements. In the event the Portfolio exercises its right to terminate a Master Agreement after a counterparty experiences a termination event as defined in the Master Agreement, the return of collateral with market

value in excess of the Portfolio's net liability may be delayed or denied.

The following tables present derivative financial instruments that are subject to enforceable netting arrangements as of June 30, 2015.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Asset Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Received(d) (000)			Net Amount (not less than $0) (000)
Bank of America NA	$	1,936	$	(3	)	$	(962	)	$	971
Bank of Montreal		526		(30	)		—			496
Bank of New York Mellon		56		(56	)		—			0
Barclays Bank PLC		590		(1	)		—			589
Citibank NA		533		(162	)		—			371
Commonwealth Bank of Australia		134		—			—			134
Credit Suisse International		154		(1	)		—			153
Deutsche Bank AG		749		(46	)		(260	)		443
Goldman Sachs International		1,244		(8	)		(800	)		436
JPMorgan Chase Bank NA		2,353		(1,197	)		(1,156	)		0
State Street Bank and Trust Co.		26		(26	)		—			0
UBS AG		373		(12	)		—			361
Total	$	8,674	$	(1,542	)	$	(3,178	)	$	3,954

(d) In some instances, the actual collateral received may be more than the amount shown here due to overcollateralization.

Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty	Gross Liability Derivatives Presented in Statement of Assets and Liabilities (000)		Financial Instrument (000)			Collateral Pledged(e) (000)			Net Amount (not less than $0) (000)
Bank of America NA	$	3	$	(3	)	$	—		$	0
Bank of Montreal		30		(30	)		—			0
Bank of New York Mellon		185		(56	)		—			129
Barclays Bank PLC		1		(1	)		—			0
Citibank NA		238		(162	)		(76	)		0
Credit Suisse International		1		(1	)		—			0
Deutsche Bank AG		46		(46	)		—			0
Goldman Sachs International		20		(8	)		—			12
JPMorgan Chase Bank NA		1,230		(1,197	)		—			33
State Street Bank and Trust Co.		76		(26	)		—			50
UBS AG		12		(12	)		—			0
Total	$	1,842	$	(1,542	)	$	(76	)	$	224

(e) In some instances, the actual collateral pledged may be more than the amount shown here due to overcollateralization.

38

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

For the six months ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	394,136,000
Futures Contracts:
Average monthly original value	$	994,463,000
Swap Agreements:
Average monthly notional amount	$	1,369,826,000

5.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited, or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

The Portfolio owns shares of real estate investment trusts ("REITs") which report information on the source of their distributions annually in the following calendar year. A portion of distributions received from REITs during the year is estimated to be a return of capital and is recorded as a reduction of their cost.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $750 million			Next $750 million			Over $1.5 billion
	0.85	%		0.80	%		0.75	%

For the six months ended June 30, 2015, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.80% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.10% for Class I shares, 1.45% for Class A shares, 1.95% for Class L shares, 2.20% for Class C shares and 1.07% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the

39

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $2,000 of other expenses were waived pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A , Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $516,795,000 and $359,606,000, respectively. For the six months ended June 30, 2015, purchases and sales of long-term U.S. Government securities were approximately $96,498,000 and $3,959,000, respectively.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $139,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	496,892	$	332,194	$	648,776	$	219	$	180,310

40

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	9,800	$	217	$	2,465	$	1,227

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are primarily due to differing book and tax treatments in the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, swap income reclass, a nondeductible expense and equalization debits, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	12,908	$	(13,538	)	$	630

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	8,076	$	—

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $4,214,000 and the aggregate gross unrealized depreciation is approximately $13,215,000 resulting in net unrealized depreciation of approximately $9,001,000.

At December 31, 2014, the Portfolio had available unused short-term capital losses of approximately $16,140,000 and long-term capital losses of approximately $2,068,000 that do not have an expiration date.

To the extent that capital loss carryforwards are used to offset any future capital gains realized, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 28.8% for Class I shares.

41

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

42

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

43

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

44

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

45

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

  IFIMASAN
1259835 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Frontier Emerging Markets Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	8
Statement of Operations	10
Statements of Changes in Net Assets	11
Financial Highlights	13
Notes to Financial Statements	18
U.S. Privacy Policy	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Frontier Emerging Markets Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Frontier Emerging Markets Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period****
Frontier Emerging Markets Portfolio Class I	$	1,000.00	$	995.30	$	1,016.51	$	8.26	*	$	8.35	*		1.67	%
Frontier Emerging Markets Portfolio Class A		1,000.00		993.20		1,014.83		9.93	*		10.04	*		2.01
Frontier Emerging Markets Portfolio Class L		1,000.00		990.00		1,012.00		12.73	*		12.87	*		2.58
Frontier Emerging Markets Portfolio Class C		1,000.00		961.60		1,003.43		4.84	**		4.94	**		2.95
Frontier Emerging Markets Portfolio Class IS		1,000.00		989.10		1,011.14		5.41	***		5.47	***		1.64

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 121/365 (to reflect the actual days in the period).

****  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was better than its peer group average for the one-, three- and five-year periods. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the Portfolio's management fee and total expense ratio were higher but close to its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was competitive with its peer group average; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which does not include breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Frontier Emerging Markets Portfolio

	Shares		Value (000)
Common Stocks (83.3%)
Argentina (9.4%)
Banco Macro SA ADR (a)		381,906	$	17,415
BBVA Banco Frances SA ADR		967,178		15,359
Telecom Argentina SA ADR		650,485		11,702
YPF SA ADR		760,254		20,854
				65,330
Bangladesh (4.0%)
GrameenPhone Ltd.		4,463,810		18,923
Olympic Industries Ltd.		3,076,076		9,286
				28,209
Egypt (6.8%)
Arabian Cement Co.		4,868,507		9,571
Commercial International Bank Egypt SAE		2,602,076		19,319
Edita Food Industries SAE (a)		2,975,772		11,310
Integrated Diagnostics Holdings PLC (a)(b)		1,190,388		6,964
				47,164
Kenya (7.4%)
East African Breweries Ltd.		4,767,901		14,641
Kenya Commercial Bank Ltd.		28,372,309		15,425
Safaricom Ltd.		130,003,419		21,597
				51,663
Kuwait (9.9%)
Burgan Bank SAK		12,387,184		17,409
Kuwait Projects Co., Holding KSC		5,967,810		12,433
National Bank of Kuwait		13,718,773		39,015
				68,857
Morocco (2.2%)
Attijariwafa Bank		419,068		15,087
Nigeria (8.1%)
Guaranty Trust Bank PLC		149,382,526		20,270
Lafarge Africa PLC		7,511,589		3,887
Nigerian Breweries PLC		27,481,829		20,708
Zenith Bank PLC		124,752,908		12,065
				56,930
Pakistan (11.6%)
K-Electric Ltd. (a)		126,766,700		10,475
Lucky Cement Ltd.		4,365,962		22,215
Maple Leaf Cement Factory Ltd.		14,183,091		10,950
MCB Bank Ltd.		6,834,371		16,704
United Bank Ltd.		12,417,278		20,833
				81,177
Qatar (2.7%)
Ooredoo QSC		172,149		4,113
Qatar Islamic Bank		509,480		15,097
				19,210
Romania (6.7%)
Banca Transilvania (a)		44,145,556		23,416
BRD-Groupe Societe Generale (a)		5,043,686		13,546
Societatea Nationala de Gaze Naturale ROMGAZ SA (a)		803,254		7,285

	Shares		Value (000)
Societatea Nationala de Gaze Naturale ROMGAZ SA GDR (a)(b)		302,095	$	2,631
				46,878
Sri Lanka (4.3%)
Commercial Bank of Ceylon PLC		14,723,788		17,662
John Keells Holdings PLC		8,070,473		12,299
				29,961
United Arab Emirates (3.7%)
Aramex PJSC		3,669,826		3,477
First Gulf Bank PJSC		3,697,856		15,303
NMC Health PLC		561,858		7,019
				25,799
United Kingdom (0.9%)
Genel Energy PLC (a)		767,570		6,115
Vietnam (5.6%)
Bank for Foreign Trade of Vietnam JSC		6,416,900		14,339
Masan Group Corp. (a)		3,413,260		12,660
Vietnam Dairy Products JSC		2,339,020		12,103
Vingroup JSC		2		—	@
				39,102
Total Common Stocks (Cost $565,319)				581,482
Participation Notes (14.2%)
Saudi Arabia (14.0%)
Al Hammadi Development and Investment Co., Equity Linked Notes, expires 12/20/18 (a)		509,294		8,420
Al Hammadi Development and Investment Co. Series 000A, Equity Linked Notes, expires 8/21/17 (a)		762,934		12,614
Alinma Bank, Equity Linked Notes, expires 9/27/16 (a)		974,691		5,861
Almina Bank Series 0001, Equity Linked Notes, expires 5/9/16 (a)		2,126,991		12,790
Jarir Marketing Co. Series 0005, Equity Linked Notes, expires 12/12/16 (a)(b)		311,965		18,385
Saudi Airlines Catering Co., Equity Linked Notes, expires 5/23/17 (a)		385,430		16,856
Saudi Hollandi Bank, Equity Linked Notes, expires 9/27/16 (a)		78,279		918
Saudi Hollandi Bank Series 0001, Equity Linked Notes, expires 1/23/17 (a)		468,185		5,493
Saudi Hollandi Bank Series 0002, Equity Linked Notes, expires 3/7/16 (a)		1,417,464		16,631
				97,968
Vietnam (0.2%)
Viet Nam Dairy Products JSC, Equity Linked Notes, expires 10/23/17 (a)		111,108		575
Viet Nam Dairy Products JSC, Equity Linked Notes, expires 7/22/19 (a)		169,596		877
				1,452
Total Participation Notes (Cost $84,506)				99,420

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments (cont'd)

Frontier Emerging Markets Portfolio

	Shares		Value (000)
Short-Term Investment (2.7%)
Investment Company (2.7%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $18,821)		18,821,392	$	18,821
Total Investments (100.2%) (Cost $668,646)				699,723
Liabilities in Excess of Other Assets (-0.2%)				(1,329	)
Net Assets (100.0%)			$	698,394

(a)  Non-income producing security.

(b)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

@  Value is less than $500.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

PJSC  Public Joint Stock Company.

