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, 2016

Item 1 - Report to Shareholders

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Active International Allocation Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	14
Statement of Operations	16
Statements of Changes in Net Assets	17
Financial Highlights	18
Notes to Financial Statements	22
Investment Advisory Agreement Approval	33
Privacy Notice	35
Director and Officer Information	38

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	950.80	$	1,020.44	$	4.32	$	4.47		0.89	%
Active International Allocation Portfolio Class A		1,000.00		948.70		1,018.70		6.01		6.22		1.24
Active International Allocation Portfolio Class L		1,000.00		946.80		1,016.21		8.42		8.72		1.74
Active International Allocation Portfolio Class C		1,000.00		945.90		1,014.97		9.63		9.97		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Active International Allocation Portfolio

	Shares		Value (000)
Common Stocks (89.0%)
Australia (5.7%)
AGL Energy Ltd.		8,774	$	127
Amcor Ltd.		23,075		258
AMP Ltd.		47,263		183
APA Group		11,931		83
Aristocrat Leisure Ltd.		5,320		55
Asciano Ltd.		15,083		100
ASX Ltd.		1,937		66
Aurizon Holding Ltd.		26,241		95
AusNet Services		17,574		22
Australia & New Zealand Banking Group Ltd.		49,773		908
Bank of Queensland Ltd.		3,773		30
Bendigo and Adelaide Bank Ltd.		4,552		33
BHP Billiton Ltd.		67,105		956
Boral Ltd.		7,396		35
Brambles Ltd.		24,809		230
Caltex Australia Ltd.		2,697		64
Challenger Ltd.		5,886		38
CIMIC Group Ltd. (a)		2,100		56
Coca-Cola Amatil Ltd.		12,535		77
Cochlear Ltd.		878		80
Commonwealth Bank of Australia		23,468		1,317
Computershare Ltd.		5,005		34
Crown Resorts Ltd.		6,292		60
CSL Ltd.		7,916		666
CYBG PLC CDI (a)(b)		9,559		30
Dexus Property Group REIT		9,436		64
Domino's Pizza Enterprises Ltd.		609		31
DUET Group		23,190		43
Flight Centre Travel Group Ltd.		562		13
Fortescue Metals Group Ltd.		22,805		61
Goodman Group REIT		29,532		157
GPT Group REIT		17,343		70
Harvey Norman Holdings Ltd.		11,416		40
Healthscope Ltd.		17,276		37
Incitec Pivot Ltd.		30,687		69
Insurance Australia Group Ltd.		34,176		140
James Hardie Industries PLC CDI		4,436		68
Lend Lease Group REIT		5,607		53
Macquarie Group Ltd.		4,461		232
Medibank Pvt Ltd.		27,247		60
Mirvac Group REIT		36,579		55
National Australia Bank Ltd.		38,236		735
Newcrest Mining Ltd. (b)		46,604		801
Oil Search Ltd.		13,681		69
Orica Ltd.		6,737		62
Origin Energy Ltd.		17,614		77
Platinum Asset Management Ltd.		2,329		10
Qantas Airways Ltd. (b)		5,209		11
QBE Insurance Group Ltd.		18,052		142
Ramsay Health Care Ltd.		1,419		76
REA Group Ltd.		535		24

	Shares		Value (000)
Rio Tinto Ltd.		9,436	$	325
Santos Ltd.		16,013		57
Scentre Group REIT		110,741		407
Seek Ltd.		3,262		37
Sonic Healthcare Ltd.		7,263		117
South32 Ltd. (b)		77,126		92
South32 Ltd. (b)		81,405		95
Stockland REIT		88,760		313
Suncorp Group Ltd.		19,013		174
Sydney Airport		10,686		56
Tabcorp Holdings Ltd.		10,883		37
Tatts Group Ltd.		21,251		61
Telstra Corp., Ltd.		62,881		262
TPG Telecom Ltd.		3,303		29
Transurban Group		20,448		183
Treasury Wine Estates Ltd.		7,467		52
Vicinity Centres REIT		32,726		81
Vocus Communications Ltd.		4,521		29
Wesfarmers Ltd.		19,409		585
Westfield Corp. REIT		39,003		311
Westpac Banking Corp.		42,681		948
Woodside Petroleum Ltd.		9,866		200
Woolworths Ltd.		24,199		380
				13,634
Austria (0.1%)
Andritz AG		901		43
Erste Group Bank AG (b)		5,917		135
OMV AG		736		21
Raiffeisen Bank International AG (b)		343		4
Voestalpine AG (a)		2,603		87
				290
Belgium (1.4%)
Ageas		1,402		48
Anheuser-Busch InBev N.V.		16,369		2,152
Groupe Bruxelles Lambert SA		3,574		292
KBC Groep N.V. (b)		4,183		205
Proximus		370		12
Solvay SA		579		54
Telenet Group Holding N.V. (b)		1,935		88
UCB SA		3,371		252
Umicore SA		5,465		282
				3,385
Brazil (0.0%)
Cia Energetica de Minas Gerais (Preference)		1		—	@
Chile (0.0%)
Antofagasta PLC (a)		3,998		25
China (0.0%)
WH Group Ltd. (c)(d)		46,000		37
Denmark (2.1%)
AP Moeller — Maersk A/S Series A		129		164
AP Moeller — Maersk A/S Series B		571		753
Carlsberg A/S Series B		252		24

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Denmark (cont'd)
Danske Bank A/S		14,332	$	380
DSV A/S		16,408		690
ISS A/S		4,182		156
Novo Nordisk A/S Series B		46,202		2,485
Novozymes A/S Series B		4,224		203
TDC A/S		9,964		49
				4,904
Finland (1.2%)
Elisa Oyj		4,026		155
Kone Oyj, Class B		7,479		345
Metso Oyj		3,584		85
Neste Oyj		3,667		131
Nokia Oyj		147,693		840
Nokian Renkaat Oyj		768		27
Orion Oyj, Class B		2,648		103
Sampo Oyj, Class A		9,411		385
Stora Enso Oyj, Class R		22,992		185
UPM-Kymmene Oyj		19,808		363
Wartsila Oyj		6,005		246
				2,865
France (10.2%)
Accor SA		7,185		279
Aeroports de Paris (ADP)		1,553		172
Air Liquide SA		7,027		736
Airbus Group SE		18,802		1,092
Alstom SA (b)		5,055		118
Atos SE		2,952		247
AXA SA		30,780		618
BNP Paribas SA		23,677		1,064
Bouygues SA		6,659		192
Cap Gemini SA		4,994		436
Carrefour SA		13,186		326
Casino Guichard Perrachon SA (a)		1,557		87
Christian Dior SE		857		139
Cie de Saint-Gobain		10,207		391
Cie Generale des Etablissements Michelin		4,717		447
CNP Assurances		3,017		45
Credit Agricole SA		22,224		188
Danone SA		11,536		813
Dassault Systemes		5,515		421
Edenred		8,945		185
Electricite de France SA (a)		8,006		98
Engie		44,236		714
Essilor International SA		3,141		418
Eurazeo SA		500		30
Eutelsat Communications SA		3,440		66
Fonciere Des Regions REIT		1,780		158
Gecina SA REIT		1,551		212
Groupe Eurotunnel SE		3,249		35
Hermes International		214		81
ICADE REIT		1,776		126
Iliad SA		999		203

	Shares		Value (000)
Imerys SA		722	$	46
Kering		1,069		174
Klepierre REIT		9,473		423
L'Oreal SA		3,765		720
Lagardere SCA		2,556		56
Legrand SA		10,858		560
LVMH Moet Hennessy Louis Vuitton SE		3,491		529
Natixis SA		9,359		36
Numericable-SFR SA		2,008		51
Orange SA		33,689		550
Pernod Ricard SA		4,410		491
Peugeot SA (b)		2,925		36
Publicis Groupe SA		4,105		278
Remy Cointreau SA		506		44
Renault SA		4,859		370
Safran SA		8,142		553
Sanofi		25,617		2,153
Schneider Electric SE		9,551		565
SES SA		8,593		186
Societe BIC SA		640		90
Societe Generale SA		22,477		710
Sodexo SA		1,337		144
STMicroelectronics N.V. (a)		24,033		142
Suez		9,255		146
Technip SA		535		29
Total SA		47,658		2,298
Unibail-Rodamco SE REIT (a)		4,686		1,228
Valeo SA		7,632		341
Veolia Environnement SA		11,927		259
Vinci SA		13,393		954
Vivendi SA		9,216		175
				24,474
Germany (7.2%)
Adidas AG		3,577		510
Allianz SE (Registered)		6,678		951
Axel Springer SE		717		38
BASF SE		15,358		1,172
Bayer AG (Registered)		18,438		1,855
Bayerische Motoren Werke AG		5,938		435
Bayerische Motoren Werke AG (Preference)		362		23
Beiersdorf AG		1,541		146
Brenntag AG		2,210		107
Commerzbank AG		12,674		82
Continental AG		2,287		430
Daimler AG (Registered)		16,025		956
Deutsche Bank AG (Registered) (b)		10,732		146
Deutsche Boerse AG		3,552		291
Deutsche Lufthansa AG (Registered)		2,424		28
Deutsche Post AG (Registered)		14,237		397
Deutsche Telekom AG (Registered)		90,000		1,531
E.ON SE		37,289		373
Fraport AG Frankfurt Airport Services Worldwide (a)		663		35
Fresenius Medical Care AG & Co., KGaA		6,321		547

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Germany (cont'd)
Fresenius SE & Co., KGaA		649	$	48
GEA Group AG		5,144		242
HeidelbergCement AG		4,229		317
Henkel AG & Co., KGaA (Preference)		2,666		324
Hugo Boss AG		527		30
Infineon Technologies AG		41,513		597
K&S AG (Registered) (a)		335		7
Kabel Deutschland Holding AG		1,087		126
Lanxess AG		612		27
Linde AG		2,235		311
Merck KGaA		3,050		310
Metro AG		8,788		269
Muenchener Rueckversicherungs AG (Registered)		301		50
Osram Licht AG		3,634		188
Porsche Automobil Holding SE (Preference)		3,579		165
ProSiebenSat.1 Media SE (Registered)		7,918		346
QIAGEN N.V. (b)		9,258		200
RTL Group SA		1,787		146
RWE AG (b)		12,683		200
SAP SE		18,213		1,361
Siemens AG (Registered)		14,998		1,536
Symrise AG		305		21
Telefonica Deutschland Holding AG		6,563		27
ThyssenKrupp AG		8,548		171
TUI AG		1,245		14
United Internet AG (Registered)		4,752		196
Vonovia SE		749		27
				17,309
Hong Kong (1.2%)
AIA Group Ltd.		89,000		536
Bank of East Asia Ltd. (The) (a)		10,385		40
BOC Hong Kong Holdings Ltd.		30,000		91
Cheung Kong Infrastructure Holdings Ltd.		5,000		43
Cheung Kong Property Holdings Ltd.		21,500		135
CK Hutchison Holdings Ltd.		21,000		231
CLP Holdings Ltd.		14,000		143
Galaxy Entertainment Group Ltd.		18,000		54
Hang Lung Properties Ltd.		19,000		39
Hang Seng Bank Ltd.		6,000		103
Henderson Land Development Co., Ltd.		11,000		62
HK Electric Investments & HK Electric Investments Ltd. (d)		20,500		19
HKT Trust & HKT Ltd.		21,000		30
Hong Kong & China Gas Co., Ltd.		58,300		107
Hong Kong Exchanges and Clearing Ltd.		9,180		224
Hongkong Land Holdings Ltd.		5,000		31
Hysan Development Co., Ltd.		5,000		22
Link REIT		17,000		116
MTR Corp., Ltd.		11,500		58
New World Development Co., Ltd.		46,509		47
NWS Holdings Ltd.		14,000		22
PCCW Ltd. (a)		36,169		24

	Shares		Value (000)
Power Assets Holdings Ltd.		10,500	$	96
Sands China Ltd.		18,800		64
Sino Land Co., Ltd.		26,558		44
Sun Hung Kai Properties Ltd.		13,000		157
Swire Pacific Ltd., Class A		5,000		57
Swire Properties Ltd.		9,800		26
Techtronic Industries Co., Ltd.		11,000		46
Wharf Holdings Ltd. (The) (a)		12,000		74
Wheelock & Co., Ltd.		8,000		38
Yue Yuen Industrial Holdings Ltd.		6,500		26
				2,805
Ireland (0.5%)
Bank of Ireland (b)		528,549		110
CRH PLC		30,401		877
Kerry Group PLC, Class A		3,075		273
				1,260
Italy (0.8%)
Assicurazioni Generali SpA		30,357		357
Atlantia SpA		7,425		185
Banca Monte dei Paschi di Siena SpA (b)		8,625		4
Eni SpA		12,598		203
Ferrari N.V.		842		34
Intesa Sanpaolo SpA		202,347		386
Luxottica Group SpA		5,128		250
Mediobanca SpA		6,620		39
Prysmian SpA		4,795		105
Telecom Italia SpA (b)		247,675		159
UniCredit SpA		63,967		143
Unione di Banche Italiane SpA (a)		12,794		36
				1,901
Japan (21.0%)
ABC-Mart, Inc.		500		33
Acom Co., Ltd. (a)(b)		16,200		78
Aeon Co., Ltd.		14,900		231
AEON Financial Service Co., Ltd.		4,000		86
Aeon Mall Co., Ltd.		1,200		16
Aisin Seiki Co., Ltd.		100		4
Ajinomoto Co., Inc.		12,900		303
Alfresa Holdings Corp.		200		4
Amada Holdings Co., Ltd.		6,400		65
ANA Holdings, Inc.		56,000		159
Aozora Bank Ltd.		1,000		3
Asahi Glass Co., Ltd. (a)		15,300		83
Asahi Group Holdings Ltd.		8,100		261
Asahi Kasei Corp.		15,000		104
Asics Corp.		2,100		35
Astellas Pharma, Inc.		50,300		787
Bandai Namco Holdings, Inc.		5,700		146
Bank of Kyoto Ltd. (The)		5,000		31
Benesse Holdings, Inc.		1,054		25
Bridgestone Corp. (a)		14,200		453
Brother Industries Ltd.		6,200		66

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Canon, Inc. (a)		14,304	$	408
Casio Computer Co., Ltd. (a)		2,400		34
Central Japan Railway Co.		3,092		547
Chiba Bank Ltd. (The)		9,000		42
Chubu Electric Power Co., Inc.		8,300		118
Chugai Pharmaceutical Co., Ltd. (a)		4,300		153
Chugoku Bank Ltd. (The)		2,900		29
Concordia Financial Group Ltd. (b)		40,600		159
Credit Saison Co., Ltd.		5,800		97
Dai Nippon Printing Co., Ltd.		6,100		68
Dai-ichi Life Insurance Co., Ltd. (The)		33,400		370
Daicel Corp.		300		3
Daiichi Sankyo Co., Ltd.		15,700		379
Daikin Industries Ltd.		5,600		467
Daito Trust Construction Co., Ltd.		1,756		285
Daiwa House Industry Co., Ltd.		11,000		321
Daiwa Securities Group, Inc.		49,000		258
Denso Corp.		13,650		480
Dentsu, Inc.		3,900		182
Don Quijote Holdings Co., Ltd.		3,600		133
East Japan Railway Co.		7,800		719
Eisai Co., Ltd.		5,600		311
Electric Power Development Co., Ltd.		100		2
FANUC Corp.		5,350		866
Fast Retailing Co., Ltd.		1,500		402
Fuji Heavy Industries Ltd.		5,500		188
FUJIFILM Holdings Corp.		15,000		580
Fujitsu Ltd.		43,200		158
Fukuoka Financial Group, Inc.		12,000		39
Hachijuni Bank Ltd. (The)		7,000		30
Hakuhodo DY Holdings, Inc.		7,900		94
Hamamatsu Photonics KK		3,300		92
Hankyu Hanshin Holdings, Inc.		12,000		89
Hikari Tsushin, Inc.		200		17
Hino Motors Ltd.		7,200		71
Hirose Electric Co., Ltd.		500		61
Hisamitsu Pharmaceutical Co., Inc.		700		40
Hitachi Construction Machinery Co., Ltd.		3,000		43
Hitachi Ltd.		80,000		333
Hitachi Metals Ltd.		300		3
Honda Motor Co., Ltd.		27,313		690
Hoshino Resorts, Inc. REIT		4		50
Hoya Corp.		13,500		481
Hulic Co., Ltd.		300		3
IHI Corp.		29,530		79
Inpex Corp.		26,300		205
Isetan Mitsukoshi Holdings Ltd.		11,500		102
Isuzu Motors Ltd.		10,000		122
Ito En Ltd. (a)		3,800		146
ITOCHU Corp.		22,851		278
J Front Retailing Co., Ltd.		5,000		52
Japan Airlines Co., Ltd.		3,000		96

	Shares		Value (000)
Japan Exchange Group, Inc.		18,700	$	214
Japan Hotel REIT Investment Corp. REIT		62		52
Japan Prime Realty Investment Corp. REIT		13		56
Japan Real Estate Investment Corp. REIT		33		203
Japan Retail Fund Investment Corp. REIT		59		150
Japan Tobacco, Inc.		28,300		1,134
JFE Holdings, Inc. (a)		9,300		120
JGC Corp.		20,546		292
Joyo Bank Ltd. (The)		20,000		75
JSR Corp.		1,808		24
JX Holdings, Inc.		69,246		269
Kajima Corp.		32,000		221
Kakaku.com, Inc.		4,100		81
Kansai Electric Power Co., Inc. (The) (b)		11,800		114
Kansai Paint Co., Ltd.		3,200		64
Kao Corp.		15,200		877
Kawasaki Heavy Industries Ltd.		25,500		71
KDDI Corp.		13,600		414
Keikyu Corp.		5,000		50
Keio Corp.		5,000		47
Keyence Corp.		1,357		915
Kinden Corp.		7,000		75
Kintetsu Group Holdings Co., Ltd.		21,750		93
Kirin Holdings Co., Ltd. (a)		17,500		294
Kobe Steel Ltd.		18,000		15
Koito Manufacturing Co., Ltd.		100		5
Komatsu Ltd.		19,300		335
Konica Minolta, Inc.		11,730		85
Kose Corp.		2,000		168
Kubota Corp.		600		8
Kuraray Co., Ltd.		7,356		87
Kurita Water Industries Ltd.		4,000		89
Kyocera Corp.		8,600		408
Kyowa Exeo Corp.		4,500		56
Kyowa Hakko Kirin Co., Ltd. (a)		7,200		122
Kyushu Electric Power Co., Inc.		5,300		53
Lawson, Inc.		2,300		182
LIXIL Group Corp.		5,162		85
M3, Inc. (a)		100		3
Mabuchi Motor Co., Ltd.		1,800		76
Makita Corp.		1,400		92
Marubeni Corp.		22,850		103
Marui Group Co., Ltd.		4,300		58
Maruichi Steel Tube Ltd.		100		3
Mazda Motor Corp.		8,500		114
Medipal Holdings Corp.		200		3
MEIJI Holdings Co., Ltd.		1,500		152
Minebea Co., Ltd.		3,000		20
Miraca Holdings, Inc.		1,800		78
Mitsubishi Chemical Holdings Corp.		34,000		155
Mitsubishi Corp.		15,300		268
Mitsubishi Electric Corp.		35,352		419
Mitsubishi Estate Co., Ltd.		30,000		549

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Mitsubishi Heavy Industries Ltd.		83,550	$	334
Mitsubishi Materials Corp.		18,000		43
Mitsubishi Motors Corp.		8,500		39
Mitsubishi Tanabe Pharma Corp.		3,000		54
Mitsubishi UFJ Financial Group, Inc. (See Note G)		140,706		627
Mitsui & Co., Ltd.		15,400		182
Mitsui Fudosan Co., Ltd.		22,900		523
Mitsui OSK Lines Ltd.		5,000		11
Mizuho Financial Group, Inc.		374,300		536
MS&AD Insurance Group Holdings, Inc.		9,060		233
Murata Manufacturing Co., Ltd.		4,000		449
Nabtesco Corp.		900		21
Nagoya Railroad Co., Ltd.		1,000		6
NEC Corp.		35,900		83
NGK Insulators Ltd.		5,660		114
NGK Spark Plug Co., Ltd.		5,559		84
NH Foods Ltd.		2,000		49
Nidec Corp.		5,700		430
Nikon Corp. (a)		10,200		138
Nintendo Co., Ltd.		1,208		172
Nippon Building Fund, Inc. REIT		36		221
Nippon Express Co., Ltd.		11,300		52
Nippon Paint Holdings Co., Ltd. (a)		2,000		49
Nippon Prologis, Inc. REIT		23		56
Nippon Steel Sumitomo Metal Corp.		8,400		161
Nippon Telegraph & Telephone Corp.		19,000		892
Nippon Television Holdings, Inc.		3,900		64
Nippon Yusen KK		18,015		32
Nissan Motor Co., Ltd.		47,505		428
Nissin Foods Holdings Co., Ltd.		100		5
Nitori Holdings Co., Ltd.		900		108
Nitto Denko Corp.		3,900		246
Nomura Holdings, Inc.		104,850		376
Nomura Real Estate Master Fund, Inc. REIT		56		89
Nomura Research Institute Ltd.		100		4
NSK Ltd.		6,253		46
NTT Data Corp.		2,400		113
NTT DoCoMo, Inc.		17,100		460
Obayashi Corp.		22,571		239
Obic Co., Ltd.		2,300		126
Odakyu Electric Railway Co., Ltd.		18,000		210
Oji Holdings Corp.		5,000		19
Olympus Corp.		200		7
Omron Corp.		6,604		214
Ono Pharmaceutical Co., Ltd.		8,400		363
Oriental Land Co., Ltd.		5,500		355
ORIX Corp.		40,360		515
Osaka Gas Co., Ltd.		61,600		236
Otsuka Holdings Co., Ltd.		9,300		429
Panasonic Corp.		21,800		189
Rakuten, Inc.		22,000		237
Resona Holdings, Inc.		18,700		68

	Shares		Value (000)
Ricoh Co., Ltd.		400	$	3
Rohm Co., Ltd.		1,705		67
Santen Pharmaceutical Co., Ltd.		8,800		137
SBI Holdings, Inc.		7,800		77
Secom Co., Ltd.		5,985		442
Sega Sammy Holdings, Inc.		2,300		25
Seiko Epson Corp.		2,400		38
Sekisui Chemical Co., Ltd.		10,772		132
Sekisui House Ltd.		29,246		509
Seven & I Holdings Co., Ltd.		16,300		681
Seven Bank Ltd.		800		2
Shimamura Co., Ltd.		200		30
Shimano, Inc. (a)		2,650		402
Shimizu Corp.		20,000		186
Shin-Etsu Chemical Co., Ltd.		8,493		495
Shionogi & Co., Ltd. (a)		9,200		500
Shiseido Co., Ltd.		8,500		219
Shizuoka Bank Ltd. (The)		9,000		63
SMC Corp.		1,305		318
SoftBank Group Corp.		18,600		1,052
Sojitz Corp.		50,300		119
Sompo Japan Nipponkoa Holdings, Inc.		6,200		164
Sony Corp.		19,693		576
Sumitomo Chemical Co., Ltd.		16,600		68
Sumitomo Corp.		19,400		194
Sumitomo Electric Industries Ltd.		17,500		230
Sumitomo Metal Mining Co., Ltd.		6,300		64
Sumitomo Mitsui Financial Group, Inc.		20,500		588
Sumitomo Mitsui Trust Holdings, Inc.		52,167		169
Sumitomo Realty & Development Co., Ltd.		8,500		229
Suruga Bank Ltd.		2,800		63
Suzuken Co., Ltd.		2,600		82
Suzuki Motor Corp.		3,100		84
Sysmex Corp.		1,600		109
T&D Holdings, Inc.		10,500		89
Taiheiyo Cement Corp.		19,000		45
Taisei Corp.		50,000		408
Takashimaya Co., Ltd.		6,000		43
Takeda Pharmaceutical Co., Ltd.		16,300		704
TDK Corp.		2,152		120
Teijin Ltd.		1,608		5
Terumo Corp.		9,100		386
THK Co., Ltd.		5,600		95
Tobu Railway Co., Ltd.		40,900		224
Toho Co., Ltd.		3,900		107
Tohoku Electric Power Co., Inc.		7,700		97
Tokio Marine Holdings, Inc.		14,620		484
Tokyo Electron Ltd.		2,700		227
Tokyo Gas Co., Ltd.		66,600		273
Tokyu Corp.		23,400		205
Tokyu Fudosan Holdings Corp.		7,100		44
Toppan Printing Co., Ltd.		6,600		57
Toray Industries, Inc.		27,100		230