Portfolio Composition

Classification	Percentage of Total Investments
Banks		50.0	%
Other*		10.5
Food Products		6.7
Construction Materials		6.7
Wireless Telecommunication Services		5.8
Oil, Gas & Consumable Fuels		5.3
Beverages		5.0
Commercial Services & Supplies		5.0
Health Care Providers & Services		5.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $649,825)	$	680,902
Investment in Security of Affiliated Issuer, at Value (Cost $18,821)		18,821
Total Investments in Securities, at Value (Cost $668,646)		699,723
Foreign Currency, at Value (Cost $78)		78
Receivable for Investments Sold		3,916
Dividends Receivable		1,141
Receivable for Portfolio Shares Sold		628
Tax Reclaim Receivable		5
Receivable from Affiliate		3
Other Assets		177
Total Assets		705,671
Liabilities:
Deferred Capital Gain Country Tax		3,231
Payable for Advisory Fees		2,167
Payable for Portfolio Shares Redeemed		709
Payable for Investments Purchased		674
Payable for Custodian Fees		388
Payable for Administration Fees		46
Payable for Sub Transfer Agency Fees — Class I		23
Payable for Sub Transfer Agency Fees — Class A		6
Payable for Shareholder Services Fees — Class A		16
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		2
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		8
Total Liabilities		7,277
Net Assets	$	698,394
Net Assets Consist of:
Paid-in-Capital	$	724,365
Accumulated Undistributed Net Investment Income		6,572
Accumulated Net Realized Loss		(60,556	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $3,061 of Deferred Capital Gain Country Tax)		28,016
Foreign Currency Translations		(3	)
Net Assets	$	698,394

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	578,234
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,329,680
Net Asset Value, Offering and Redemption Price Per Share	$	19.06
CLASS A:
Net Assets	$	77,983
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,116,467
Net Asset Value, Redemption Price Per Share	$	18.94
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.05
Maximum Offering Price Per Share	$	19.99
CLASS L:
Net Assets	$	7,334
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		390,288
Net Asset Value, Offering and Redemption Price Per Share	$	18.79
CLASS C:
Net Assets	$	389
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		20,718
Net Asset Value, Offering and Redemption Price Per Share	$	18.78
CLASS IS:
Net Assets	$	34,454
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,806,929
Net Asset Value, Offering and Redemption Price Per Share	$	19.07

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,171 of Foreign Taxes Withheld)	$	12,582
Dividends from Security of Affiliated Issuer (Note G)		14
Total Investment Income		12,596
Expenses:
Advisory Fees (Note B)		4,159
Custodian Fees (Note F)		782
Administration Fees (Note C)		266
Sub Transfer Agency Fees — Class I		113
Sub Transfer Agency Fees — Class A		46
Sub Transfer Agency Fees — Class L		3
Professional Fees		129
Shareholder Services Fees — Class A (Note D)		95
Distribution and Shareholder Services Fees — Class L (Note D)		30
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Registration Fees		44
Shareholder Reporting Fees		22
Transfer Agency Fees — Class I (Note E)		7
Transfer Agency Fees — Class A (Note E)		3
Transfer Agency Fees — Class L (Note E)		5
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		—	@
Directors' Fees and Expenses		8
Pricing Fees		3
Other Expenses		10
Expenses Before Non Operating Expenses		5,725
Bank Overdraft Expense		1
Total Expenses		5,726
Rebate from Morgan Stanley Affiliate (Note G)		(9	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Net Expenses		5,717
Net Investment Income		6,879
Realized Loss:
Investments Sold (Net of $166 of Capital Gain Country Tax)		(16,039	)
Foreign Currency Transactions		(610	)
Net Realized Loss		(16,649	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $1,338)		5,923
Foreign Currency Translations		46
Net Change in Unrealized Appreciation (Depreciation)		5,969
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(10,680	)
Net Decrease in Net Assets Resulting from Operations	$	(3,801	)

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Frontier Emerging Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	6,879		$	5,958
Net Realized Loss		(16,649	)		(7,627	)
Net Change in Unrealized Appreciation (Depreciation)		5,969			(12,194	)
Net Decrease in Net Assets Resulting from Operations		(3,801	)		(13,863	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(4,928	)
Paid-in-Capital		—			(215	)
Class A:
Net Investment Income		—			(524	)
Paid-in-Capital		—			(32	)
Class L:
Net Investment Income		—			(21	)
Paid-in-Capital		—			(3	)
Total Distributions		—			(5,723	)
Capital Share Transactions:(1)
Class I:
Subscribed		190,901			436,382
Distributions Reinvested		—			3,342
Redeemed		(157,699	)		(115,877	)
Class A:
Subscribed		29,611			89,841
Distributions Reinvested		—			549
Redeemed		(27,896	)		(33,970	)
Class L:
Subscribed		1,338			7,270
Distributions Reinvested		—			24
Redeemed		(1,920	)		(2,050	)
Class C:
Subscribed		398	*		—
Redeemed		(3	)*		—
Class IS:
Subscribed		35,032	**		—
Net Increase in Net Assets Resulting from Capital Share Transactions		69,762			385,511
Redemption Fees		56			100
Total Increase in Net Assets		66,017			366,025
Net Assets:
Beginning of Period		632,377			266,352
End of Period (Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $6,572 and $(307), respectively)	$	698,394		$	632,377

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Frontier Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		9,947			21,506
Shares Issued on Distributions Reinvested		—			185
Shares Redeemed		(8,211	)		(5,792	)
Net Increase in Class I Shares Outstanding		1,736			15,899
Class A:
Shares Subscribed		1,550			4,403
Shares Issued on Distributions Reinvested		—			30
Shares Redeemed		(1,465	)		(1,667	)
Net Increase in Class A Shares Outstanding		85			2,766
Class L:
Shares Subscribed		70			355
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(102	)		(106	)
Net Increase (Decrease) in Class L Shares Outstanding		(32	)		250
Class C:
Shares Subscribed		21	*		—
Shares Redeemed		(—	@@)*		—
Net Increase in Class C Shares Outstanding		21			—
Class IS:
Shares Subscribed		1,807	**		—

*  For the period April 30, 2015 through June 30, 2015.

**  For the period February 27, 2015 through June 30, 2015.

@@  Amount is less than 500 shares.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Frontier Emerging Markets Portfolio

	Class I@
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from November 1, 2012 to December 31,			Year Ended October 31,
Selected Per Share Data and Ratios	(unaudited)			2014			2013			2012			2012			2011			2010
Net Asset Value, Beginning of Period	$	19.15		$	18.86		$	14.24		$	14.00		$	12.75		$	15.26		$	13.19
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.20			0.25			0.09			(0.03	)		0.19			0.34			0.13
Net Realized and Unrealized Gain (Loss)		(0.29	)		0.23			4.60			0.56			1.26			(2.65	)		2.06
Total from Investment Operations		(0.09	)		0.48			4.69			0.53			1.45			(2.31	)		2.19
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.07	)		(0.30	)		(0.22	)		(0.20	)		(0.21	)
Paid-in-Capital		—			(0.01	)		—			—			—			—			—
Total Distributions		—			(0.19	)		(0.07	)		(0.30	)		(0.22	)		(0.20	)		(0.21	)
Anti-Dilutive Effect of Share Repurchase Program		—			—			—			—			—			—			0.09
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.01			0.02			—			—
Net Asset Value, End of Period	$	19.06		$	19.15		$	18.86		$	14.24		$	14.00		$	12.75		$	15.26
Total Return++		(0.47	)%#		2.66	%		32.95	%		3.94	%#		12.03	%		(15.35	)%		17.95	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	578,234		$	547,535		$	239,378		$	51,415		$	58,729		$	84,962		$	101,662
Ratio of Expenses to Average Net Assets (1)		1.67	%+*		1.69	%+		1.77	%+		1.85	%+*		2.38	%+		2.03	%+		2.13	%
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.67	%+*		1.71	%+		N/A			N/A			2.38	%+		N/A			N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.10	%+*		1.23	%+		0.54	%+		(1.23	)%+*		1.47	%+		2.32	%+		1.00	%
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.00	%§*		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		11	%#		52	%		34	%		13	%#		59	%		60	%		42	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.72	%		1.89	%		3.31	%*		2.47	%		N/A			N/A
Net Investment Income (Loss) to Average Net Assets		N/A			1.20	%		0.42	%		(2.69	)%*		1.38	%		N/A			N/A

@  On September 17, 2012, all assets of Morgan Stanley Frontier Emerging Markets Fund, Inc. (the "Predecessor Fund") were reorganized into Class I shares of Morgan Stanley Institutional Fund, Inc. Frontier Emerging Markets Portfolio (the "Portfolio"). Per share data and ratios shown for Class I shares reflects the historical per share data and performance of the Predecessor Fund for periods prior to September 17, 2012.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Frontier Emerging Markets Portfolio

	Class A
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from November 1, 2012 to			Period from September 14, 2012^
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012			to October 31, 2012
Net Asset Value, Beginning of Period	$	19.06		$	18.78		$	14.20		$	13.97		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.16			0.18			(0.15	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.28	)		0.24			4.79			0.56			0.23
Total from Investment Operations		(0.12	)		0.42			4.64			0.53			0.21
Distributions from and/or in Excess of:
Net Investment Income		—			(0.13	)		(0.06	)		(0.30	)		—
Paid-in-Capital		—			(0.01	)		—			—			—
Total Distributions		—			(0.14	)		(0.06	)		(0.30	)		—
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	18.94		$	19.06		$	18.78		$	14.20		$	13.97
Total Return++		(0.68	)%#		2.39	%		32.53	%		3.77	%#		1.67	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	77,983		$	76,839		$	23,762		$	10		$	10

Ratio of Expenses to Average Net Assets ⁽¹⁾ 2.01 %+* 2.02 %+ 1.95 %+^^ 2.10 %+* 2.10 %+*

Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses	2.01	%+*	2.04	%+	N/A		N/A		2.09	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)	1.65	%+*	0.90	%+	(0.81	)%+	(1.48	)%+*	(0.88	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.00	%§*	0.01	%	0.01	%	0.00	%§*	0.01	%*
Portfolio Turnover Rate	11	%#	52	%	34	%	13	%#	59	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets	N/A		2.05	%	N/A		3.56	%*	2.92	%*
Net Investment Income (Loss) to Average Net Assets	N/A		0.87	%	N/A		(2.94	)%*	(1.70	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.20% for Class A shares. Prior to September 16, 2013, the maximum ratio was 2.10% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Frontier Emerging Markets Portfolio

	Class L
	Six Months Ended June 30, 2015			Year Ended December 31,						Period from November 1, 2012 to			Period from September 14, 2012^
Selected Per Share Data and Ratios	(unaudited)			2014			2013			December 31, 2012			to October 31, 2012
Net Asset Value, Beginning of Period	$	18.96		$	18.71		$	14.19		$	13.96		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.12			0.06			(0.16	)		(0.05	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.29	)		0.25			4.69			0.57			0.22
Total from Investment Operations		(0.17	)		0.31			4.53			0.52			0.20
Distributions from and/or in Excess of:
Net Investment Income		—			(0.05	)		(0.01	)		(0.29	)		—
Paid-in-Capital		—			(0.01	)		—			—			—
Total Distributions		—			(0.06	)		(0.01	)		(0.29	)		—
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	18.79		$	18.96		$	18.71		$	14.19		$	13.96
Total Return++		(1.00	)%#		1.77	%		31.81	%		3.71	%#		1.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,334		$	8,003		$	3,212		$	10		$	10

Ratio of Expenses to Average Net Assets ⁽¹⁾ 2.58 %+* 2.65 %+ 2.53 %+^^ 2.60 %+* 2.60 %+*

Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses	2.58	%+*	2.67	%+	N/A		N/A		2.59	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)	1.27	%+*	0.27	%+	(0.92	)%+	(1.98	)%+*	(1.37	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets	0.00	%§*	0.01	%	0.00	%§	0.00	%§*	0.01	%*
Portfolio Turnover Rate	11	%#	52	%	34	%	13	%#	59	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets	N/A		2.68	%	N/A		4.08	%*	3.49	%*
Net Investment Income (Loss) to Average Net Assets	N/A		0.24	%	N/A		(3.46	)%*	(2.26	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective September 16, 2013, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.70% for Class L shares. Prior to September 16, 2013, the maximum ratio was 2.60% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Frontier Emerging Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	19.53
Loss from Investment Operations:
Net Investment Loss†		(0.01	)
Net Realized and Unrealized Loss		(0.74	)
Total from Investment Operations		(0.75	)
Redemption Fees		0.00	‡
Net Asset Value, End of Period	$	18.78
Total Return++		(3.84	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	389
Ratios of Expenses to Average Net Assets (1)		2.95	%+*
Ratios of Expenses to Average Net Assets Excluding Non Operating Expenses		2.95	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.33	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		11	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.43	%*
Net Investment Loss to Average Net Assets		(0.81	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Frontier Emerging Markets Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from February 27, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	19.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.19
Net Realized and Unrealized Loss		(0.40	)
Total from Investment Operations		(0.21	)
Net Asset Value, End of Period	$	19.07
Total Return++		(1.09	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	34,454
Ratio of Expenses to Average Net Assets (1)		1.64	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.64	%+*
Ratio of Net Investment Income to Average Net Assets (1)		3.00	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		11	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		1.64	%*
Net Investment Income to Average Net Assets		3.00	%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Frontier Emerging Markets Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On February 27, 2015, the Portfolio commenced offering Class IS shares. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing

service; (4) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") determines that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (7) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services,

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Air Freight & Logistics	$	3,477	$	—	$	—	$	3,477
Banks		308,264		—		—		308,264
Beverages		35,349		—		—		35,349
Construction Materials		46,623		—		—		46,623
Diversified Financial Services		12,433		—		—		12,433
Diversified Telecommunication Services		15,815		—		—		15,815
Electric Utilities		10,475		—		—		10,475
Food Products		33,256		12,103		—		45,359

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Health Care Providers & Services	$	13,983		$	—	$	—	$	13,983
Industrial Conglomerates		12,299			—		—		12,299
Oil, Gas & Consumable Fuels		36,885			—		—		36,885
Real Estate Management & Development		—	@		—		—		—	@
Wireless Telecommunication Services		40,520			—		—		40,520
Total Common Stocks		569,379			12,103		—		581,482
Participation Notes		—			99,420		—		99,420
Short-Term Investment
Investment Company		18,821			—		—		18,821
Total Assets	$	588,200		$	111,523	$	—	$	699,723

@  Value is less than $500.

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $369,924,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect

of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

A significant portion of the Portfolio's net assets consist of securities of issuers located in emerging markets, which are denominated in foreign currencies. Such securities may be concentrated in a limited number of countries and regions and may vary throughout the year. Changes in currency exchange rates will affect the value of and investment income from foreign currency denominated securities. Emerging market securities are often subject to greater price volatility, limited capitalization and liquidity, and higher rates of inflation than U.S. securities. In addition, emerging market issuers may be subject to substantial governmental involvement in the economy and greater social, economic and political uncertainty.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

5.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class L shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statements of Changes in Net Assets.

6.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown.

However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

7.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

8.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at an annual rate of 1.25% of the daily net assets of the Portfolio.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.85% for Class I shares, 2.20% for Class A shares, 2.70% for Class L shares, 2.95% for Class C shares and 1.80% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, less than $500 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining

accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $162,328,000 and $68,213,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by approximately $9,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	51,451	$	116,884	$	149,514	$	14	$	18,821

The Portfolio has an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Director to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Directors. Each eligible

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Director generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the NAV of the Portfolio.

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Generally each of the tax periods from the tax period ended October 31, 2012 through the tax period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:						2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	5,473	$	—	$	250	$	915	$	—

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, basis adjustments on certain equity securities designated as passive foreign investment companies, a nondeductible expense, and foreign taxes paid on capital gains, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(190	)	$	196	$	(6	)

At December 31, 2014, the Portfolio had no distributable earnings on a tax basis.

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $69,131,000 and the aggregate gross unrealized depreciation is approximately $38,054,000 resulting in net unrealized appreciation of approximately $31,077,000.

At December 31, 2014, the Portfolio had available for Federal income tax purposes unused capital losses, which will expire on the indicated dates:

Amount (000)		Expiration
$	20,010	December 31, 2017
	4,191	December 31, 2018

To the extent that capital loss carryforwards are used to offset any future capital gains realized during the carryover period as provided by U.S. Federal income tax regulations, no capital gains tax liability will be incurred by the Portfolio for gains realized and not distributed. To the extent that capital gains are offset, such gains will not be distributed to the shareholders. During the year ended December 31, 2014, the Portfolio utilized capital loss carryforwards for U.S. Federal income tax purposes of approximately $11,272,000.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

Capital losses and specified ordinary losses, including currency losses, incurred after October 31 but within the taxable year are deemed to arise on the first day of the Portfolio's next taxable year. For the year ended December 31, 2014, the Portfolio deferred to January 1, 2015 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	302	$	19,282

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 63.7% and 62.3% for Class I and Class A shares, respectively.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

28

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIFEMSAN
1262702 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Quality Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	7
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	11
Notes to Financial Statements	16
U.S. Privacy Policy	22
Director and Officer Information	25

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Quality Portfolio (the "Portfolio") performed during the latest six-month period.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Global Quality Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the six-month period ended June 30, 2015 and held for the entire six-month period.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads). Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/1/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Global Quality Portfolio Class I	$	1,000.00	$	1,026.50	$	1,020.03	$	4.82	*	$	4.81	*		0.96	%
Global Quality Portfolio Class A		1,000.00		1,024.70		1,018.50		6.38	*		6.36	*		1.27
Global Quality Portfolio Class L		1,000.00		1,023.00		1,015.97		8.93	*		8.90	*		1.78
Global Quality Portfolio Class C		1,000.00		979.60		1,004.85		3.47	**		3.52	**		2.10
Global Quality Portfolio Class IS		1,000.00		1,027.30		1,020.08		4.78	*		4.76	*		0.95

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the most recent one-half year period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

*** Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers. The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as 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 administrative and advisory services to the Portfolio. 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 the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board reviewed the performance, fees and expenses of the Portfolio compared to its peers, as determined by Lipper, and to appropriate benchmarks where applicable. The Board discussed with the Adviser the performance goals and the actual results achieved in managing the Portfolio. When considering a fund's performance, the Board and the Adviser place emphasis on trends and longer-term returns (focusing on one-year, three-year and five-year performance, as of December 31, 2014, or since inception, as applicable). When a fund underperforms its benchmark and/or its peer group average, the Board and the Adviser discuss the causes of such underperformance and, where necessary, they discuss specific changes to investment strategy or investment personnel. The Board noted that the Portfolio's performance was below its peer group average for the one-year period and the period since the end of August 2013, the month of the Portfolio's inception. The Board discussed with the Adviser the level of the advisory and administration fees (together, the "management fee") for this Portfolio relative to comparable funds and/or other accounts advised by the Adviser and/or compared to its peers as determined by Lipper. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that the management fee and total expense ratio were lower than its peer group averages. After discussion, the Board concluded that the Portfolio's (i) performance was acceptable; and (ii) management fee and total expense ratio were competitive with its peer group averages.

Economies of Scale

The Board considered the size and growth prospects of the Portfolio and how that relates to the Portfolio's total expense ratio and particularly the Portfolio's management fee rate, which includes breakpoints. In conjunction with its review of the Adviser's profitability, the Board discussed with the Adviser how a change in assets can affect the efficiency or effectiveness of managing the Portfolio and whether the management fee level is appropriate relative to current and projected asset levels and/or whether the management fee structure reflects economies of scale as asset levels change. The Board has determined that its review of the actual and/or potential economies of scale of the Portfolio supports its decision to approve the Management Agreement.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last year from their relationship with the 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

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

affiliates. The Board has determined that its review of the analysis of the Adviser's expenses and profitability supports its decision to approve the Management Agreement.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. The Board reviewed with the Adviser these arrangements and the reasonableness of the Adviser's costs relative to the services performed. The Board has determined that its review of the other benefits received by the Adviser or its affiliates supports its decision to approve the Management Agreement.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the historical relationship between the Portfolio and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the 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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its shareholders to approve renewal of the Management Agreement for another year. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. The Board considered these factors and information over the course of the year and in numerous meetings, some of which were in executive session with only the independent Board members and their counsel present. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Global Quality Portfolio

	Shares		Value (000)
Common Stocks (97.5%)
France (6.6%)
LVMH Moet Hennessy Louis Vuitton SE		684	$	120
Pernod Ricard SA		2,907		335
Publicis Groupe SA		4,285		317
Sanofi		7,530		741
				1,513
Germany (3.3%)
Bayer AG (Registered)		3,039		425
SAP SE		4,682		327
				752
Japan (1.8%)
Japan Tobacco, Inc.		11,600		413
Netherlands (0.5%)
Reed Elsevier N.V.		5,023		119
Switzerland (13.6%)
Nestle SA (Registered)		19,831		1,432
Novartis AG (Registered)		9,838		970
Roche Holding AG (Genusschein)		2,655		744
				3,146
United Kingdom (25.5%)
British American Tobacco PLC		24,214		1,299
Diageo PLC		23,560		682
Experian PLC		12,579		229
GlaxoSmithKline PLC		15,854		329
Prudential PLC		14,433		348
Reckitt Benckiser Group PLC		13,834		1,193
Reed Elsevier PLC		7,085		115
Smiths Group PLC		10,633		189
Unilever PLC		26,936		1,155
Weir Group PLC (The)		12,687		338
				5,877
United States (46.2%)
3M Co.		2,829		437
Accenture PLC, Class A		8,445		817
Danaher Corp.		6,050		518
Google, Inc., Class A (a)		2,092		1,130
Intuit, Inc.		1,346		136
Johnson & Johnson		9,267		903
Microsoft Corp.		22,001		971
Mondelez International, Inc., Class A		15,194		625
Moody's Corp.		1,282		138
Nielsen N.V.		12,939		579
NIKE, Inc., Class B		4,335		468
Philip Morris International, Inc.		3,377		271
Procter & Gamble Co. (The)		9,504		744
Time Warner, Inc.		9,753		852
Twenty-First Century Fox, Inc., Class B		20,571		663

	Shares		Value (000)
Visa, Inc., Class A		9,594	$	644
Walt Disney Co. (The)		6,726		768
				10,664
Total Common Stocks (Cost $21,703)				22,484
Short-Term Investment (1.9%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $439)		438,720		439
Total Investments (99.4%) (Cost $22,142)				22,923
Other Assets in Excess of Liabilities (0.6%)				130
Net Assets (100.0%)			$	23,053