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Japan (cont'd)
Toshiba Corp. (b)		70,026	$	191
TOTO Ltd.		2,100		83
Toyo Suisan Kaisha Ltd.		2,800		113
Toyota Industries Corp.		1,450		57
Toyota Motor Corp.		41,655		2,083
Toyota Tsusho Corp.		200		4
Trend Micro, Inc.		1,800		64
Unicharm Corp.		11,700		261
United Urban Investment Corp. REIT		43		77
USS Co., Ltd.		4,300		71
West Japan Railway Co.		742		47
Yahoo! Japan Corp.		42,100		185
Yakult Honsha Co., Ltd. (a)		2,400		124
Yamada Denki Co., Ltd. (a)		31,800		167
Yamaha Corp.		4,200		113
Yamaha Motor Co., Ltd.		3,000		45
Yamato Holdings Co., Ltd.		7,335		168
Yaskawa Electric Corp.		5,100		66
				50,260
Korea, Republic of (0.1%)
Nexon Co., Ltd.		6,300		93
Malta (0.0%)
BGP Holdings PLC (b)(e)(f)		72,261		—
Mexico (0.0%)
Fresnillo PLC		2,199		49
Netherlands (3.7%)
Aegon N.V.		39,534		158
Akzo Nobel N.V.		5,313		334
Altice N.V., Class A (a)(b)		5,460		82
Altice N.V., Class B (b)		1,820		27
ArcelorMittal (b)		39,221		181
ASML Holding N.V.		13,041		1,293
Boskalis Westminster		120		4
CNH Industrial N.V.		69,306		504
Fiat Chrysler Automobiles N.V. (a)		5,941		37
Gemalto N.V. (a)		3,395		208
Heineken Holding N.V.		202		16
Heineken N.V.		5,343		494
ING Groep N.V. CVA		74,065		770
Koninklijke Ahold N.V.		19,869		442
Koninklijke DSM N.V.		3,462		201
Koninklijke KPN N.V. (a)		90,024		326
Koninklijke Philips N.V.		24,165		603
Randstad Holding N.V.		3,921		158
RELX N.V.		35,189		614
TNT Express N.V. (b)		19,228		200
Unilever N.V. CVA		31,852		1,485
Wolters Kluwer N.V.		15,546		635
				8,772

	Shares		Value (000)
Norway (0.5%)
Akastor ASA (a)(b)		180	$	—	@
DNB ASA		27,548		333
Norsk Hydro ASA		29,034		106
Orkla ASA		3,033		27
Statoil ASA		23,802		412
Telenor ASA		17,571		290
Yara International ASA		3,800		121
				1,289
Portugal (0.1%)
Galp Energia SGPS SA		17,717		246
South Africa (0.5%)
Mondi PLC		1,063		20
SABMiller PLC		19,930		1,162
				1,182
Spain (1.4%)
Abertis Infraestructuras SA (a)		5,746		84
ACS Actividades de Construccion y Servicios SA		1,103		30
Aena SA (d)		476		63
Amadeus IT Holding SA, Class A		8,226		360
Banco Bilbao Vizcaya Argentaria SA		89,038		510
Banco de Sabadell SA		37,904		51
Banco Popular Espanol SA		13,333		17
Banco Santander SA		198,662		774
Bankia SA		40,395		30
Bankinter SA (a)		1,932		12
CaixaBank SA (a)		18,070		40
Distribuidora Internacional de Alimentacion SA (a)		6,142		36
Endesa SA (a)		12,366		249
Ferrovial SA		2,977		58
Industria de Diseno Textil SA		7,727		258
Mapfre SA		5,109		11
Red Electrica Corp., SA		3,788		338
Repsol SA		13,279		168
Telefonica SA		20,107		192
Zardoya Otis SA		3,256		31
				3,312
Sweden (3.4%)
Alfa Laval AB		3,340		52
Assa Abloy AB, Class B		18,883		387
Atlas Copco AB, Class A		7,513		194
Atlas Copco AB, Class B		4,380		103
Electrolux AB, Class B		57,052		1,550
Elekta AB, Class B		7,571		61
Getinge AB, Class B		6,985		143
Hennes & Mauritz AB, Class B		15,347		450
Hexagon AB, Class B		8,169		297
Husqvarna AB, Class B		39,598		294
Investor AB, Class B		15,925		533
Lundin Petroleum AB (b)		3,960		72
Nordea Bank AB		80,106		677

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
Sweden (cont'd)
Sandvik AB		12,220	$	122
Securitas AB, Class B		2,161		33
Skandinaviska Enskilda Banken AB, Class A		38,788		337
Skanska AB, Class B		8,914		186
SKF AB, Class B		4,495		72
Svenska Cellulosa AB SCA, Class B		14,723		469
Svenska Handelsbanken AB, Class A		26,690		323
Swedbank AB, Class A		16,789		351
Swedish Match AB		6,810		237
Tele2 AB, Class B		571		5
Telefonaktiebolaget LM Ericsson, Class B		96,108		735
Telia Co AB		45,418		214
Volvo AB, Class B		23,482		232
				8,129
Switzerland (9.4%)
ABB Ltd. (Registered) (b)		47,275		931
Actelion Ltd. (Registered) (b)		2,464		413
Adecco Group AG (Registered)		6,173		311
Baloise Holding AG (Registered)		1,203		134
Cie Financiere Richemont SA (Registered)		7,029		412
Coca-Cola HBC AG (b)		1,092		22
Credit Suisse Group AG (Registered) (b)		32,773		349
Galenica AG (Registered) (a)		7		9
Geberit AG (Registered)		1,139		430
Givaudan SA (Registered)		162		326
Julius Baer Group Ltd. (b)		4,325		174
LafargeHolcim Ltd. (Registered) (b)		9,183		384
LafargeHolcim Ltd. (Registered) (b)		4,101		170
Lonza Group AG (Registered) (b)		1,624		269
Nestle SA (Registered)		74,851		5,774
Novartis AG (Registered)		50,923		4,189
Pargesa Holding SA		147		10
Partners Group Holding AG		258		111
Roche Holding AG (Genusschein)		15,530		4,100
Schindler Holding AG		1,032		187
SGS SA (Registered)		18		41
Sonova Holding AG (Registered)		789		105
Swatch Group AG (The) (a)		418		122
Swatch Group AG (The) (Registered)		610		35
Swiss Life Holding AG (Registered) (b)		1,353		313
Swiss Prime Site AG (Registered) (b)		3,137		284
Swisscom AG (Registered)		784		389
Syngenta AG (Registered)		2,014		774
UBS Group AG (Registered)		81,080		1,049
Zurich Insurance Group AG (b)		3,168		784
				22,601
United Kingdom (18.2%)
3i Group PLC		11,956		89
Aberdeen Asset Management PLC		16,505		64
Admiral Group PLC		2,505		68

	Shares		Value (000)
Aggreko PLC		6,847	$	118
Amec Foster Wheeler PLC		3,442		23
Anglo American PLC		28,920		281
ARM Holdings PLC		45,575		690
Ashtead Group PLC		1,468		21
Associated British Foods PLC		1,168		42
AstraZeneca PLC		27,366		1,629
Aviva PLC		89,851		483
Babcock International Group PLC		6,570		80
BAE Systems PLC		81,277		570
Barclays PLC		183,372		349
Barratt Developments PLC		30,189		165
BHP Billiton PLC		24,422		307
BP PLC		425,379		2,484
British American Tobacco PLC		40,943		2,664
British Land Co., PLC REIT		7,080		59
BT Group PLC		198,938		1,099
Bunzl PLC		7,885		244
Burberry Group PLC		6,546		102
Capita PLC		25,535		328
Carnival PLC		4,473		199
Centrica PLC		109,100		329
Cobham PLC		49,996		105
Compass Group PLC		48,327		921
Croda International PLC		2,868		120
Diageo PLC		59,547		1,666
Dixons Carphone PLC		2,879		12
easyJet PLC		5,055		73
Experian PLC		24,901		473
G4S PLC		16,438		41
GKN PLC		45,119		162
GlaxoSmithKline PLC		105,440		2,267
Glencore PLC		275,111		562
Hammerson PLC REIT		6,558		48
Hargreaves Lansdown PLC		1,941		32
HSBC Holdings PLC		323,012		2,018
Imperial Brands PLC		22,274		1,209
Indivior PLC		14,317		48
Inmarsat PLC		1,246		13
InterContinental Hotels Group PLC		6,418		238
International Consolidated Airlines Group SA		1,250		6
International Consolidated Airlines Group SA (a)		8,632		43
Intertek Group PLC		3,793		177
Intu Properties PLC REIT		5,106		20
Investec PLC		4,681		30
ITV PLC		11,183		27
J Sainsbury PLC (a)		31,777		99
Johnson Matthey PLC		3,970		150
Kingfisher PLC		59,004		255
Land Securities Group PLC REIT		6,314		89
Legal & General Group PLC		87,490		227
Lloyds Banking Group PLC		995,222		732

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

	Shares		Value (000)
United Kingdom (cont'd)
Lonmin PLC (b)		33	$	—	@
Marks & Spencer Group PLC		47,859		203
Meggitt PLC		19,455		106
Melrose Industries PLC		441		2
Merlin Entertainments PLC (d)		2,059		12
National Grid PLC		29,546		434
Next PLC		3,451		231
Old Mutual PLC		66,579		179
Pearson PLC		24,081		314
Persimmon PLC		8,695		170
Petrofac Ltd.		2,548		26
Prudential PLC		45,410		774
Randgold Resources Ltd.		5,091		572
Reckitt Benckiser Group PLC		10,201		1,026
RELX PLC		32,975		608
Rio Tinto PLC		14,381		445
Rolls-Royce Holdings PLC (b)		44,344		421
Royal Dutch Shell PLC, Class A		116,219		3,173
Royal Dutch Shell PLC, Class B		45,200		1,243
Royal Mail PLC		2,356		16
RSA Insurance Group PLC		9,894		66
Sage Group PLC (The)		41,474		361
Schroders PLC		1,675		53
Segro PLC REIT		13,156		74
Severn Trent PLC		1,893		62
Shire PLC		12,920		796
Sky PLC		50,049		568
Smith & Nephew PLC		50,882		863
Smiths Group PLC		10,336		159
SSE PLC		7,726		162
Standard Chartered PLC		58,824		447
Standard Life PLC		22,062		87
Tate & Lyle PLC		1,517		14
Taylor Wimpey PLC		98,619		176
Tesco PLC (b)		177,850		416
Travis Perkins PLC		716		14
Unilever PLC		27,249		1,307
United Utilities Group PLC		5,426		76
Vodafone Group PLC		549,758		1,674
Weir Group PLC (The)		5,533		107
Whitbread PLC		5,314		248
William Hill PLC		2,567		9
WM Morrison Supermarkets PLC (a)		7,283		18
Wolseley PLC		5,367		278
WPP PLC		58,932		1,224
				43,564
United States (0.3%)
Alcatel-Lucent SA (b)		110,086		424
Grifols SA		7,213		163
IMI PLC		3,545		46

	Shares		Value (000)
Li & Fung Ltd. (c)		48,000	$	23
Ryanair Holdings PLC ADR (a)		2,047		142
				798
Total Common Stocks (Cost $202,601)				213,184
	No. of Rights
Right (0.0%)
Spain (0.0%)
ACS Actividades de Construccion y Servicios SA (b) (Cost $1)		1,103		1
	Shares
Short-Term Investments (11.9%)
Securities held as Collateral on Loaned Securities (2.3%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		4,481,316		4,481
	Face Amount (000)
Repurchase Agreements (0.4%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $1,035; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $1,056)	$	1,036		1,036
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $42; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $43)		42		42
				1,078
Total Securities held as Collateral on Loaned Securities (Cost $5,559)				5,559
	Shares
Investment Company (9.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $23,085)		23,085,182		23,085
Total Short-Term Investments (Cost $28,644)				28,644
Total Investments (100.9%) (Cost $231,246) Including $5,564 of Securities Loaned (g)(h)(i)				241,829
Liabilities in Excess of Other Assets (–0.9%)				(2,093	)
Net Assets (100.0%)			$	239,736

(a)  All or a portion of this security was on loan at June 30, 2016.

(b)  Non-income producing security.

(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.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

(e)  Security has been deemed illiquid at June 30, 2016.

(f)  At June 30, 2016, 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.

(h)  The approximate fair value and percentage of net assets, $213,042,000 and 88.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(i)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $37,152,000 and the aggregate gross unrealized depreciation is approximately $26,569,000 resulting in net unrealized appreciation of approximately $10,583,000.

@  Value is less than $500.

ADR  American Depositary Receipt.

CDI  CHESS Depositary Interest.

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, 2016:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
Citibank NA	$	3,481	EUR	3,119	7/21/16	$	(18	)
Credit Suisse International	AUD	483	$	355	7/21/16		(5	)
Credit Suisse International	$	5,752	AUD	7,880	7/21/16		121
State Street Bank and Trust Co.	AUD	1,850	$	1,361	7/21/16		(18	)
State Street Bank and Trust Co.	AUD	934	$	693	7/21/16		(3	)
State Street Bank and Trust Co.	EUR	611	$	695	7/21/16		16
State Street Bank and Trust Co.	GBP	1,489	$	2,096	7/21/16		113
State Street Bank and Trust Co.	GBP	150	$	224	7/21/16		24
State Street Bank and Trust Co.	GBP	286	$	394	7/21/16		13
State Street Bank and Trust Co.	GBP	214	$	287	7/21/16		2
State Street Bank and Trust Co.	JPY	142,532	$	1,369	7/21/16		(12	)
State Street Bank and Trust Co.	$	548	EUR	488	7/21/16		(7	)
State Street Bank and Trust Co.	$	1,789	EUR	1,603	7/21/16		(9	)
State Street Bank and Trust Co.	$	433	EUR	390	7/21/16		(—	@)
State Street Bank and Trust Co.	$	1,789	GBP	1,218	7/21/16		(167	)
State Street Bank and Trust Co.	$	2,337	GBP	1,751	7/21/16		(5	)
State Street Bank and Trust Co.	$	247	GBP	185	7/21/16		(—	@)
State Street Bank and Trust Co.	$	6,193	JPY	642,687	7/21/16		34
						$	79

Futures Contracts:

The Portfolio had the following futures contracts open at June 30, 2016:

	Number of Contracts		Value (000)		Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
Dax Index (Germany)		9	$	2,414	Sep-16	$	24
E-mini MSCI Eafe Index (United States)		16		1,292	Sep-16		(3	)
Euro Stoxx 50 Index (Germany)		91		2,883	Sep-16		83
FTSE MIB Index (Italy)		13		1,168	Sep-16		5
FTSE MIB Index (United Kingdom)		38		3,249	Sep-16		284
Hang Seng Index (Hong Kong)		9		1,215	Jul-16		61
IBEX 35 Index (Spain)		26		2,345	Jul-16		(27	)
MSCI Singapore Free Index (Singapore)		105		2,473	Jul-16		119
NIKKEI 225 Index (Japan)		8		610	Sep-16		(33	)
SPI 200 Index (Australia)		20		1,930	Sep-16		(—	@)
TOPIX Index (Japan)		49		5,910	Sep-16		(423	)
						$	90

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Active International Allocation Portfolio

AUD  —  Australian Dollar

EUR  —  Euro

GBP  —  British Pound

JPY  —  Japanese Yen

SGD  —  Singapore Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		72.7	%
Pharmaceuticals		9.9
Short-Term Investments		9.8
Banks		7.6
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

**  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 $25,489,000 with net unrealized appreciation of approximately $90,000. Does not include open foreign currency forward exchange contracts with net unrealized appreciation of approximately $79,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $202,126)	$	213,636
Investment in Security of Affiliated Issuer, at Value (Cost $29,120)		28,193
Total Investments in Securities, at Value (Cost $231,246)		241,829
Foreign Currency, at Value (Cost $652)		678
Receivable for Variation Margin on Futures Contracts		2,201
Receivable for Investments Sold		1,414
Dividends Receivable		482
Tax Reclaim Receivable		412
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		323
Receivable for Portfolio Shares Sold		38
Receivable from Affiliates		4
Other Assets		72
Total Assets		247,453
Liabilities:
Collateral on Securities Loaned, at Value		5,559
Payable for Investments Purchased		978
Payable for Advisory Fees		371
Payable for Portfolio Shares Redeemed		304
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		244
Payable for Sub Transfer Agency Fees — Class I		48
Payable for Sub Transfer Agency Fees — Class A		24
Payable for Sub Transfer Agency Fees — Class L		5
Payable for Custodian Fees		47
Payable for Professional Fees		27
Payable for Directors' Fees and Expenses		20
Payable for Shareholder Services Fees — Class A		12
Payable for Distribution and Shareholder Services Fees — Class L		4
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		16
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		4
Payable for Transfer Agency Fees — Class L		1
Other Liabilities		51
Total Liabilities		7,717
Net Assets	$	239,736
Net Assets Consist Of:
Paid-in-Capital	$	297,877
Accumulated Undistributed Net Investment Income		2,900
Accumulated Net Realized Loss		(71,786	)
Unrealized Appreciation (Depreciation) on:
Investments		11,510
Investments in Affiliates		(927	)
Futures Contracts		90
Foreign Currency Forward Exchange Contracts		79
Foreign Currency Translations		(7	)
Net Assets	$	239,736

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Active International Allocation Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	175,272
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		15,112,653
Net Asset Value, Offering and Redemption Price Per Share	$	11.60
CLASS A:
Net Assets	$	58,133
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,912,909
Net Asset Value, Redemption Price Per Share	$	11.83
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.66
Maximum Offering Price Per Share	$	12.49
CLASS L:
Net Assets	$	6,262
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		532,878
Net Asset Value, Offering and Redemption Price Per Share	$	11.75
CLASS C:
Net Assets	$	69
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,857
Net Asset Value, Offering and Redemption Price Per Share	$	11.70
(1) Including: Securities on Loan, at Value:	$	5,564

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Active International Allocation Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $507 of Foreign Taxes Withheld)	$	4,915
Income from Securities Loaned — Net		57
Dividends from Security of Affiliated Issuers (Net of $1 of Foreign Taxes Withheld) (Note G)		44
Interest from Securities of Unaffiliated Issuers		—	@
Total Investment Income		5,016
Expenses:
Advisory Fees (Note B)		804
Sub Transfer Agency Fees — Class I		45
Sub Transfer Agency Fees — Class A		47
Sub Transfer Agency Fees — Class L		8
Sub Transfer Agency Fees — Class C		—	@
Administration Fees (Note C)		99
Shareholder Services Fees — Class A (Note D)		74
Distribution and Shareholder Services Fees — Class L (Note D)		24
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Professional Fees		60
Custodian Fees (Note F)		53
Shareholder Reporting Fees		31
Pricing Fees		26
Registration Fees		23
Transfer Agency Fees — Class I (Note E)		4
Transfer Agency Fees — Class A (Note E)		6
Transfer Agency Fees — Class L (Note E)		2
Transfer Agency Fees — Class C (Note E)		1
Directors' Fees and Expenses		4
Other Expenses		15
Total Expenses		1,326
Reimbursement of Class Specific Expenses — Class I (Note B)		(48	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(24	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(6	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(14	)
Net Expenses		1,233
Net Investment Income		3,783
Realized Gain (Loss):
Investments Sold		(14,264	)
Investments in Affiliates		(80	)
Foreign Currency Forward Exchange Contracts		295
Foreign Currency Transactions		(171	)
Futures Contracts		(1,927	)
Net Realized Loss		(16,147	)
Change in Unrealized Appreciation (Depreciation):
Investments		(711	)
Investments in Affiliates		(184	)
Foreign Currency Forward Exchange Contracts		25
Foreign Currency Translations		23
Futures Contracts		(171	)
Net Change in Unrealized Appreciation (Depreciation)		(1,018	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(17,165	)
Net Decrease in Net Assets Resulting from Operations	$	(13,382	)

@  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, 2016

Active International Allocation Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	3,783		$	4,651
Net Realized Loss		(16,147	)		(4,578	)
Net Change in Unrealized Appreciation (Depreciation)		(1,018	)		(3,740	)
Net Decrease in Net Assets Resulting from Operations		(13,382	)		(3,667	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(1,928	)
Class A:
Net Investment Income		—			(382	)
Class L:
Net Investment Income		—			(13	)
Class C:
Net Investment Income		—			(—	@)
Total Distributions		—			(2,323	)
Capital Share Transactions:(1)
Class I:
Subscribed		4,018			5,523
Distributions Reinvested		—			1,915
Redeemed		(16,782	)		(24,777	)
Class A:
Subscribed		1,672			4,676
Distributions Reinvested		—			375
Redeemed		(4,739	)		(11,059	)
Class L:
Subscribed		—			105
Distributions Reinvested		—			13
Redeemed		(833	)		(1,086	)
Class C:
Subscribed		40			36	*
Distributions Reinvested		—			—	@*
Net Decrease in Net Assets Resulting from Capital Share Transactions		(16,624	)		(24,279	)
Redemption Fees		—	@		—	@
Total Decrease in Net Assets		(30,006	)		(30,269	)
Net Assets:
Beginning of Period		269,742			300,011
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $2,900 and $(883), respectively)	$	239,736		$	269,742
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		349			428
Shares Issued on Distributions Reinvested		—			154
Shares Redeemed		(1,448	)		(1,906	)
Net Decrease in Class I Shares Outstanding		(1,099	)		(1,324	)
Class A:
Shares Subscribed		142			352
Shares Issued on Distributions Reinvested		—			29
Shares Redeemed		(402	)		(834	)
Net Decrease in Class A Shares Outstanding		(260	)		(453	)
Class L:
Shares Subscribed		—			8
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(71	)		(81	)
Net Decrease in Class L Shares Outstanding		(71	)		(72	)
Class C:
Shares Subscribed		3			3	*
Shares Issued on Distributions Reinvested		—			—	@@*
Net Increase in Class C Shares Outstanding		3			3

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Active International Allocation Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.20		$	12.52		$	13.75		$	11.65		$	10.07		$	12.06
Income (Loss) from Investment Operations:
Net Investment Income†		0.18			0.22			0.34			0.22			0.23			0.27
Net Realized and Unrealized Gain (Loss)		(0.78	)		(0.42	)		(1.22	)		2.25			1.51			(2.03	)
Total from Investment Operations		(0.60	)		(0.20	)		(0.88	)		2.47			1.74			(1.76	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)		(0.35	)		(0.37	)		(0.16	)		(0.23	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	11.60		$	12.20		$	12.52		$	13.75		$	11.65		$	10.07
Total Return++		(4.92	)%#		(1.63	)%		(6.37	)%		21.38	%		17.30	%		(14.56	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	175,272		$	197,733		$	219,467		$	260,614		$	251,657		$	302,048
Ratio of Expenses to Average Net Assets (1)		0.89	%+*		0.89	%+		0.88	%+		0.83	%+		0.89	%+		0.84	%+^
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			0.88	%+		N/A			0.84	%+^
Ratio of Net Investment Income to Average Net Assets (1)		3.17	%+*		1.66	%+		2.53	%+		1.71	%+		2.12	%+		2.33	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.02	%		0.02	%		0.01	%		0.01	%
Portfolio Turnover Rate		14	%#		30	%		32	%		36	%		27	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		0.95	%*		0.92	%		0.99	%		0.99	%		0.98	%		0.95	%
Net Investment Income to Average Net Assets		3.11	%*		1.63	%		2.42	%		1.55	%		2.03	%		2.22	%

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value 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.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Active International Allocation Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.47		$	12.79		$	14.03		$	11.89		$	10.27		$	12.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.17			0.17			0.30			0.11			0.20			0.25
Net Realized and Unrealized Gain (Loss)		(0.81	)		(0.42	)		(1.24	)		2.36			1.55			(2.07	)
Total from Investment Operations		(0.64	)		(0.25	)		(0.94	)		2.47			1.75			(1.82	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)		(0.30	)		(0.33	)		(0.13	)		(0.19	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	11.83		$	12.47		$	12.79		$	14.03		$	11.89		$	10.27
Total Return++		(5.13	)%#		(1.95	)%		(6.70	)%		20.94	%		17.05	%		(14.75	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	58,133		$	64,482		$	71,938		$	90,599		$	8,608		$	10,387
Ratio of Expenses to Average Net Assets (1)		1.24	%+*		1.24	%+		1.23	%+		1.09	%+^^		1.14	%+		1.09	%+^
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			1.21	%+^^		N/A			1.09	%+^
Ratio of Net Investment Income to Average Net Assets (1)		2.81	%+*		1.31	%+		2.18	%+		0.84	%+		1.80	%+		2.08	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.02	%		0.02	%		0.01	%		0.01	%
Portfolio Turnover Rate		14	%#		30	%		32	%		36	%		27	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.33	%*		1.28	%		1.31	%+		1.25	%+		1.23	%		1.20	%
Net Investment Income to Average Net Assets		2.72	%*		1.27	%		2.10	%+		0.68	%+		1.71	%		1.97	%

†  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.
19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Active International Allocation Portfolio

	Class L
	Six Months Ended June 30,2016			Year Ended December 31,									Period from June 14, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	12.41		$	12.74		$	13.97		$	11.84		$	10.09
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.13			0.11			0.23			0.12			(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.79	)		(0.42	)		(1.23	)		2.27			1.91
Total from Investment Operations		(0.66	)		(0.31	)		(1.00	)		2.39			1.89
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.23	)		(0.26	)		(0.14	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	11.75		$	12.41		$	12.74		$	13.97		$	11.84
Total Return++		(5.32	)%#		(2.44	)%		(7.17	)%		20.34	%		18.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6,262		$	7,495		$	8,606		$	10,345		$	10,246
Ratio of Expenses to Average Net Assets (1)		1.74	%+*		1.74	%+		1.73	%+		1.61	%+^^		1.63	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			1.66	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.30	%*		0.82	%+		1.68	%+		0.94	%+		(0.33	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.02	%		0.02	%		0.02	%*
Portfolio Turnover Rate		14	%#		30	%		32	%		36	%		27	%#
(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation:

Expenses to Average Net Assets	1.94	%*	1.87	%	1.87	%	1.76	%	1.79	%*
Net Investment Income (Loss) to Average Net Assets	2.10	%*	0.69	%	1.54	%	0.79	%	(0.49	)%*

^  Commencement of Offering.