(a)  Non-income producing security.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		21.0	%
Pharmaceuticals		17.9
Media		12.4
Food Products		9.0
Tobacco		8.6
Household Products		8.4
Information Technology Services		6.4
Software		6.3
Personal Products		5.0
Industrial Conglomerates		5.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $21,703)	$	22,484
Investment in Security of Affiliated Issuer, at Value (Cost $439)		439
Total Investments in Securities, at Value (Cost $22,142)		22,923
Cash		—	@
Tax Reclaim Receivable		39
Dividends Receivable		25
Due from Adviser		1
Receivable from Affiliate		—	@
Other Assets		100
Total Assets		23,088
Liabilities:
Payable for Professional Fees		21
Payable for Custodian Fees		4
Payable for Shareholder Services Fees — Class A		1
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		2
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Portfolio Shares Redeemed		1
Other Liabilities		4
Total Liabilities		35
Net Assets	$	23,053
Net Assets Consist of:
Paid-in-Capital	$	21,928
Accumulated Undistributed Net Investment Income		189
Accumulated Net Realized Gain		157
Unrealized Appreciation (Depreciation) on:
Investments		781
Foreign Currency Translations		(2	)
Net Assets	$	23,053

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	16,238
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,394,621
Net Asset Value, Offering and Redemption Price Per Share	$	11.64
CLASS A:
Net Assets	$	3,515
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		302,914
Net Asset Value, Redemption Price Per Share	$	11.60
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.64
Maximum Offering Price Per Share	$	12.24
CLASS L:
Net Assets	$	2,996
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		259,578
Net Asset Value, Offering and Redemption Price Per Share	$	11.54
CLASS C:
Net Assets	$	293
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		25,439
Net Asset Value, Offering and Redemption Price Per Share	$	11.53
CLASS IS:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		973
Net Asset Value, Offering and Redemption Price Per Share	$	11.65

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Global Quality Portfolio

Statement of Operations	Six Months Ended June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $20 of Foreign Taxes Withheld)	$	280
Income from Securities Loaned — Net		2
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		282
Expenses:
Advisory Fees (Note B)		84
Professional Fees		43
Registration Fees		20
Shareholder Services Fees — Class A (Note D)		5
Distribution and Shareholder Services Fees — Class L (Note D)		11
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Custodian Fees (Note F)		15
Administration Fees (Note C)		8
Shareholder Reporting Fees		7
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		3
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		1
Sub Transfer Agency Fees — Class L		—	@
Directors' Fees and Expenses		—	@
Other Expenses		6
Total Expenses		207
Waiver of Advisory Fees (Note B)		(84	)
Expenses Reimbursed by Adviser (Note B)		(4	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		118
Net Investment Income		164
Realized Gain:
Investments Sold		191
Foreign Currency Transactions		2
Net Realized Gain		193
Change in Unrealized Appreciation (Depreciation):
Investments		103
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		104
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		297
Net Increase in Net Assets Resulting from Operations	$	461

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Global Quality Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2015 (unaudited) (000)			Year Ended December 31, 2014 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	164		$	246
Net Realized Gain		193			153
Net Change in Unrealized Appreciation (Depreciation)		104			3
Net Increase in Net Assets Resulting from Operations		461			402
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(160	)
Net Realized Gain		—			(137	)
Class A:
Net Investment Income		—			(37	)
Net Realized Gain		—			(40	)
Class L:
Net Investment Income		—			(13	)
Net Realized Gain		—			(25	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		—			(412	)
Capital Share Transactions:(1)
Class I:
Subscribed		5,508			8,825
Distributions Reinvested		—			255
Redeemed		(4,135	)		(1,983	)
Class A:
Subscribed		488			2,990
Distributions Reinvested		—			75
Redeemed		(1,418	)		(300	)
Class L:
Subscribed		262			1,787
Distributions Reinvested		—			36
Redeemed		(57	)		(56	)
Class C:
Subscribed		300	*		—
Net Increase in Net Assets Resulting from Capital Share Transactions		948			11,629
Total Increase in Net Assets		1,409			11,619
Net Assets:
Beginning of Period		21,644			10,025
End of Period (Including Accumulated Undistributed Net Investment Income of $189 and $25)	$	23,053		$	21,644
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		467			779
Shares Issued on Distributions Reinvested		—			23
Shares Redeemed		(358	)		(176	)
Net Increase in Class I Shares Outstanding		109			626
Class A:
Shares Subscribed		41			259
Shares Issued on Distributions Reinvested		—			7
Shares Redeemed		(121	)		(26	)
Net Increase (Decrease) in Class A Shares Outstanding		(80	)		240
Class L:
Shares Subscribed		23			158
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(5	)		(5	)
Net Increase in Class L Shares Outstanding		18			156
Class C:
Shares Subscribed		25	*		—

@  Amount is less than $500.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Quality Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from August 30, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	11.34		$	11.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.10			0.17			(0.00	)‡
Net Realized and Unrealized Gain		0.20			0.13			1.28
Total from Investment Operations		0.30			0.30			1.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.13	)		—
Net Realized Gain		—			(0.11	)		—
Total Distributions		—			(0.24	)		—
Net Asset Value, End of Period	$	11.64		$	11.34		$	11.28
Total Return++		2.65	%#		2.66	%		12.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	16,238		$	14,579		$	7,440
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		1.11	%+^^		1.19	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.71	%+*		1.49	%+		(0.12	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		28	%#		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.80	%*		2.34	%		4.86	%*
Net Investment Income (Loss) to Average Net Assets		0.87	%*		0.26	%		(3.79	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective October 1, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.00% for Class I shares. Prior to October 1, 2014, the maximum ratio was 1.20% for Class I shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Quality Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from August 30, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	11.32		$	11.27		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.09			0.12			(0.02	)
Net Realized and Unrealized Gain		0.19			0.14			1.29
Total from Investment Operations		0.28			0.26			1.27
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		—
Net Realized Gain		—			(0.11	)		—
Total Distributions		—			(0.21	)		—
Net Asset Value, End of Period	$	11.60		$	11.32		$	11.27
Total Return++		2.47	%#		2.34	%		12.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,515		$	4,331		$	1,612
Ratio of Expenses to Average Net Assets (1)		1.27	%+*		1.40	%+^^		1.54	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.47	%+*		1.03	%+		(0.45	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		28	%#		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.11	%*		2.62	%		5.00	%*
Net Investment Income (Loss) to Average Net Assets		0.63	%*		(0.19	)%		(3.91	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective October 1, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratios of 1.35% for Class A shares. Prior to October 1, 2014, the maximum ratio was 1.55% for Class A shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Quality Portfolio

	Class L
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from August 30, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	11.29		$	11.25		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.06			0.06			(0.03	)
Net Realized and Unrealized Gain		0.19			0.14			1.28
Total from Investment Operations		0.25			0.20			1.25
Distributions from and/or in Excess of:
Net Investment Income		—			(0.05	)		—
Net Realized Gain		—			(0.11	)		—
Total Distributions		—			(0.16	)		—
Net Asset Value, End of Period	$	11.54		$	11.29		$	11.25
Total Return++		2.30	%#		1.74	%		12.50	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,996		$	2,723		$	962
Ratio of Expenses to Average Net Assets (1)		1.78	%*+		1.93	%+^^		2.04	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.04	%*+		0.55	%+		(0.80	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%*
Portfolio Turnover Rate		28	%#		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.63	%*		3.15	%		6.27	%*
Net Investment Income (Loss) to Average Net Assets		0.19	%*		(0.67	)%		(5.03	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective October 1, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratios of 1.85% for Class L shares. Prior to October 1, 2014, the maximum ratio was 2.05% for Class L shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Quality Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	11.77
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.02	)
Net Realized and Unrealized Loss		(0.22	)
Total from Investment Operations		(0.24	)
Net Asset Value, End of Period	$	11.53
Total Return++		(2.04	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	293
Ratios of Expenses to Average Net Assets (1)		2.10	%+*
Ratio of Net Investment Income to Average Net Assets Loss (1)		(0.87	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		28	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.62	%*
Net Investment Loss to Average Net Assets		(2.39	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Loss reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Global Quality Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2015 (unaudited)			Year Ended December 31, 2014			Period from September 13, 2013^ to December 31, 2013
Net Asset Value, Beginning of Period	$	11.34		$	11.28		$	10.28
Income (Loss) from Investment Operations:
Net Investment Income Gain (Loss)† 0.11		0.17			(0.00	)		‡
Net Realized and Unrealized Gain		0.20			0.13			1.00
Total from Investment Operations		0.31			0.30			1.00
Distributions from and/or in Excess of:
Net Investment Income		—			(0.13	)		—
Net Realized Gain		—			(0.11	)		—
Total Distributions		—			(0.24	)		—
Net Asset Value, End of Period	$	11.65		$	11.34		$	11.28
Total Return++		2.73	%#		2.67	%		9.73	%#
Ratios and Supplemental Data:
Net Assets, End of Period, in (Thousands)	$	11		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		0.95	%*+		1.10	%+^^		1.15	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.86	%*+		1.51	%+		(0.10	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§*
Portfolio Turnover Rate		28	%#		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		14.97	%*		19.72	%		9.57	%*
Net Investment Loss to Average Net Assets		(12.16	)%*		(17.11	)%		(8.52	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

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

+  The Ratios of Expenses and Net Investment Income (Loss) reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

^^  Effective October 1, 2014, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.95% for Class IS shares. Prior to October 1, 2014, the maximum ratio was 1.15% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Global Quality Portfolio. The Portfolio's "Sub-Advisers," Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek long-term capital appreciation by investing primarily in equity securities of high quality companies located throughout the world, including developed and emerging market countries. In seeking to identify high quality companies, the Sub-Advisers look for companies that they believe have the returns profile that can underpin compounding, that is, they are able to consistently compound shareholder wealth at attractive rates of return over the long-term. In the Sub-Advisers' view, such companies are typically businesses built on dominant market positions, underpinned by powerful, hard to replicate intangible assets and that can generate resilient high cross cycle returns on capital. In addition, the Sub-Advisers consider high quality companies to have some or all of the following characteristics: strong managements, resilient revenue streams, pricing power (high gross margins), typically low capital intensity and the opportunity for organic growth.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. On April 30, 2015, the Portfolio commenced offering Class C shares and suspended offering of Class L shares. Existing Class L shareholders may invest through reinvestment of dividends and distributions.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its financial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there

were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the "Adviser") or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Board of Directors (the "Directors"). 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (4) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (5) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (6) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodolo-

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

gies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

The following is a summary of the inputs used to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Beverages	$	1,017	$	—	$	—	$	1,017
Diversified Financial Services		138		—		—		138
Food Products		2,057		—		—		2,057
Household Products		1,937		—		—		1,937
Industrial Conglomerates		1,144		—		—		1,144
Information Technology Services		1,461		—		—		1,461
Insurance		348		—		—		348
Internet Software & Services		1,130		—		—		1,130
Machinery		338		—		—		338
Media		2,834		—		—		2,834
Personal Products		1,155		—		—		1,155
Pharmaceuticals		4,112		—		—		4,112
Professional Services		808		—		—		808
Software		1,434		—		—		1,434
Textiles, Apparel & Luxury Goods		588		—		—		588
Tobacco		1,983		—		—		1,983
Total Common Stocks		22,484		—		—		22,484
Short-Term Investments
Investment Company		439		—		—		439
Total Assets	$	22,923	$	—	$	—	$	22,923

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, securities with a total value of approximately $11,820,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2014 were valued using unadjusted quoted prices at June 30, 2015.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Securities Lending: The Portfolio lends securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Portfolio. The Portfolio would receive cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily by State Street Bank and Trust Company ("State Street"), the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in an affiliated money market portfolio and repurchase agreements. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent, and is recorded as "Income from Securities Loaned — Net" in the Portfolio's Statement of Operations. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

The Portfolio has the right under the lending agreement to recover the securities from the borrower on demand.