†  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.
20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Active International Allocation Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30,2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	12.38		$	13.94
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.14			(0.00	)‡
Net Realized and Unrealized Loss		(0.82	)		(1.53	)
Total from Investment Operations		(0.68	)		(1.53	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	11.70		$	12.38
Total Return++		(5.41	)%#		(10.96	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	69		$	32
Ratios of Expenses to Average Net Assets (1)		1.99	%+*		1.99	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.42	%+*		(0.04	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		14	%#		30	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		5.95	%*		4.26	%*
Net Investment Loss to Average Net Assets		(1.54	)%*		(2.31	)%*

^  Commencement of Offering.

†  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."

#  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, 2016

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-nine 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices; if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the

valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—		$	2,847		$	—	$	2,847
Air Freight & Logistics		—			781			—		781
Airlines		142			416			—		558
Auto Components		—			2,720			—		2,720
Automobiles		—			5,849			—		5,849
Banks		—			17,983			—		17,983
Beverages		—			6,901			—		6,901
Biotechnology		—			2,038			—		2,038
Building Products		—			1,926			—		1,926
Capital Markets		—			3,089			—		3,089
Chemicals		—			6,500			—		6,500
Commercial Services & Supplies		—			1,500			—		1,500
Communications Equipment		—			1,999			—		1,999
Construction & Engineering		—			2,957			—		2,957
Construction Materials		—			1,942			—		1,942
Consumer Finance		—			261			—		261
Containers & Packaging		—			258			—		258
Diversified Consumer Services		—			25			—		25
Diversified Finanancial Services		—			183			—		183
Diversified Financial Services —		2,213			—	†		2,213		†
Diversified Telecommunication Services		—			6,526			—		6,526
Electric Utilities		—	@		1,552			—		1,552
Electrical Equipment		—			3,274			—		3,274
Electronic Equipment, Instruments & Components		—			2,955			—		2,955
Energy Equipment & Services		—			78			—		78
Food & Staples Retailing		—			3,752			—		3,752
Food Products		—			7,726			—		7,726
Gas Utilities		—			699			—		699
Health Care Equipment & Supplies		—			2,653			—		2,653
Health Care Providers & Services		—			992			—		992
Health Care Technology		—			3			—		3
Hotels, Restaurants & Leisure		—			2,794			—		2,794
Household Durables		—			3,979			—		3,979
Household Products		—			2,080			—		2,080
Independent Power Producers & Energy Traders		—			2			—		2
Industrial Conglomerates		—			2,742			—		2,742
Information Technology Services		—			1,478			—		1,478
Insurance		—			8,130			—		8,130
Internet & Catalog Retail		—			237			—		237
Internet Software & Services		—			462			—		462

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)
Leisure Products	$	—		$	686		$	—		$	686
Life Sciences Tools & Services		—			469			—			469
Machinery		—			5,398			—			5,398
Marine		—			960			—			960
Media		—			6,075			—			6,075
Metals & Mining		—			5,525			—			5,525
Multi-Utilities		—			2,625			—			2,625
Multi-line Retail		—			862			—			862
Oil, Gas & Consumable Fuels		—			11,392			—			11,392
Paper & Forest Products		—			587			—			587
Personal Products		—			4,922			—			4,922
Pharmaceuticals		—			23,379			—			23,379
Professional Services		—			1,525			—			1,525
Real Estate Investment Trusts (REITs)		—			4,965			—			4,965
Real Estate Management & Development		—			3,066			—			3,066
Road & Rail		—			3,232			—			3,232
Semiconductors & Semiconductor Equipment		—			3,016			—			3,016
Software		—			2,680			—			2,680
Specialty Retail		—			1,803			—			1,803
Tech Hardware, Storage & Peripherals		—			1,263			—			1,263
Textiles, Apparel & Luxury Goods		—			2,468			—			2,468
Thrifts & Mortgage Finance		—			30			—			30
Tobacco		—			5,244			—			5,244
Trading Companies & Distributors		—			1,812			—			1,812
Transportation Infrastructure		—			813			—			813
Water Utilities		—			138			—			138
Wireless Telecommunication Services		—			3,605			—			3,605
Total Common Stocks		142			213,042			—	†		213,184	†
Right		1			—			—			1
Short-Term Investments
Investment Company		27,566			—			—			27,566
Repurchase Agreements		—			1,078			—			1,078
Total Short-Term Investments		27,566			1,078			—			28,644
Foreign Currency Forward Exchange Contracts		—			323			—			323
Futures Contracts		576			—			—			576
Total Assets		28,285			214,443			—	†		242,728	†
Liabilities:
Foreign Currency Forward Exchange Contracts		—			(244	)		—			(244	)
Futures Contracts		(486	)		—			—			(486	)
Total Liabilities		(486	)		(244	)		—			(730	)
Total	$	27,799		$	214,199		$	—	†	$	241,998	†

@  Value is less than $500.

†  Includes one security which is valued at zero.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016, securities with a total value of approximately $424,000 transferred from Level 1 to Level 2. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification. As of June 30, 2016, a security with a total value of less than $500 transferred from Level 2 to Level 1. The security that was valued using other significant observable inputs at December 31, 2015 was valued using unadjusted quoted prices at June 30, 2016.

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

	Common Stocks (000)
Beginning Balance	$	8	†
Purchases		—
Sales		(5	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		8
Realized gains (losses)		(11	)
Ending Balance	$	—	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—

†  Includes one or more securities which are valued at zero.

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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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, 2016.

	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	$	323
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		576	(a)
Total			$	899
	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	$	(244	)
Futures Contracts	Variation Margin on Futures Contracts	Equity Risk		(486	)(a)
Total			$	(730	)

(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	295
Equity Risk	Futures Contracts		(1,927	)
	Total	$	(1,632	)

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	25
Equity Risk	Futures Contracts		(171	)
	Total	$	(146	)

At June 30, 2016, 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	$	323	$	(244	)

(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, 2016.

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)
Credit Suisse International	$	121	$	(5	)	$	—	$	116
State Street Bank and Trust Co.		202		(202	)		—		0
Total	$	323	$	(207	)	$	—	$	116
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)
Citibank NA	$	18	$	—		$	—	$	18
Credit Suisse International		5		(5	)		—		0
State Street Bank and Trust Co.		221		(202	)		—		19
Total	$	244	$	(207	)	$	—	$	37

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	27,486,000
Futures Contracts:
Average monthly original value	$	52,751,000

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.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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)
$	5,564	(d)	$	—	$	(5,564	)(e)(f)	$	0

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

(e) The Portfolio received cash collateral of approximately $5,559,000 which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $278,000 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.

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	5,559	$	—	$	—	$	—	$	5,559
Total Borrowings	$	5,559	$	—	$	—	$	—	$	5,559
Gross amount of recognized liabilities for securities lending transactions									$	5,559

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 investment income, if any, are declared and paid 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.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, 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 as 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, 2016, approximately $79,000 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.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $31,305,000 and $54,500,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $14,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	19,365	$	89,362	$	81,161	$	34	$	27,566

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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Realized Loss (000)			Dividend Income (000)		Value June 30, 2016 (000)
$	948	$	—	$	57	$	(80	)	$	10	$	627

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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, 2015, remains subject to examination by taxing authorities.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	2,323	$	—	$	7,870	$	—

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, 2015:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in-Capital (000)
$	(3,131	)	$	3,131	$	—

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused capital losses of approximately $10,070,000 that do not have an expiration date.

In addition, at December 31, 2015, 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.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	157	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 85.3%.

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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.

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

36

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

37

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

38

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(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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIAIASAN
1558896 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

U.S. Real Estate Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,101.20	$	1,019.89	$	5.22	$	5.02		1.00	%
U.S. Real Estate Portfolio Class A		1,000.00		1,099.50		1,018.40		6.79		6.52		1.30
U.S. Real Estate Portfolio Class L		1,000.00		1,096.50		1,015.71		9.59		9.22		1.84
U.S. Real Estate Portfolio Class C		1,000.00		1,095.60		1,014.42		10.94		10.52		2.10
U.S. Real Estate Portfolio Class IS		1,000.00		1,102.00		1,020.39		4.70		4.52		0.90

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

U.S. Real Estate Portfolio

	Shares		Value (000)
Common Stocks (96.5%)
Apartments (17.8%)
Apartment Investment & Management Co., Class A REIT		279,883	$	12,360
AvalonBay Communities, Inc. REIT		206,163		37,190
Camden Property Trust REIT		276,406		24,440
Equity Residential REIT		864,826		59,569
Essex Property Trust, Inc. REIT		72,705		16,583
Post Properties, Inc. REIT		30,924		1,888
				152,030
Data Centers (0.5%)
QTS Realty Trust, Inc., Class A REIT		82,688		4,629
Diversified (7.1%)
Lexington Realty Trust REIT		34,840		352
RMR Group, Inc. (The), Class A		136		4
Vornado Realty Trust REIT		605,956		60,669
				61,025
Health Care (7.7%)
HCP, Inc. REIT		63,861		2,259
Healthcare Realty Trust, Inc. REIT		161,334		5,645
Omega Healthcare Investors, Inc. REIT		180,752		6,137
Senior Housing Properties Trust REIT		235,533		4,906
Ventas, Inc. REIT		357,971		26,068
Welltower, Inc. REIT		273,024		20,796
				65,811
Industrial (4.3%)
Cabot Industrial Value Fund II, LP REIT (a)(b)(c)(d) (See Note A-4)		14,000		8,406
Duke Realty Corp. REIT		211,655		5,643
Exeter Industrial Value Fund, LP REIT (a)(b)(c)(d) (See Note A-4)		7,905,000		2,522
Liberty Property Trust REIT		71,517		2,841
ProLogis, Inc. REIT		275,596		13,515
Rexford Industrial Realty, Inc. REIT		172,117		3,630
				36,557
Lodging/Resorts (9.9%)
Chesapeake Lodging Trust REIT		309,514		7,196
Hilton Worldwide Holdings, Inc.		532,270		11,992
Host Hotels & Resorts, Inc. REIT		2,625,543		42,560
LaSalle Hotel Properties REIT		693,232		16,346
Sunstone Hotel Investors, Inc. REIT		252,171		3,044
Xenia Hotels & Resorts, Inc. REIT		225,719		3,788
				84,926
Manufactured Homes (0.3%)
Equity Lifestyle Properties, Inc. REIT		36,699		2,938
Office (10.8%)
Boston Properties, Inc. REIT		346,903		45,756
BRCP REIT I, LP (a)(b)(c)(d) (See Note A-4)		6,101,396		372
BRCP REIT II, LP (a)(b)(c)(d) (See Note A-4)		8,363,574		4,332
Corporate Office Properties Trust REIT		69,854		2,066
Cousins Properties, Inc. REIT		618,885		6,436
Douglas Emmett, Inc. REIT		349,214		12,404

	Shares		Value (000)
Hudson Pacific Properties, Inc. REIT		534,186	$	15,588
Mack-Cali Realty Corp. REIT		70,061		1,892
Paramount Group, Inc. REIT		206,313		3,289
				92,135
Regional Malls (19.1%)
CBL & Associates Properties, Inc. REIT		31,965		298
General Growth Properties, Inc. REIT		1,172,981		34,978
Simon Property Group, Inc. REIT		555,687		120,529
Taubman Centers, Inc. REIT		91,057		6,756
WP GLIMCHER, Inc. REIT		60,153		673
				163,234
Retail Free Standing (2.8%)
National Retail Properties, Inc. REIT		237,831		12,301
Realty Income Corp. REIT		39,451		2,736
Spirit Realty Capital, Inc. REIT		149,620		1,911
STORE Capital Corp. REIT		227,722		6,706
				23,654
Self Storage (5.6%)
CubeSmart REIT		141,539		4,371
Public Storage REIT		138,153		35,310
Sovran Self Storage, Inc. REIT		75,421		7,913
				47,594
Shopping Centers (9.9%)
Acadia Realty Trust REIT		37,907		1,346
Brixmor Property Group, Inc. REIT		170,170		4,503
DDR Corp. REIT		209,002		3,791
Equity One, Inc. REIT		88,660		2,853
Federal Realty Investment Trust REIT		1,580		262
Kimco Realty Corp. REIT		612,346		19,215
Regency Centers Corp. REIT		396,583		33,206
Tanger Factory Outlet Centers, Inc. REIT		495,919		19,926
				85,102
Single Family Homes (0.2%)
American Homes 4 Rent, Class A REIT		67,360		1,379
Specialty (0.5%)
Gaming and Leisure Properties, Inc. REIT		137,823		4,752
Total Common Stocks (Cost $539,291)				825,766
Short-Term Investment (2.7%)
Investment Company (2.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $22,692)		22,691,898		22,692
Total Investments (99.2%) (Cost $561,983) (e)				848,458
Other Assets in Excess of Liabilities (0.8%)				7,169
Net Assets (100.0%)			$	855,627

(a)  Non-income producing security.

(b)  Security has been deemed illiquid at June 30, 2016.

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

U.S. Real Estate Portfolio

(c)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $15,632,000, representing 1.8% 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)  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 current 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 $6,695,000. 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 $467,000. At June 30, 2016, these securities had an aggregate market value of approximately $15,632,000, representing 1.8% of net assets.

(e)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $293,823,000 and the aggregate gross unrealized depreciation is approximately $7,348,000 resulting in net unrealized appreciation of approximately $286,475,000.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Regional Malls		19.2	%
Apartments		17.9
Other*		11.4
Office		10.9
Shopping Centers		10.0
Lodging/Resorts		10.0
Health Care		7.8
Diversified		7.2
Self Storage		5.6
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $539,291)	$	825,766
Investment in Security of Affiliated Issuer, at Value (Cost $22,692)		22,692
Total Investments in Securities, at Value (Cost $561,983)		848,458
Foreign Currency, at Value (Cost $1)		1
Receivable for Investments Sold		7,026
Dividends Receivable		2,764
Receivable for Portfolio Shares Sold		2,078
Receivable from Affiliate		5
Other Assets		117
Total Assets		860,449
Liabilities:
Payable for Investments Purchased		2,172
Payable for Advisory Fees		1,541
Payable for Portfolio Shares Redeemed		816
Payable for Sub Transfer Agency Fees — Class I		44
Payable for Sub Transfer Agency Fees — Class A		20
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Administration Fees		54
Payable for Professional Fees		28
Payable for Directors' Fees and Expenses		24
Payable for Shareholder Services Fees — Class A		18
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Custodian Fees		17
Payable for Transfer Agency Fees — Class I		7
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		—	@
Other Liabilities		75
Total Liabilities		4,822
Net Assets	$	855,627
Net Assets Consist of:
Paid-in-Capital	$	517,066
Accumulated Undistributed Net Investment Income		18,515
Accumulated Net Realized Gain		33,571
Unrealized Appreciation (Depreciation) on:
Investments		286,475
Foreign Currency Translations		(—	@)
Net Assets	$	855,627

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

U.S. Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	578,643
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		29,525,864
Net Asset Value, Offering and Redemption Price Per Share	$	19.60
CLASS A:
Net Assets	$	92,143
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,824,708
Net Asset Value, Redemption Price Per Share	$	19.10
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.06
Maximum Offering Price Per Share	$	20.16
CLASS L:
Net Assets	$	4,076
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		213,888
Net Asset Value, Offering and Redemption Price Per Share	$	19.06
CLASS C:
Net Assets	$	191
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,065
Net Asset Value, Offering and Redemption Price Per Share	$	18.99
CLASS IS:
Net Assets	$	180,574
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		9,209,954
Net Asset Value, Offering and Redemption Price Per Share	$	19.61

@  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, 2016 (unaudited)

U.S. Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	20,971
Dividends from Security of Affiliated Issuer (Note G)		15
Interest from Securities of Unaffiliated Issuers		2
Total Investment Income		20,988
Expenses:
Advisory Fees (Note B)		3,187
Sub Transfer Agency Fees — Class I		287
Sub Transfer Agency Fees — Class A		58
Sub Transfer Agency Fees — Class L		2
Sub Transfer Agency Fees — Class C		—	@
Administration Fees (Note C)		327
Shareholder Services Fees — Class A (Note D)		107
Distribution and Shareholder Services Fees — Class L (Note D)		15
Distribution and Shareholder Services Fees — Class C (Note D)		1
Shareholder Reporting Fees		50
Professional Fees		45
Registration Fees		43
Transfer Agency Fees — Class I (Note E)		15
Transfer Agency Fees — Class A (Note E)		7
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Custodian Fees (Note F)		18
Directors' Fees and Expenses		11
Pricing Fees		2
Other Expenses		15
Total Expenses		4,193
Reimbursement of Class Specific Expenses — Class I (Note B)		(28	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(10	)
Net Expenses		4,154
Net Investment Income		16,834
Realized Gain:
Investments Sold		21,581
Change in Unrealized Appreciation (Depreciation):
Investments		42,491
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		42,491
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		64,072
Net Increase in Net Assets Resulting from Operations	$	80,906

@  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, 2016

U.S. Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	16,834		$	15,592
Net Realized Gain		21,581			113,715
Net Change in Unrealized Appreciation (Depreciation)		42,491			(109,098	)
Net Increase in Net Assets Resulting from Operations		80,906			20,209
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(2,048	)		(8,675	)
Net Realized Gain		—			(89,446	)
Class A:
Net Investment Income		(253	)		(982	)
Net Realized Gain		—			(13,045	)
Class L:
Net Investment Income		(6	)		(20	)
Net Realized Gain		—			(586	)
Class C:
Net Investment Income		(—	@)		(—	@)
Net Realized Gain		—			(11	)
Class IS:
Net Investment Income		(533	)		(2,237	)
Net Realized Gain		—			(20,229	)
Total Distributions		(2,840	)		(135,231	)
Capital Share Transactions:(1)
Class I:
Subscribed		48,377			111,705
Distributions Reinvested		2,021			96,912
Redeemed		(152,421	)		(458,721	)
Class A:
Subscribed		12,189			22,527
Distributions Reinvested		252			13,932
Redeemed		(15,747	)		(44,080	)
Class L:
Subscribed		4			164
Distributions Reinvested		6			601
Redeemed		(281	)		(1,151	)
Class C:
Subscribed		101			92	*
Distributions Reinvested		—	@		10	*
Redeemed		(17	)		—
Class IS:
Subscribed		41,010			232,226
Distributions Reinvested		—	@		—	@
Redeemed		(17,148	)		(60,663	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(81,654	)		(86,446	)
Total Decrease in Net Assets		(3,588	)		(201,468	)
Net Assets:
Beginning of Period		859,215			1,060,683
End of Period (Including Accumulated Undistributed Net Investment Income of $18,515 and $4,521)	$	855,627		$	859,215

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

U.S. Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		2,657			5,439
Shares Issued on Distributions Reinvested		108			5,342
Shares Redeemed		(8,290	)		(22,044	)
Net Decrease in Class I Shares Outstanding		(5,525	)		(11,263	)
Class A:
Shares Subscribed		692			1,132
Shares Issued on Distributions Reinvested		14			788
Shares Redeemed		(902	)		(2,260	)
Net Decrease in Class A Shares Outstanding		(196	)		(340	)
Class L:
Shares Subscribed		—	@@		8
Shares Issued on Distributions Reinvested		—	@@		34
Shares Redeemed		(16	)		(58	)
Net Decrease in Class L Shares Outstanding		(16	)		(16	)
Class C:
Shares Subscribed		6			4	*
Shares Issued on Distributions Reinvested		—	@@		1	*
Shares Redeemed		(1	)		—
Net Increase in Class C Shares Outstanding		5			5
Class IS:
Shares Subscribed		2,239			10,956
Shares Issued on Distributions Reinvested		—	@@		—	@@
Shares Redeemed		(960	)		(3,025	)
Net Increase in Class IS Shares Outstanding		1,279			7,931

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

U.S. Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	17.86		$	20.48		$	16.55		$	16.93		$	14.99		$	14.33
Income from Investment Operations:
Net Investment Income†		0.37			0.32			0.36			0.27			0.24			0.11
Net Realized and Unrealized Gain		1.44			0.10			4.66			0.14			2.19			0.69
Total from Investment Operations		1.81			0.42			5.02			0.41			2.43			0.80
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.26	)		(0.35	)		(0.20	)		(0.20	)		(0.14	)
Net Realized Gain		—			(2.78	)		(0.74	)		(0.59	)		(0.29	)		—
Total Distributions		(0.07	)		(3.04	)		(1.09	)		(0.79	)		(0.49	)		(0.14	)
Net Asset Value, End of Period	$	19.60		$	17.86		$	20.48		$	16.55		$	16.93		$	14.99
Total Return++		10.12	%#		2.27	%		30.74	%		2.45	%		16.26	%		5.57	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	578,643		$	625,999		$	948,311		$	797,933		$	826,420		$	773,138
Ratio of Expenses to Average Net Assets (1)		1.00	%+*		0.98	%+		0.95	%+		1.01	%+		0.98	%+		1.01	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			0.98	%+		0.94	%+		1.00	%+		0.97	%+		1.00	%+
Ratio of Net Investment Income to Average Net Assets (1)		4.18	%+*		1.61	%+		1.90	%+		1.51	%+		2.45	%+		0.76	%+
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		11	%#		24	%		25	%		24	%		22	%		21	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.00	%*		N/A			N/A			1.03	%		N/A			1.03	%
Net Investment Income to Average Net Assets		4.18	%*		N/A			N/A			1.49	%		N/A			0.74	%

†  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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

U.S. Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	17.42		$	20.04		$	16.21		$	16.60		$	14.70		$	14.07
Income from Investment Operations:
Net Investment Income†		0.33			0.28			0.29			0.23			0.19			0.08
Net Realized and Unrealized Gain		1.40			0.08			4.56			0.12			2.16			0.66
Total from Investment Operations		1.73			0.36			4.85			0.35			2.35			0.74
Distributions from and/or in Excess of:
Net Investment Income		(0.05	)		(0.20	)		(0.28	)		(0.15	)		(0.16	)		(0.11	)
Net Realized Gain		-—			(2.78	)		(0.74	)		(0.59	)		(0.29	)		—
Total Distributions		(0.05	)		(2.98	)		(1.02	)		(0.74	)		(0.45	)		(0.11	)
Net Asset Value, End of Period	$	19.10		$	17.42		$	20.04		$	16.21		$	16.60		$	14.70
Total Return++		9.95	%#		2.01	%		30.28	%		2.14	%		16.02	%		5.26	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	92,143		$	87,462		$	107,441		$	101,325		$	92,240		$	92,047
Ratio of Expenses to Average Net Assets (1)		1.30	%+*		1.28	%+		1.31	%+		1.28	%+^		1.23	%+		1.26	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.28	%+		1.30	%+		1.27	%+^		1.22	%+		1.25	%+
Ratio of Net Investment Income to Average Net Assets (1)		3.76	%+*		1.43	%+		1.54	%+		1.35	%+		2.20	%+		0.54	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		11	%#		24	%		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			N/A			1.29	%		N/A			1.28	%
Net Investment Income to Average Net Assets		N/A			N/A			N/A			1.34	%		N/A			0.52	%