At June 30, 2015, the Portfolio did not have any outstanding securities on loan.

5.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's

maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

6.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

7.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $500 million			Next $500 million			Over $1 billion
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation),

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares, 2.10% for Class C shares and 0.95% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least one year from the date of the Portfolio's prospectus or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the six months ended June 30, 2015, approximately $84,000 of advisory fees were waived and approximately $5,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

Under a Sub-Administration Agreement between the Administrator and State Street, State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Portfolio.

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class L shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.50% and

a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class L shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A, Class L and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $6,919,000 and $5,843,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser, both directly and as a portion of the securities held as collateral on loaned securities. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and adminis-

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

tration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the six months ended June 30, 2015, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the six months ended June 30, 2015 is as follows:

Value December 31, 2014 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2015 (000)
$	523	$	6,654	$	6,738	$	—	@	$	439

@ Amount is less than $500.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest

Expense" and penalties in "Other Expenses" in the Statement of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states. Each of the tax years in the four-year period ended December 31, 2014, remains subject to examination by taxing authorities.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2014 and 2013 was as follows:

2014 Distributions Paid From:				2013 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	339	$	73	$	—	$	—

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions, resulted in the following reclassifications among the components of net assets at December 31, 2014:

Accumulated Undistributed Net Investment Income (000)			Distributions in Excess of Net Realized Gain (000)		Paid-in- Capital (000)
$	(11	)	$	11	$	—

At December 31, 2014, the components of distributable earnings for the Portfolio on a tax basis were as follows:

Undistributed Ordinary Income (000)		Undistributed Long-Term Capital Gain (000)
$	25	$	38

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,263,000 and the aggregate gross unrealized depreciation is approximately $482,000 resulting in net unrealized appreciation of approximately $781,000.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

25

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGQSAN
1259860 Exp. 08.31.16

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Leaders Portfolio

Semi-Annual Report

June 30, 2015

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Table of Contents

Shareholders' Letter	2
Expense Example	3
Investment Advisory Agreement Approval	4
Portfolio of Investments	6
Statement of Assets and Liabilities	7
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	11
Notes to Financial Statements	15
U.S. Privacy Policy	22
Director and Officer Information	25

This report is authorized for distribution only when preceded or accompanied by prospectuses of the Morgan Stanley Institutional Fund, Inc. To receive a prospectus and/or statement of additional information (SAI), which contains more complete information such as investment objectives, charges, expenses, policies for voting proxies, risk considerations, and describes in detail each of the Portfolio's investment policies to the prospective investor, please call toll free 1 (800) 548-7786. Please read the prospectuses carefully before you invest or send money.

Additionally, you can access portfolio information including performance, characteristics, and investment team commentary through Morgan Stanley Investment Management's website: www.morganstanley.com/im.

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that market values of securities owned by the Portfolio will decline and, therefore, the value of the Portfolio's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Portfolio. Please see the prospectus for more complete information on investment risks.

1

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Emerging Markets Leaders Portfolio (the "Portfolio") performed during the period ended June 30, 2015.

Morgan Stanley Investment Management is a client-centric, investor-led organization. Our global presence, intellectual capital, and breadth of products and services enable us to partner with investors to meet the evolving challenges of today's financial markets. We aim to deliver superior investment service and to empower our clients to make the informed decisions that help them reach their investment goals.

As always, we thank you for selecting Morgan Stanley Investment Management, and look forward to working with you in the months and years ahead.

Sincerely,

John H. Gernon
President and Principal Executive Officer

July 2015

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Expense Example (unaudited)

Emerging Markets Leaders Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, including advisory fees, administration fees, distribution and shareholder services 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.

This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 1/5/15-6/30/15 (unless otherwise noted).

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the information in this table, 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 table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The table below provides information about hypothetical account values and 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 costs 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 transactional costs, such as sales charges (loads) and redemption fees. Therefore, the information for each class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 1/5/15		Actual Ending Account Value 6/30/15		Hypothetical Ending Account Value		Actual Expenses Paid During Period			Hypothetical Expenses Paid During Period			Net Expense Ratio During Period***
Emerging Markets Leaders Portfolio Class I^	$	1,000.00	$	1,028.00	$	1,018.56	$	5.61	*	$	5.60	*		1.15	%
Emerging Markets Leaders Portfolio Class A^		1,000.00		1,026.00		1,016.68		7.51	*		7.49	*		1.54
Emerging Markets Leaders Portfolio Class C^		1,000.00		966.10		1,004.51		3.78	**		3.85	**		2.30
Emerging Markets Leaders Portfolio Class IS^		1,000.00		1,029.00		1,018.61		5.56	*		5.55	*		1.14

*  Expenses are calculated using each Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 176/365 (to reflect the actual days in the period).

**  Expenses are calculated using the Portfolio Class' annualized net expense ratio (as disclosed), multiplied by the average account value over the period, and multiplied by 61/365 (to reflect the actual days in the period).

***  Annualized.

^  Class I, A and IS commenced operations on 1/5/15 and Class C commenced operations on 4/30/15.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited)

Board Considerations Prior to the Commencement of Operations

Pursuant to an agreement and plan of reorganization between the Fund, on behalf of the Portfolio, and Morgan Stanley Emerging Markets Leaders Fund (Cayman) LP, a private fund managed by the Adviser (the "Private Fund"), on January 6, 2015, the Portfolio acquired substantially all of the assets and liabilities of the Private Fund in exchange for shares of the Portfolio (the "Reorganization"). The Board considered the following factors at the time of approval of the contracts and Reorganization which occurred prior to commencement of operations.

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services to be provided by the Adviser (as defined herein) under the advisory agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Advisers (as defined herein), to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services to be provided by the Portfolio's Adviser under the administration agreement, including accounting, operations, clerical, bookkeeping, compliance, business management and planning, legal services and the provision of supplies, office space and utilities at the Adviser's expense. The Board also considered the Adviser's investment in personnel and infrastructure that benefits the Portfolio. (The Adviser and Sub-Advisers together are referred to as the "Adviser" and the advisory, sub-advisory and administration agreements together are referred to as the "Management Agreement.") The Board also considered that the Adviser serves a variety of other investment advisory clients and has experience overseeing service providers.

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who will provide the administrative and advisory services to the Portfolio. 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 to be provided were necessary and appropriate for the conduct of the business and investment activities of the Portfolio and supported its decision to approve the Management Agreement.

Performance, Fees and Expenses of the Portfolio

The Board considered that the Adviser plans to arrange for a public offering of shares of the Portfolio to raise assets for investment and that the offering had not yet begun and concluded that, since the Portfolio currently had no assets to invest (other than seed capital required under the Investment Company Act) and had no track record of performance, this was not a factor it needed to address at the present time. The Board, however, did consider the performance of the Private Fund as compared to the MSCI Emerging Markets Index for the three-year period ended June 30, 2014 and determined that the performance supported its decision to approve the Management Agreement.

The Board reviewed the advisory and administrative fee rates (the "management fee rates") proposed to be paid by the Portfolio under the Management Agreement relative to comparable funds advised by the Adviser, when applicable, and compared to their peers as determined by the Adviser, and reviewed the anticipated total expense ratio of the Portfolio. The Board considered that the Portfolio requires the Adviser to develop processes, invest in additional resources and incur additional risks to successfully manage the Portfolio and concluded that the proposed management fee rate and anticipated total expense ratio would be competitive with its peer group average.

Economies of Scale

The Board considered the growth prospects of the Portfolio and the structure of the proposed management fee schedule, which includes a breakpoint for the Portfolio. The Board considered that the Portfolio's potential growth was uncertain and concluded that it would be premature to consider economies of scale as a factor in approving the Management Agreement at the present time.

4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Investment Advisory Agreement Approval (unaudited) (cont'd)

Profitability of the Adviser and Affiliates

Since the Portfolio has not begun operations and has not paid any fees to the Adviser, the Board concluded that this was not a factor that needed to be considered at the present time.

Other Benefits of the Relationship

The Board considered other direct and indirect benefits to the Adviser and/or its affiliates to be derived from their relationship with the Portfolio and other funds advised by the Adviser. These benefits may include, among other things, fees for trading, distribution and/or shareholder servicing and for transaction processing and reporting platforms used by securities lending agents, and research received by the Adviser generated from commission dollars spent on funds' portfolio trading. Since the Portfolio has not begun operations and has not paid any fees to the Adviser, the Board concluded that these benefits were not a factor that needed to be considered at the present time.

Resources of the Adviser and Historical Relationship Between the Portfolio and the Adviser

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board also reviewed and considered the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Portfolio's 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 the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement and that it is beneficial for the Portfolio to enter into this 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 Portfolio'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 the Portfolio's business.

General Conclusion

After considering and weighing all of the above factors, with various written materials and verbal information presented by the Adviser, the Board concluded that it would be in the best interest of the Portfolio and its future shareholders to approve the Management Agreement, which will remain in effect for two years and thereafter must be approved annually by the Board of the Portfolio if it is to continue in effect. In reaching this conclusion the Board did not give particular weight to any single piece of information or factor referenced above. It is possible that individual Board members may have weighed these factors, and the information presented, differently in reaching their individual decisions to approve the Management Agreement.