†  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

U.S. Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from November 11, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	17.41		$	20.03		$	16.20		$	16.59		$	14.69		$	14.52
Income from Investment Operations:
Net Investment Income†		0.28			0.21			0.20			0.13			0.10			0.06
Net Realized and Unrealized Gain		1.40			0.04			4.56			0.13			2.16			0.11
Total from Investment Operations		1.68			0.25			4.76			0.26			2.26			0.17
Distributions from and/or in Excess of:
Net Investment Income		(0.03	)		(0.09	)		(0.19	)		(0.06	)		(0.07	)		—
Net Realized Gain		—			(2.78	)		(0.74	)		(0.59	)		(0.29	)		—
Total Distributions		(0.03	)		(2.87	)		(0.93	)		(0.65	)		(0.36	)		—
Net Asset Value, End of Period	$	19.06		$	17.41		$	20.03		$	16.20		$	16.59		$	14.69
Total Return++		9.65	%#		1.44	%		29.68	%		1.62	%		15.44	%		1.17	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,076		$	3,993		$	4,919		$	4,462		$	4,975		$	5,879
Ratio of Expenses to Average Net Assets (1)		1.84	%+*		1.82	%+		1.79	%+		1.78	%+^^		1.73	%+		1.75	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.81	%+		1.78	%+		1.77	%+^^		1.72	%+		N/A
Ratio of Net Investment Income to Average Net Assets (1)		3.24	%+*		1.08	%+		1.06	%+		0.73	%+		1.70	%+		3.33	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		11	%#		24	%		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			N/A			1.79	%		N/A			1.91	%+*
Net Investment Income to Average Net Assets		N/A			N/A			N/A			0.72	%		N/A			3.17	%+*

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

U.S. Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	17.36		$	19.73
Income from Investment Operations:
Net Investment Income†		0.26			0.18
Net Realized and Unrealized Gain		1.40			0.31
Total from Investment Operations		1.66			0.49
Distributions from and/or in Excess of:
Net Investment Income		(0.03	)		(0.08	)
Net Realized Gain		—			(2.78	)
Total Distributions		(0.03	)		(2.86	)
Net Asset Value, End of Period	$	18.99		$	17.36
Total Return++		9.56	%#		2.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	191		$	91
Ratio of Expenses to Average Net Assets (1)		2.10	%+*		2.10	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			2.10	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.96	%+*		1.44	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		11	%#		24	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.33	%*		5.89	%*
Net Investment Income (Loss) to Average Net Assets		1.73	%*		(2.35	)%*

^  Commencement of Offering.

†  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, 2016

Financial Highlights

U.S. Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	17.86		$	20.48		$	16.55		$	17.13
Income from Investment Operations:
Net Investment Income†		0.37			0.36			0.38			0.03
Net Realized and Unrealized Gain		1.45			0.08			4.65			0.01
Total from Investment Operations		1.82			0.44			5.03			0.04
Distributions from and/or in Excess of:
Net Investment Income		(0.07	)		(0.28	)		(0.36	)		(0.11	)
Net Realized Gain		—			(2.78	)		(0.74	)		(0.51	)
Total Distributions		(0.07	)		(3.06	)		(1.10	)		(0.62	)
Net Asset Value, End of Period	$	19.61		$	17.86		$	20.48		$	16.55
Total Return++		10.20	%#		2.36	%		30.82	%		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	180,574		$	141,670		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		0.90	%+*		0.90	%+		0.89	%+		0.90	%^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			0.90	%+		0.88	%+		0.89	%^^*
Ratio of Net Investment Income to Average Net Assets (1)		4.11	%+*		1.81	%+		1.96	%+		0.52	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		N/A
Portfolio Turnover Rate		11	%#		24	%		25	%		24	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.90	%		20.21	%		6.19	%*
Net Investment Income (Loss) to Average Net Assets		N/A			1.81	%		(17.36	)%		(4.77	)%*

^  Commencement of Offering.

†  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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the

relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	152,030	$	—	$	—	$	152,030
Data Centers		4,629		—		—		4,629
Diversified		61,025		—		—		61,025
Health Care		65,811		—		—		65,811
Industrial		25,629		—		10,928		36,557
Lodging/Resorts		84,926		—		—		84,926
Manufactured Homes		2,938		—		—		2,938
Office		87,431		—		4,704		92,135
Regional Malls		163,234		—		—		163,234
Retail Free Standing		23,654		—		—		23,654
Self Storage		47,594		—		—		47,594
Shopping Centers		85,102		—		—		85,102
Single Family Homes		1,379		—		—		1,379
Specialty		4,752		—		—		4,752
Total Common Stocks		810,134		—		15,632		825,766
Short-Term Investment
Investment Company		22,692		—		—		22,692
Total Assets	$	832,826	$	—	$	15,632	$	848,458

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, 2016, 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	$	15,704
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		(979	)
Change in unrealized appreciation (depreciation)		907
Realized gains (losses)		—
Ending Balance	$	15,632
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	907

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, 2016.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input
Industrial
Common Stocks	$	10,928	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	$	4,704	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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, LP, 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, 2016, BRCP REIT I, LP 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, LP, 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, 2016, BRCP REIT II, LP 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, 2016, 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, 2016, 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016, the advisory fee rate (net of rebate) was equivalent to an annual effective rate of 0.78% 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 as 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, 2016, approximately $29,000 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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $90,367,000 and $175,639,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $10,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	12,619	$	82,554	$	72,481	$	15	$	22,692

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	13,888	$	121,343	$	17,600	$	37,672

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 and a dividend redesignation, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(446	)	$	460	$	(14	)

At December 31, 2015, 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)
$	4,933	$	12,565

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 43.5%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 but below its peer group average for the five-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 Broadridge. 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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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.

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Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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

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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.

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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.

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSREASAN
1559395 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Small Company Growth Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	7
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	12
Notes to Financial Statements	16
Investment Advisory Agreement Approval	28
Privacy Notice	30
Director and Officer Information	33

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	984.70	$	1,019.64	$	5.18	$	5.27		1.05	%
Small Company Growth Portfolio Class A		1,000.00		983.70		1,017.90		6.91		7.02		1.40
Small Company Growth Portfolio Class L		1,000.00		981.50		1,015.42		9.36		9.52		1.90
Small Company Growth Portfolio Class IS		1,000.00		985.50		1,019.99		4.84		4.92		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Small Company Growth Portfolio

	Shares		Value (000)
Common Stocks (86.3%)
Aerospace & Defense (3.8%)
BWX Technologies, Inc.		1,103,541	$	39,474
Biotechnology (2.3%)
Agios Pharmaceuticals, Inc. (a)(b)		60,225		2,523
Alnylam Pharmaceuticals, Inc. (a)		47,310		2,625
Bellicum Pharmaceuticals, Inc. (a)(b)		265,176		3,437
Editas Medicine, Inc. (a)(b)		164,669		4,018
Intellia Therapeutics, Inc. (a)(b)		199,645		4,263
Intrexon Corp. (a)(b)		176,320		4,339
Juno Therapeutics, Inc. (a)(b)		64,496		2,479
				23,684
Capital Markets (2.5%)
Artisan Partners Asset Management, Inc., Class A		326,124		9,027
Financial Engines, Inc.		305,281		7,898
WisdomTree Investments, Inc. (b)		901,114		8,822
				25,747
Chemicals (0.4%)
Platform Specialty Products Corp. (a)		487,136		4,326
Consumer Finance (0.4%)
LendingClub Corp. (a)(b)		1,023,433		4,401
Electronic Equipment, Instruments & Components (1.1%)
Cognex Corp.		140,881		6,072
FARO Technologies, Inc. (a)		138,344		4,680
				10,752
Health Care Equipment & Supplies (1.1%)
Penumbra, Inc. (a)		189,054		11,249
Health Care Providers & Services (1.7%)
HealthEquity, Inc. (a)		591,000		17,957
Health Care Technology (12.0%)
athenahealth, Inc. (a)		360,050		49,690
Castlight Health, Inc., Class B (a)(b)		1,448,856		5,737
Cotiviti Holdings, Inc. (a)		773,711		16,349
Medidata Solutions, Inc. (a)		571,236		26,774
Press Ganey Holdings, Inc. (a)		293,955		11,567
Veeva Systems, Inc., Class A (a)		395,069		13,480
				123,597
Hotels, Restaurants & Leisure (8.6%)
Fiesta Restaurant Group, Inc. (a)		588,240		12,829
Habit Restaurants, Inc. (The) (a)(b)		539,879		8,843
Shake Shack, Inc., Class A (a)(b)		943,957		34,388
Wingstop, Inc. (a)(b)		399,658		10,891
Zoe's Kitchen, Inc. (a)(b)		609,643		22,112
				89,063
Internet & Catalog Retail (4.0%)
Blue Nile, Inc.		144,366		3,953
Etsy, Inc. (a)		988,365		9,478
MakeMyTrip Ltd. (India) (a)		267,756		3,979
Ocado Group PLC (United Kingdom) (a)		2,253,828		6,945
Wayfair, Inc., Class A (a)(b)		428,194		16,700
				41,055

	Shares		Value (000)
Internet Software & Services (19.3%)
Angie's List, Inc. (a)		674,125	$	4,388
Benefitfocus, Inc. (a)(b)		309,892		11,813
Criteo SA ADR (France) (a)		770,788		35,395
GrubHub, Inc. (a)(b)		1,536,974		47,754
Just Eat PLC (United Kingdom) (a)		2,242,767		12,796
New Relic, Inc. (a)		365,117		10,727
Quotient Technology, Inc. (a)(b)		526,970		7,067
Shutterstock, Inc. (a)(b)		374,523		17,153
Twitter, Inc. (a)		841,200		14,225
Zillow Group, Inc., Class A (a)(b)		346,296		12,692
Zillow Group, Inc., Class C (a)(b)		696,559		25,271
				199,281
Machinery (7.5%)
Joy Global, Inc.		1,195,760		25,278
Manitowoc Foodservice, Inc. (a)		1,414,367		24,921
Terex Corp.		1,317,076		26,750
				76,949
Multi-line Retail (2.4%)
Ollie's Bargain Outlet Holdings, Inc. (a)		992,971		24,715
Multi-Utilities (0.0%)
AET&D Holdings No. 1 Ltd. (Australia) (a)(c)(d)		6,682,555		—
Professional Services (6.0%)
Advisory Board Co. (The) (a)		866,375		30,661
CEB, Inc.		239,463		14,770
WageWorks, Inc. (a)		279,773		16,733
				62,164
Software (6.9%)
Ellie Mae, Inc. (a)		111,075		10,180
FleetMatics Group PLC (a)		383,140		16,601
Guidewire Software, Inc. (a)		457,387		28,248
Xero Ltd. (Australia) (a)		304,836		3,978
Zendesk, Inc. (a)		472,250		12,458
				71,465
Specialty Retail (6.3%)
Burlington Stores, Inc. (a)		175,558		11,711
Five Below, Inc. (a)		993,478		46,107
Restoration Hardware Holdings, Inc. (a)(b)		230,391		6,608
				64,426
Total Common Stocks (Cost $756,586)				890,305
Preferred Stocks (8.2%)
Health Care Technology (0.6%)
Grand Rounds, Inc. Series B (a)(c)(d)(e) (acquisition cost — $3,362; acquired 7/3/14)		3,269,139		5,623
Hotels, Restaurants & Leisure (1.6%)
Blue Bottle Coffee, Inc. Series B (a)(c)(d)(e) (acquisition cost — $13,714; acquired 1/24/14)		947,792		16,823

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Small Company Growth Portfolio

	Shares		Value (000)
Internet & Catalog Retail (3.4%)
Flipkart Online Services Pvt Ltd. Series D (a)(c)(d)(e) (acquisition cost — $9,579; acquired 10/4/13)		417,464	$	35,188
Internet Software & Services (0.8%)
Doximity, Inc. Series C (a)(c)(d)(e) (acquisition cost — $8,482; acquired 4/10/14)		1,759,434		8,410
Mode Media Corporation Series M-1 (a)(c)(d)(e) (acquisition cost — $5,449; acquired 3/19/08)		361,920		116
Mode Media Corporation Escrow Series M-1 (a)(c)(d)(e) (acquisition cost — $506; acquired 3/19/08)		51,702		8
				8,534
Software (1.8%)
DOMO, Inc. (a)(c)(d)(e) (acquisition cost — $10,559; acquired 1/31/14 — 2/7/14)		2,554,715		12,876
Lookout, Inc. Series F (a)(c)(d)(e) (acquisition cost — $13,476; acquired 6/17/14)		1,179,743		5,674
				18,550
Tobacco (0.0%)
NJOY, Inc. Series D (a)(c)(d)(e) (acquisition cost — $6,363; acquired 2/14/14)		375,918		169
Total Preferred Stocks (Cost $71,490)				84,887
	Face Amount (000)
Promissory Notes (0.0%)
Internet Software & Services (0.0%)
Mode Media Corporation 9.00%, 12/3/19 (a)(c)(d)(e) (acquisition cost — $2,301; acquired 3/19/08)	$	793		487
Mode Media Corporation Escrow 9.00%, 12/3/19 (a)(c)(d)(e) (acquisition cost — $38; acquired 3/19/08)		29		8
Total Promissory Notes (Cost $2,339)				495
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $517)		111,793		196

	Shares		Value (000)
Short-Term Investments (22.2%)
Securities held as Collateral on Loaned Securities (16.1%)
Investment Company (13.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		133,663,263	$	133,663
	Face Amount (000)
Repurchase Agreements (3.1%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $30,882; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $31,500)	$	30,882		30,882
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $1,261; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $1,286)		1,261		1,261
				32,143
Total Securities held as Collateral on Loaned Securities (Cost $165,806)				165,806
	Shares
Investment Company (6.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $63,315)		63,315,056		63,315
Total Short-Term Investments (Cost $229,121)				229,121
Total Investments (116.7%) (Cost $1,060,053) Including $173,330 of Securities Loaned (f)(g)				1,205,004
Liabilities in Excess of Other Assets (–16.7%)				(172,802	)
Net Assets (100.0%)			$	1,032,202

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2016.