5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Portfolio of Investments

Emerging Markets Leaders Portfolio

	Shares		Value (000)
Common Stocks (80.2%)
Belgium (4.9%)
Anheuser-Busch InBev N.V.		13,165	$	1,578
Brazil (3.2%)
BRF SA		27,804		587
Raia Drogasil SA		34,417		444
				1,031
China (4.9%)
Baidu, Inc. ADR (a)		2,766		550
Tencent Holdings Ltd. (b)		52,200		1,042
				1,592
Colombia (1.3%)
Banco Davivienda SA (Preference)		41,084		422
Hong Kong (13.5%)
AIA Group Ltd.		216,400		1,417
Samsonite International SA		851,100		2,942
				4,359
Indonesia (7.6%)
Bank Mandiri Persero Tbk PT		854,200		644
Link Net Tbk PT (a)		1,404,300		534
Matahari Department Store Tbk PT		382,700		475
Sumber Alfaria Trijaya Tbk PT		17,871,691		798
				2,451
Korea, Republic of (2.2%)
Orion Corp.		739		694
Mexico (8.6%)
Fomento Economico Mexicano SAB de CV ADR		15,593		1,389
Grupo Financiero Banorte SAB de CV Series O		125,746		691
Grupo Financiero Santander Mexico SAB de CV ADR		75,131		688
				2,768
Peru (3.6%)
Credicorp Ltd.		8,394		1,166
Philippines (1.2%)
BDO Unibank, Inc.		156,180		376
Poland (4.2%)
Jeronimo Martins SGPS SA		106,242		1,362
Russia (1.1%)
O'Key Group SA GDR		143,882		340
South Africa (12.0%)
Famous Brands Ltd.		121,941		1,153
Life Healthcare Group Holdings Ltd.		316,807		977
Naspers Ltd., Class N		3,960		617
SABMiller PLC		21,948		1,139
				3,886
Thailand (4.2%)
DKSH Holding AG (a)		18,740		1,355
United Kingdom (4.6%)
British American Tobacco PLC		27,638		1,483

	Shares		Value (000)
United States (3.1%)
Yum! Brands, Inc.		11,242	$	1,013
Total Common Stocks (Cost $25,966)				25,876
Participation Notes (14.3%)
India (14.3%)
Bata India Ltd., Equity Linked Notes, expires 11/12/15 (a)		41,366		687
Bata India Ltd., Equity Linked Notes, expires 6/4/18 (a)		28,108		467
Colgate-Palmolive India Ltd., Equity Linked Notes, expires 7/18/19 (a)		9,233		296
Hero MotoCorp Ltd., Equity Linked Notes, expires 11/12/15 (a)		19,196		761
Ipca Laboratories Ltd., Equity Linked Notes, expires 2/5/16 (a)		18,743		209
Ipca Laboratories Ltd., Equity Linked Notes, expires 8/18/16 (a)		57,554		641
Marico Ltd., Equity Linked Notes, expires 6/10/20 (a)		13,004		92
Marico Ltd., Equity Linked Notes, expires 1/9/20 (a)		67,359		476
Shriram Transport Finance Co., Ltd., Equity Linked Notes, expires 10/31/16 (a)		72,555		972
Total Participation Notes (Cost $5,022)				4,601
Short-Term Investment (4.8%)
Investment Company (4.8%)
Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio — Institutional Class (See Note G) (Cost $1,539)		1,538,941		1,539
Total Investments (99.3%) (Cost $32,527)				32,016
Other Assets in Excess of Liabilities (0.7%)				242
Net Assets (100.0%)			$	32,258

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		41.0	%
Beverages		12.8
Textiles, Apparel & Luxury Goods		12.8
Banks		12.4
Food & Staples Retailing		9.2
Hotels, Restaurants & Leisure		6.8
Internet Software & Services		5.0
Total Investments		100.0	%

*  Industries and/or investment types representing less than 5% of total investments.

The accompanying notes are an integral part of the financial statements.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities	June 30, 2015 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $30,988)	$	30,477
Investment in Security of Affiliated Issuer, at Value (Cost $1,539)		1,539
Total Investments in Securities, at Value (Cost $32,527)		32,016
Foreign Currency, at Value (Cost $5)		5
Prepaid Offering Costs		149
Receivable for Portfolio Shares Sold		100
Dividends Receivable		67
Due from Adviser		38
Tax Reclaim Receivable		6
Receivable from Affiliate		—	@
Other Assets		31
Total Assets		32,412
Liabilities:
Payable for Investments Purchased		79
Payable for Professional Fees		20
Payable for Custodian Fees		14
Deferred Capital Gain Country Tax		14
Payable for Reorganization Expense		6
Payable for Administration Fees		2
Payable for Offering Costs		2
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		1
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		16
Total Liabilities		154
Net Assets	$	32,258
Net Assets Consist of:
Paid-in-Capital	$	32,461
Accumulated Undistributed Net Investment Income		139
Accumulated Net Realized Gain		169
Unrealized Appreciation (Depreciation) on:
Investments		(511	)
Foreign Currency Translations		(—	@)
Net Assets	$	32,258

The accompanying notes are an integral part of the financial statements.
7

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2015 (000)
CLASS I:
Net Assets	$	14,999
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,458,861
Net Asset Value, Offering and Redemption Price Per Share	$	10.28
CLASS A:
Net Assets	$	48
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,644
Net Asset Value, Redemption Price Per Share	$	10.26
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.57
Maximum Offering Price Per Share	$	10.83
CLASS C:
Net Assets	$	108
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,511
Net Asset Value, Offering and Redemption Price Per Share	$	10.25
CLASS IS:
Net Assets	$	17,103
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,662,758
Net Asset Value, Offering and Redemption Price Per Share	$	10.29

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Operations	Period from January 5, 2015^ to June 30, 2015 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $19 of Foreign Taxes Withheld)	$	264
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		265
Expenses:
Offering Costs		121
Advisory Fees (Note B)		98
Professional Fees		46
Custodian Fees (Note F)		21
Shareholder Reporting Fees		17
Administration Fees (Note C)		9
Pricing Fees		3
Registration Fees		3
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Service Fees — Class C (Note D)		—	@
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Directors' Fees and Expenses		—	@
Other Expenses		4
Total Expenses		325
Waiver of Advisory Fees (Note B)		(98	)
Expenses Reimbursed by Adviser (Note B)		(98	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		126
Net Investment Income		139
Realized Gain (Loss):
Investments Sold		200
Foreign Currency Transactions		(21	)
Futures Contracts		(10	)
Net Realized Gain		169
Change in Unrealized Appreciation (Depreciation):
Investments		(511	)
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		(511	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(342	)
Net Decrease in Net Assets Resulting from Operations	$	(203	)

^  Commencement of Operations.

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Changes in Net Assets	Period from January 5, 2015^ to June 30, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	139
Net Realized Gain		169
Net Change in Unrealized Appreciation (Depreciation)		(511	)
Net Decrease in Net Assets Resulting from Operations		(203	)
Capital Share Transactions:(1)
Class I:
Subscribed		14,728
Class A:
Subscribed		48
Class C:
Subscribed		110	*
Class IS:
Subscribed		17,575
Net Increase in Net Assets Resulting from Capital Share Transactions		32,461
Total Increase in Net Assets		32,258
Net Assets:
Beginning of Period		—
End of Period (Including Accumulated Undistributed Net Investment Income of $139)	$	32,258
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,459
Class A:
Shares Subscribed		5
Class C:
Shares Subscribed		11	*
Class IS:
Shares Subscribed		1,663

^  Commencement of Operations.

*  For the period April 30, 2015 through June 30, 2015.

The accompanying notes are an integral part of the financial statements.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Leaders Portfolio

	Class I
Selected Per Share Data and Ratios	Period from January 5, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income from Investment Operations:
Net Investment Income†		0.05
Net Realized and Unrealized Gain		0.23
Total from Investment Operations		0.28
Net Asset Value, End of Period	$	10.28
Total Return++		2.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	14,999
Ratios of Expenses to Average Net Assets (1)		1.15	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.06	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.05	%*
Net Investment Loss to Average Net Assets		(0.84	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Leaders Portfolio

	Class A
Selected Per Share Data and Ratios	Period from January 5, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income from Investment Operations:
Net Investment Income†		0.05
Net Realized and Unrealized Gain		0.21
Total from Investment Operations		0.26
Net Asset Value, End of Period	$	10.26
Total Return++		2.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	48
Ratios of Expenses to Average Net Assets (1)		1.54	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.91	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		7.14	%*
Net Investment Loss to Average Net Assets		(4.69	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Leaders Portfolio

	Class C
Selected Per Share Data and Ratios	Period from April 30, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	10.61
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.38	)
Total from Investment Operations		(0.36	)
Net Asset Value, End of Period	$	10.25
Total Return++		(3.39	)%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	108
Ratios of Expenses to Average Net Assets (1)		2.30	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.12	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		14.08	%*
Net Investment Loss to Average Net Assets		(11.66	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

++  Calculated based on the net asset value which does not reflect sales charges, if applicable, as of the last business day of the period.

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Financial Highlights

Emerging Markets Leaders Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from January 5, 2015^ to June 30, 2015 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income from Investment Operations:
Net Investment Income†		0.08
Net Realized and Unrealized Gain		0.21
Total from Investment Operations		0.29
Net Asset Value, End of Period	$	10.29
Total Return++		2.90	%#
Ratios and Supplemental Data:
Net Assets, End of Period, (Thousands)	$	17,103
Ratios of Expenses to Average Net Assets (1)		1.14	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.59	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.82	%*
Net Investment Loss to Average Net Assets		(0.09	)%*

^  Commencement of Operations.

†  Per share amount is based on average shares outstanding.

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

+  The Ratios of Expenses and Net Investment Income reflect the rebate of certain Portfolio expenses in connection with the investments in Morgan Stanley affiliates during the period. The effect of the rebate on the ratios is disclosed in the above table as "Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets."

#  Not Annualized.

*  Annualized.

The accompanying notes are an integral part of the financial statements.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited)

Morgan Stanley Institutional Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Fund is comprised of twenty-six separate, active, diversified and non-diversified portfolios (individually referred to as a "Portfolio", collectively as the "Portfolios"). The Fund applies investment company accounting and reporting guidance.

The accompanying financial statements relate to the Emerging Markets Leaders Portfolio. The Portfolio's adviser, Morgan Stanley Investment Management Inc. (the "Adviser"), and sub-advisers, Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), seek to achieve the Portfolio's investment objective by investing primarily in equity securities of companies located in emerging market countries.

The Portfolio offers four classes of shares — Class I, Class A, Class C and Class IS. On April 30, 2015 the Portfolio commenced offering Class C shares.

Pursuant to an agreement and plan of reorganization, between the Fund, on behalf of the Portfolio, and Morgan Stanley Emerging Markets Leaders Fund (Cayman) LP, a private fund managed by the Adviser (the "Private Fund"), on January 6, 2015, the Portfolio acquired substantially all of the assets and liabilities of the Private Fund in exchange for shares of the Portfolio (the "Reorganization"). The Private Fund commenced operations on June 30, 2011, and had an investment objective, policies, and strategies that were, in all material respects, the same as those of the Portfolio, and was managed in a manner that, in all material respects, complied with the investment guidelines and restrictions of the Portfolio. However, the Private Fund was not registered as an investment company under the Act, and therefore was not subject to certain investment limitations, diversification requirements, liquidity requirements, and other restrictions imposed by the Act and the Internal Revenue Code of 1986, as amended (the "Code"), which, if applicable, may have adversely affected its performance. The net assets of the Private Fund before the Reorganization were approximately $11,030,000, including unrealized depreciation of approximately $59,000. Immediately after the Reorganization, the net assets of the Portfolio were approximately $10,996,000.

A. Significant Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles ("GAAP"). Such policies are consistently followed by the Fund in the preparation of its finan-

cial statements. GAAP may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.  Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), if there were no sales on a given day, the security is valued at the mean between the last reported bid and asked prices; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at its latest reported sales 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; (3) Certain portfolio securities may be valued by an outside pricing service approved by the Fund's Board of Directors (the "Directors"). The pricing service may utilize a matrix system or other model incorporating attributes such as security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker dealer market price quotations in determining what it believes is the fair valuation of the portfolios securities valued by such pricing service; (4) futures are valued at the latest price published by the commodities exchange on which they trade; (5) when market quotations are not readily available, including circumstances under which the Adviser or Sub-Advisers determine that the closing price, last sale price or the mean between the last reported bid and asked prices 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 Directors. 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 of the New York Stock Exchange ("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 Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (6) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; (7) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value ("NAV") as of the close of each business day; and (8) short-term debt securities with remaining maturities of 60 days or less at the time of purchase may be valued at amortized cost, unless the Adviser determines such valuation does not reflect the securities' market value, in which case these securities will be valued at their fair market value determined by the Adviser.

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund's Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund's Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund's valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

The Fund has procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available. Under these procedures, the Valuation Committee convenes on a regular and ad hoc basis to review such securities and considers a number of factors, including valuation methodologies and significant unobservable valuation inputs, when arriving at fair value. The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used

had an active market existed. The Valuation Committee employs various methods for calibrating these valuation approaches including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

2.  Fair Value Measurement: Financial Accounting Standards Board ("FASB") Accounting Standards Codification^TM ("ASC") 820, "Fair Value Measurement" ("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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

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 to value the Portfolio's investments as of June 30, 2015.

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Assets:
Common Stocks
Banks	$	3,987	$	—	$	—	$	3,987
Beverages		4,106		—		—		4,106
Diversified Telecommunication Services		534		—		—		534
Food & Staples Retailing		2,944		—		—		2,944
Food Products		1,281		—		—		1,281
Health Care Providers & Services		977		—		—		977
Hotels, Restaurants & Leisure		2,166		—		—		2,166
Insurance		1,417		—		—		1,417
Internet Software & Services		1,592		—		—		1,592
Media		617		—		—		617
Multi-line Retail		475		—		—		475
Professional Services		1,355		—		—		1,355
Textiles, Apparel & Luxury Goods		2,942		—		—		2,942
Tobacco		1,483		—		—		1,483
Total Common Stocks		25,876		—		—		25,876
Participation Notes		—		4,601		—		4,601
Short-Term Investment
Investment Company		1,539		—		—		1,539
Total Assets	$	27,415	$	4,601	$	—	$	32,016

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Portfolio recognizes transfers between the levels as of the end of the period. As of June 30, 2015, the Portfolio did not have any investments transfer between investment levels.

3.  Foreign Currency Translation and Foreign Investments: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars as follows:

–  investments, other assets and liabilities at the prevailing rate of exchange on the valuation date;

–  investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Portfolio are presented at the foreign exchange rates and market values at the close of the period, the Portfolio does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at period end. Similarly, the Portfolio does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) on investments in securities are included in the reported net realized and unrealized gains (losses) on investment transactions and balances. However, pursuant to U.S. Federal income tax regulations, gains and losses from certain foreign currency transactions and the foreign currency portion of gains and losses realized on sales and maturities of foreign denominated debt securities are treated as ordinary income for U.S. Federal income tax purposes.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from foreign currency forward exchange contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. dollar denominated transactions as a result of, among other factors, fluctuations of exchange rates in relation to the U.S. dollar, the possibility of lower levels of governmental supervision and regulation

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

of foreign securities markets and the possibility of political or economic instability.

Governmental approval for foreign investments may be required in advance of making an investment under certain circumstances in some countries, and the extent of foreign investments in domestic companies may be subject to limitation in other countries. Foreign ownership limitations also may be imposed by the charters of individual companies to prevent, among other concerns, violations of foreign investment limitations. As a result, an additional class of shares (identified as "Foreign" in the Portfolio of Investments) may be created and offered for investment. The "local" and "foreign shares" market values may differ. In the absence of trading of the foreign shares in such markets, the Portfolio values the foreign shares at the closing exchange price of the local shares.

4.  Structured Investments: The Portfolio invested a portion of its assets in structured investments. A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency, commodity or market. Structured investments may come in various forms including notes (such as exchange-traded notes), warrants and options to purchase securities. The Portfolio will typically use structured investments to gain exposure to a permitted underlying security, currency, commodity or market when direct access to a market is limited or inefficient from a tax or cost standpoint. There can be no assurance that structured investments will trade at the same price or have the same value as the underlying security, currency, commodity or market. Investments in structured investments involve risks including issuer risk, counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to issuer or counterparty risk because the Portfolio is relying on the creditworthiness of such issuer or counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular time, may be unable to find qualified buyers for these securities.

5.  Derivatives: The Portfolio may, but is not required to, use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based, in part, on the value of an underlying asset,

interest rate, index or financial instrument. Prevailing interest rates and volatility levels, among other things, also affect the value of derivative instruments. A derivative instrument often has risks similar to its underlying asset and may have additional risks, including imperfect correlation between the value of the derivative and the underlying asset, risks of default by the counterparty to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which the derivative instrument relates, risks that the transactions may not be liquid and risks arising from margin requirements. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of the Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. Leverage associated with derivative transactions may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission rules and regulations, or may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. Although the Adviser and/or Sub-Advisers seek to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolio used during the period and their associated risks:

Futures: A futures contract is a standardized, exchange-traded agreement to buy or sell a specific quantity of an underlying asset, reference rate or index at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment and even a well-conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures contracts can be highly volatile, using futures contracts can lower total return, and the potential loss from futures contracts can exceed the Portfolio's initial investment in such contracts. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. There is also the risk of loss by the Portfolio of margin deposits in the event of bankruptcy of a broker with which the Portfolio has open positions in the futures contract.

As of June 30, 2015, the Portfolio did not have any open futures contracts.

FASB ASC 815, "Derivatives and Hedging" ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why the Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on the Portfolio's financial position and results of operations.

The following table sets forth by primary risk exposure the Portfolio's realized gains (losses) by type of derivative contract for the period ended June 30, 2015 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Equity Risk	Futures Contracts	$	(10	)

For the period ended June 30, 2015, the approximate average monthly amount outstanding for each derivative type is as follows:

Futures Contracts:
Average monthly original value	$	494,000

6.  Redemption Fees: The Portfolio will assess a 2% redemption fee on Class I shares, Class A shares, Class C shares and Class IS shares, which is paid directly to the Portfolio, for shares redeemed or exchanged within thirty days of purchase, subject to certain exceptions. The

redemption fee is designed to protect the Portfolio and its remaining shareholders from the effects of short-term trading. These fees, if any, are included in the Statement of Changes in Net Assets.

7.  Indemnifications: The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

8.  Dividends and Distributions to Shareholders: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid semi-annually. Net realized capital gains, if any, are distributed at least annually.

9.  Security Transactions, Income and Expenses: Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on the sale of investment securities are determined on the specific identified cost method. Dividend income and other distributions are recorded on the ex-dividend date (except for certain foreign dividends which may be recorded as soon as the Portfolio is informed of such dividends) net of applicable withholding taxes. Interest income is recognized on the accrual basis except where collection is in doubt. Discounts are accreted and premiums are amortized over the life of the respective securities. Most expenses of the Fund can be directly attributed to a particular Portfolio. Expenses which cannot be directly attributed are apportioned among the Portfolios based upon relative net assets or other appropriate methods. Income, expenses (other than class specific expenses — distribution and shareholder services, transfer agency and sub transfer agency fees) and realized and unrealized gains or losses are allocated to each class of shares based upon their relative net assets.

B. Advisory/Sub-Advisory Fees: The Adviser, a wholly-owned subsidiary of Morgan Stanley, provides the Portfolio with advisory services under the terms of an Investment Advisory Agreement, paid quarterly, at the annual rate based on the daily net assets as follows:

First $1 billion			Over $1 billion
	0.90	%		0.85	%

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

For the period ended June 30, 2015, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.00% of the Portfolio's average daily net assets.

The Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses, excluding certain investment related expenses, taxes, interest and other extraordinary expenses (including litigation), will not exceed 1.20% for Class I shares, 1.55% for Class A shares, 2.30% for Class C shares and 1.15% for Class IS shares. The fee waivers and/or expense reimbursements will continue for at least three years from the date of the Reorganization or until such time that the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the period ended June 30, 2015, approximately $98,000 of advisory fees were waived and approximately $100,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

The Adviser has entered into a Sub-Advisory Agreement with the Sub-Advisers, each a wholly-owned subsidiary of Morgan Stanley. The Sub-Advisers provide the Portfolio with advisory services subject to the overall supervision of the Adviser and the Fund's Officers and Directors. The Adviser pays the Sub-Advisers on a monthly basis a portion of the net advisory fees the Adviser receives from the Portfolio.

C. Administration Fees: The Adviser also serves as Administrator to the Fund and provides administrative services pursuant to an Administration Agreement for an annual fee, accrued daily and paid monthly, of 0.08% of the Portfolio's average daily net assets.

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

D. Distribution and Shareholder Services Fees: Morgan Stanley Distribution, Inc. ("MSDI" or the "Distributor"), a wholly-owned subsidiary of the Adviser and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to a Distribution Agreement. The Fund has adopted a Shareholder Services Plan with respect to Class A shares pursuant to Rule 12b-1 under the Act. Under the Shareholder Services Plan, the Portfolio pays the Distributor a shareholder services fee, accrued daily and paid monthly,

at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class A shares.

The Fund has adopted a Distribution and Shareholder Services Plan with respect to Class C shares pursuant to Rule 12b-1 under the Act. Under the Distribution and Shareholder Services Plan, the Portfolio pays the Distributor a distribution fee, accrued daily and paid monthly, at an annual rate of 0.75% and a shareholder services fee, accrued daily and paid monthly, at an annual rate of 0.25% of the Portfolio's average daily net assets attributable to Class C shares.

The distribution and shareholder services fees are used to support the expenses associated with servicing and maintaining accounts. The Distributor may compensate other parties for providing shareholder support services to investors who purchase Class A and Class C shares.

E. Dividend Disbursing and Transfer Agent: The Fund's dividend disbursing and transfer agent is Boston Financial Data Services, Inc. ("BFDS"). Pursuant to a Transfer Agency Agreement, the Fund pays BFDS a fee based on the number of classes, accounts and transactions relating to the Portfolios of the Fund.

F. Custodian Fees: State Street (the "Custodian") serves as Custodian for the Fund in accordance with a Custodian Agreement. The Custodian holds cash, securities, and other assets of the Fund as required by the Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

G. Security Transactions and Transactions with Affiliates: For the period ended June 30, 2015, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $25,093,000 and $4,770,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2015.

The Portfolio invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds — Money Market Portfolio (the "Liquidity Funds"), an open-end management investment company managed by the Adviser. Advisory fees paid by the Portfolio are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Portfolio due to its investment in the Liquidity Funds. For the period ended June 30, 2015, advisory fees paid were reduced by

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Notes to Financial Statements (unaudited) (cont'd)

approximately $1,000 relating to the Portfolio's investment in the Liquidity Funds.

A summary of the Portfolio's transactions in shares of the Liquidity Funds during the period ended June 30, 2015 is as follows:

Value January 5, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2015 (000)
$	—	$	23,548	$	22,009	$	1	$	1,539

During the period ended June 30, 2015, the Portfolio incurred less than $500 in brokerage commissions with Morgan Stanley & Co., LLC, an affiliate of the Adviser/Administrator, Sub-Advisers and Distributor, for portfolio transactions executed on behalf of the Portfolio.

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

H. Federal Income Taxes: It is the Portfolio's intention to continue to qualify as a regulated investment company and distribute all of its taxable and tax-exempt income. Accordingly, no provision for Federal income taxes is required in the financial statements.

The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued based on net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned. Taxes may also be based on transactions in foreign currency and are accrued based on the value of investments denominated in such currency.

FASB ASC 740-10, Income Taxes — Overall, sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. Management has concluded there are no significant uncertain tax positions that would require recognition in the financial statements. If applicable, the Portfolio recognizes interest accrued related to unrecognized tax benefits in "Interest Expense" and penalties in "Other Expenses" in the Statement

of Operations. The Portfolio files tax returns with the U.S. Internal Revenue Service, New York and various states.

The tax character of distributions paid may differ from the character of distributions shown in the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes.

The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from GAAP. These book/tax differences are either considered temporary or permanent in nature.

At June 30, 2015, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $975,000 and the aggregate gross unrealized depreciation is approximately $1,486,000 resulting in net unrealized depreciation of approximately $511,000.

I. Other: At June 30, 2015, the Portfolio had otherwise unaffiliated record owners of 10% or greater. Investment activities of these shareholders could have a material impact on the Portfolio. The aggregate percentage of such owners was 11.6% and 99.9% for Class A and Class IS shares, respectively.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited)

AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

This privacy notice describes the U.S. privacy policy of Morgan Stanley Distribution, Inc., and the Morgan Stanley family of mutual funds ("us", "our", "we").

We are required by federal law to provide you with notice of our U.S. privacy policy ("Policy"). This Policy applies to both our current and former clients unless we state otherwise and is intended for individual clients who purchase products or receive services from us for personal, family or household purposes. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders, nor is this Policy applicable to individuals who are either beneficiaries of a trust for which we serve as trustee or participants in an employee benefit plan administered or advised by us. This Policy is, however, applicable to individuals who select us to be a custodian of securities or assets in individual retirement accounts, 401(k) accounts, or accounts subject to the Uniform Gifts to Minors Act.

This notice sets out our business practices to protect your privacy; how we collect and share personal information about you; and how you can limit our sharing or certain uses by others of this information. We may amend this Policy at any time, and will inform you of any changes to our Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information and understand your concerns about your information. We strive to safeguard the information our clients entrust to us. Protecting the confidentiality and security of client information is an important part of how we conduct our business.

This notice describes what personal information we collect about you, how we collect it, when we may share it with others, and how certain others may use it. It discusses the steps you may take to limit our sharing of certain information about you with our affiliated companies, including, but not limited to our affiliated banking businesses, brokerage firms and credit service affiliates. It also discloses how you may limit our affiliates' use of shared information for marketing purposes.

Throughout this Policy, we refer to the nonpublic information that personally identifies you as "personal information." We also use the term "affiliated company" in this notice. An affiliated company is a company in our family of companies and includes companies with the Morgan Stanley name. These affiliated companies are financial institutions such as broker-dealers, banks, investment advisers and credit card issuers. We refer to any company that is not an affiliated company as a nonaffiliated third party. For purposes of Section 5 of this notice, and your ability to limit certain uses of personal information by our affiliates, this notice applies to the use of personal information by our affiliated companies.

1.  WHAT PERSONAL INFORMATION DO WE COLLECT FROM YOU?

We may collect the following types of information about you: (i) information provided by you, including information from applications and other forms we receive from you, (ii) information about your transactions with us or our affiliates, (iii) information about your transactions with nonaffiliated third parties, (iv) information from consumer reporting agencies, (v) information obtained from our websites, and (vi) information obtained from other sources. For example:

•  We collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•  We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•  We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•  We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

2.  WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We may disclose personal information we collect about you in each of the categories listed above to affiliated and nonaffiliated third parties.

a. Information We Disclose to Affiliated Companies.

We may disclose personal information that we collect about you to our affiliated companies to manage your account(s) effectively, to service and process your transactions, and to let you know about products and services offered by us and affiliated companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from affiliated companies are developed under conditions designed to safeguard your personal information.

b. Information We Disclose to Third Parties.

We may disclose personal information that we collect about you to nonaffiliated third parties to provide marketing services on our behalf or to other financial institutions with whom we have joint marketing agreements. We may also disclose all of the information we collect to other nonaffiliated third parties for our everyday business purposes, such as to process transactions, maintain account(s), respond to court orders and legal investigations, report to credit bureaus, offer our own products and services, protect against fraud, for institutional risk control, to perform services on our behalf, and as otherwise required or permitted by law.

When we share personal information about you with a nonaffiliated third party, they are required to limit their use of personal information about you to the particular purpose for which it was shared and they are not allowed to share personal information about you with others except to fulfill that limited purpose or as may be permitted or required by law.

3.  HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures that comply with applicable law and regulations to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information by employees. Third parties that provide support or marketing services on our behalf may also receive personal information about you, and we require them to adhere to appropriate security standards with respect to such information.

4.  HOW CAN YOU LIMIT OUR SHARING CERTAIN PERSONAL INFORMATION ABOUT YOU WITH OUR AFFILIATED COMPANIES FOR ELIGIBILITY DETERMINATION?

By following the opt-out procedures in Section 6 below, you may limit the extent to which we share with our affiliated companies, personal information that was collected to determine your eligibility for products and services such as your credit reports and other information that you have provided to us or that we may obtain from third parties ("eligibility information"). Eligibility information does not include your identification information or personal information pertaining to our transactions or experiences with you. Please note that, even if you direct us not to share eligibility information with our affiliated companies, we may still share your personal information, including eligibility information, with our affiliated companies under circumstances that are permitted under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN PERSONAL INFORMATION ABOUT YOU BY OUR AFFILIATED COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit our affiliated companies from marketing their products or services to you based on personal information we disclose to them. This information may include, for example, your income and account history with us. Please note that, even if you choose to limit our affiliated companies from using personal information about you that we may share with them for marketing their products and services to you, our affiliated companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the affiliated party has its own relationship with you.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

U.S. Privacy Policy (unaudited) (cont'd)

6.  HOW CAN YOU SEND US AN OPT-OUT INSTRUCTION?

If you wish to limit our sharing of eligibility information about you with our affiliated companies, or our affiliated companies' use of personal information for marketing purposes, as described in this notice, you may do so by:

•  Calling us at (800) 548-7786
Monday–Friday between 8a.m. and 6p.m. (EST)

•  Writing to us at the following address:

  Boston Financial Data Services, Inc.
c/o Privacy Coordinator
P.O. Box 219804
Kansas City, Missouri 64121

If you choose to write to us, your request should include: your name, address, telephone number and account number(s) to which the opt-out applies and whether you are opting out with respect to sharing of eligibility information (Section 4 above), or information used for marketing (Section 5 above), or both. Written opt-out requests should not be sent with any other correspondence. In order to process your request, we require that the request be provided by you directly and not through a third party. Once you have informed us about your privacy preferences, your opt-out preference will remain in effect with respect to this Policy (as it may be amended) until you notify us otherwise. If you are a joint account owner, we will accept instructions from any one of you and apply those instructions to the entire account.

Please understand that if you limit our sharing or our affiliated companies' use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies' products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If you have more than one account or relationship with us, please specify the accounts to which you would like us to apply your privacy choices. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

7.  WHAT IF AN AFFILIATED COMPANY BECOMES A NONAFFILIATED THIRD PARTY?

If, at any time in the future, an affiliated company becomes a nonaffiliated third party, further disclosures of personal information made to the former affiliated company will be limited to those described in Section 2(b) above relating to nonaffiliated third parties. If you elected under Section 6 to limit disclosures we make to affiliated companies, or use of personal information by affiliated companies, your election will not apply to use by any former affiliated company of your personal information in their possession once it becomes a nonaffiliated third party.

SPECIAL NOTICE TO RESIDENTS OF VERMONT

The following section supplements our Policy with respect to our individual clients who have a Vermont address and supersedes anything to the contrary in the above Policy with respect to those clients only.

The State of Vermont requires financial institutions to obtain your consent prior to sharing personal information that they collect about you with nonaffiliated third parties, or eligibility information with affiliated companies, other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with nonaffiliated third parties or eligibility information with affiliated companies, unless you provide us with your written consent to share such information.

SPECIAL NOTICE TO RESIDENTS OF CALIFORNIA

The following section supplements our Policy with respect to our individual clients who have a California address and supersedes anything to the contrary in the above Policy with respect to those clients only.

In response to a California law, if your account has a California home address, your personal information will not be disclosed to nonaffiliated third parties except as permitted by applicable California law, and we will limit sharing such personal information with our affiliates to comply with California privacy laws that apply to us.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2015

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Nancy C. Everett
Jakki L. Haussler
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Officers

Michael E. Nugent
Chairperson of the Board and Director

John H. Gernon
President and Principal Executive Officer

Stefanie V. Chang Yu
Chief Compliance Officer

Joseph C. Benedetti
Vice President

Mary E. Mullin
Secretary

Francis J. Smith
Treasurer and Principal Financial Officer

Adviser and Administrator

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

Sub-Advisers

Morgan Stanley Investment Management Limited
25 Cabot Square, Canary Wharf
London, E14 4QA, England

Morgan Stanley Investment Management Company
23 Church Street
16-01 Capital Square, Singapore 049481

Distributor

Morgan Stanley Distribution, Inc.
522 Fifth Avenue
New York, New York 10036

Dividend Disbursing and Transfer Agent

Boston Financial Data Services, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02169

Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111

Legal Counsel

Dechert LLP
1095 Avenue of the Americas
New York, New York 10036

Counsel to the Independent Directors

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

Independent Registered Public Accounting Firm

Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116

Reporting to Shareholders

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semi-annual and 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 semi-annual and annual reports to fund shareholders and makes these reports available on its public website, www.morganstanley.com/im. 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 website. 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 website, 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 toll free at 1 (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's email address (publicinfo@sec.gov) or by writing the Public Reference Room of the SEC, Washington, DC 20549-0102.

Proxy Voting Policies and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures and information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, without charge, upon request, by calling toll free 1 (800) 548-7786 or by visiting our website at www.morganstanley.com/im. This information is also available on the SEC's website at www.sec.gov.

This report is authorized for distribution only when preceded or accompanied by a prospectus of the Morgan Stanley Institutional Fund, Inc., which describes in detail each Portfolio's investment policies, risks, fees and expenses. Please read the prospectus carefully before you invest or send money. For additional information, including information regarding the investments comprising the Portfolio, please visit our website at www.morganstanley.com/im or call toll free 1 (800) 548-7786.

25

Printed in U.S.A.
This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus.

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

© 2015 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMLSAN
1261450 Exp. 08.31.16

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.

(a) Refer to Item 1.

(b) Not applicable.

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 annual 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 Institutional Fund, Inc.

/s/ John H. Gernon

John H. Gernon

Principal Executive Officer

August 19, 2015

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/ John H. Gernon

John H. Gernon

Principal Executive Officer

August 19, 2015

/s/ Francis Smith

Francis Smith

Principal Financial Officer

August 19, 2015