(c)  Security has been deemed illiquid at June 30, 2016.

(d)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $85,382,000, representing 8.3% 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 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, 2016 amounts to approximately $85,382,000 and represents 8.3% of net assets.

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Small Company Growth Portfolio

(f)  The approximate fair value and percentage of net assets, $23,719,000 and 2.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $208,552,000 and the aggregate gross unrealized depreciation is approximately $63,601,000 resulting in net unrealized appreciation of approximately $144,951,000.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Internet Software & Services		20.0	%
Other**		15.7
Health Care Technology		12.4
Hotels, Restaurants & Leisure		10.2
Software		8.7
Machinery		7.4
Internet & Catalog Retail		7.3
Specialty Retail		6.2
Short-Term Investment		6.1
Professional Services		6.0
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

**  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, 2016 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $863,075)	$	1,008,026
Investment in Security of Affiliated Issuer, at Value (Cost $196,978)		196,978
Total Investments in Securities, at Value (Cost $1,060,053)		1,205,004
Foreign Currency, at Value (Cost $—@)		—	@
Receivable for Portfolio Shares Sold		433
Dividends Receivable		415
Receivable for Investments Sold		339
Interest Receivable		148
Receivable from Affiliate		1
Other Assets		136
Total Assets		1,206,476
Liabilities:
Collateral on Securities Loaned, at Value		165,806
Payable for Portfolio Shares Redeemed		5,464
Payable for Advisory Fees		2,151
Due to Broker		320
Payable for Sub Transfer Agency Fees — Class I		219
Payable for Sub Transfer Agency Fees — Class A		45
Payable for Sub Transfer Agency Fees — Class L		1
Payable for Administration Fees		71
Payable for Professional Fees		32
Payable for Shareholder Services Fees — Class A		25
Payable for Distribution and Shareholder Services Fees — Class L		1
Payable for Directors' Fees and Expenses		13
Payable for Transfer Agency Fees — Class I		6
Payable for Transfer Agency Fees — Class A		4
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Custodian Fees		6
Other Liabilities		110
Total Liabilities		174,274
Net Assets	$	1,032,202
Net Assets Consist Of:
Paid-in-Capital	$	918,328
Accumulated Net Investment Income		17
Accumulated Net Realized Loss		(31,094	)
Unrealized Appreciation (Depreciation) on:
Investments		144,951
Foreign Currency Translations		(—	@)
Net Assets	$	1,032,202

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Small Company Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	486,971
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		35,958,387
Net Asset Value, Offering and Redemption Price Per Share	$	13.54
CLASS A:
Net Assets	$	118,736
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		9,856,871
Net Asset Value, Redemption Price Per Share	$	12.05
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.67
Maximum Offering Price Per Share	$	12.72
CLASS L:
Net Assets	$	1,691
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		144,604
Net Asset Value, Offering and Redemption Price Per Share	$	11.70
CLASS IS:
Net Assets	$	424,804
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		31,302,354
Net Asset Value, Offering and Redemption Price Per Share	$	13.57
(1) Including: Securities on Loan, at Value:	$	173,330

@  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, 2016 (unaudited)

Small Company Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Income from Securities Loaned — Net	$	5,608
Dividends from Securities of Unaffiliated Issuers		1,634
Dividends from Securities of Affiliated Issuer (Note G)		90
Total Investment Income		7,332
Expenses:
Advisory Fees (Note B)		5,332
Sub Transfer Agency Fees — Class I		498
Sub Transfer Agency Fees — Class A		99
Sub Transfer Agency Fees — Class L		3
Administration Fees (Note C)		469
Shareholder Services Fees — Class A (Note D)		149
Distribution and Shareholder Services Fees — Class L (Note D)		6
Shareholder Reporting Fees		58
Professional Fees		52
Custodian Fees (Note F)		50
Registration Fees		41
Transfer Agency Fees — Class I (Note E)		11
Transfer Agency Fees — Class A (Note E)		8
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class IS (Note E)		2
Directors' Fees and Expenses		16
Pricing Fees		3
Other Expenses		26
Total Expenses		6,824
Reimbursement of Class Specific Expenses — Class I (Note B)		(312	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(6	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(2	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Waiver of Advisory Fees (Note B)		(302	)
Rebate from Morgan Stanley Affiliate (Note G)		(28	)
Net Expenses		6,173
Net Investment Income		1,159
Realized Gain (Loss):
Investments Sold		(26,820	)
Foreign Currency Transactions		4
Net Realized Loss		(26,816	)
Change in Unrealized Appreciation (Depreciation):
Investments		(28,968	)
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		(28,968	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(55,784	)
Net Decrease in Net Assets Resulting from Operations	$	(54,625	)

@  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, 2016

Small Company Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	1,159		$	(5,406	)
Net Realized Gain (Loss)		(26,816	)		118,987
Net Change in Unrealized Appreciation (Depreciation)		(28,968	)		(280,693	)
Net Decrease in Net Assets Resulting from Operations		(54,625	)		(167,112	)
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(63,449	)
Class A:
Net Realized Gain		—			(12,300	)
Class L:
Net Realized Gain		—			(174	)
Class IS:
Net Realized Gain		—			(50,360	)
Total Distributions		—			(126,283	)
Capital Share Transactions:(1)
Class I:
Subscribed		44,014			118,065
Distributions Reinvested		—			53,646
Redeemed		(253,398	)		(462,723	)
Class A:
Subscribed		5,767			16,043
Distributions Reinvested		—			12,255
Redeemed		(20,745	)		(50,786	)
Class L:
Subscribed		—			9
Distributions Reinvested		—			173
Redeemed		(139	)		(290	)
Class IS:
Subscribed		31,944			250,791
Distributions Reinvested		—			49,812
Redeemed		(237,635	)		(194,000	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(430,192	)		(207,005	)
Redemption Fees		4			41
Total Decrease in Net Assets		(484,813	)		(500,359	)
Net Assets:
Beginning of Period		1,517,015			2,017,374
End of Period (Including Accumulated Net Investment Income and Accumulated Net Investment Loss of $17 and $(1,142), respectively)	$	1,032,202		$	1,517,015

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Small Company Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		3,504			7,216
Shares Issued on Distributions Reinvested		—			3,848
Shares Redeemed		(19,801	)		(28,933	)
Net Decrease in Class I Shares Outstanding		(16,297	)		(17,869	)
Class A:
Shares Subscribed		525			1,079
Shares Issued on Distributions Reinvested		—			986
Shares Redeemed		(1,822	)		(3,426	)
Net Decrease in Class A Shares Outstanding		(1,297	)		(1,361	)
Class L:
Shares Subscribed		—			1
Shares Issued on Distributions Reinvested		—			14
Shares Redeemed		(13	)		(20	)
Net Decrease in Class L Shares Outstanding		(13	)		(5	)
Class IS:
Shares Subscribed		2,584			15,424
Shares Issued on Distributions Reinvested		—			3,570
Shares Redeemed		(19,219	)		(11,750	)
Net Increase (Decrease) in Class IS Shares Outstanding		(16,635	)		7,244

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Small Company Growth Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	13.75		$	16.50		$	20.55		$	14.16		$	12.64		$	14.17
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.05	)		(0.06	)		(0.09	)		(0.03	)		(0.04	)
Net Realized and Unrealized Gain (Loss)		(0.22	)		(1.51	)		(2.04	)		8.77			2.19			(1.25	)
Total from Investment Operations		(0.21	)		(1.56	)		(2.10	)		8.68			2.16			(1.29	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.19	)		(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	$	13.54		$	13.75		$	16.50		$	20.55		$	14.16		$	12.64
Total Return++		(1.53	)%#		(9.58	)%		(9.68	)%		62.26	%		17.10	%		(9.12	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	486,971		$	718,386		$	1,156,812		$	2,017,558		$	1,143,640		$	1,074,392
Ratio of Expenses to Average Net Assets (1)		1.05	%+*		1.05	%+		1.05	%+		1.04	%+		1.05	%+		1.05	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.05	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.21	%+*		(0.29	)%+		(0.34	)%+		(0.49	)%+		(0.20	)%+		(0.29	)%+
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		22	%#		42	%		53	%		43	%		22	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.21	%*		1.11	%		1.13	%		1.08	%		1.12	%		1.10	%
Net Investment Income (Loss) to Average Net Assets		0.05	%*		(0.35	)%		(0.42	)%		(0.53	)%		(0.27	)%		(0.34	)%

†  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, 2016

Financial Highlights

Small Company Growth Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.25		$	14.89		$	18.83		$	13.13		$	11.80		$	13.27
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.01	)		(0.09	)		(0.11	)		(0.13	)		(0.06	)		(0.07	)
Net Realized and Unrealized Gain (Loss)		(0.19	)		(1.36	)		(1.88	)		8.12			2.03			(1.16	)
Total from Investment Operations		(0.20	)		(1.45	)		(1.99	)		7.99			1.97			(1.23	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.19	)		(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	$	12.05		$	12.25		$	14.89		$	18.83		$	13.13		$	11.80
Total Return++		(1.63	)%#		(9.88	)%		(9.98	)%		61.88	%		16.70	%		(9.28	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	118,736		$	136,621		$	186,307		$	282,632		$	156,824		$	282,988
Ratio of Expenses to Average Net Assets (1)		1.40	%+*		1.37	%+		1.38	%+		1.31	%+^		1.30	%+		1.30	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			N/A			N/A			1.30	%+
Ratio of Net Investment Loss to Average Net Assets (1)		(0.15	)%+*		(0.61	)%+		(0.67	)%+		(0.75	)%+		(0.45	)%+		(0.54	)%+
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		22	%#		42	%		53	%		43	%		22	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.46	%*		1.38	%		N/A			1.35	%		1.37	%		1.35	%
Net Investment Loss to Average Net Assets		(0.21	)%*		(0.62	)%		N/A			(0.79	)%		(0.52	)%		(0.59	)%

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Small Company Growth Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from November 11, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.92		$	14.60		$	18.60		$	13.06		$	11.79		$	12.47
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.04	)		(0.16	)		(0.19	)		(0.21	)		(0.12	)		(0.01	)
Net Realized and Unrealized Gain (Loss)		(0.18	)		(1.33	)		(1.86	)		8.04			2.03			(0.43	)
Total from Investment Operations		(0.22	)		(1.49	)		(2.05	)		7.83			1.91			(0.44	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.19	)		(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	$	11.70		$	11.92		$	14.60		$	18.60		$	13.06		$	11.79
Total Return++		(1.85	)%#		(10.36	)%		(10.43	)%		60.97	%		16.21	%		(3.54	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,691		$	1,874		$	2,370		$	2,632		$	1,696		$	1,657
Ratio of Expenses to Average Net Assets (1)		1.90	%+*		1.90	%+		1.90	%+		1.83	%+^^		1.80	%+		1.80	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.65	)%+*		(1.13	)%+		(1.16	)%+		(1.27	)%+		(0.95	)%+		(0.77	)%+*
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		22	%#		42	%		53	%		43	%		22	%		26	%*
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.23	%*		2.10	%		2.02	%		1.92	%		1.87	%		1.85	%*
Net Investment Loss to Average Net Assets		(0.98	)%*		(1.34	)%		(1.28	)%		(1.36	)%		(1.02	)%		(0.82	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Small Company Growth Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	13.77		$	16.51		$	20.55		$	19.51
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.02			(0.03	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.22	)		(1.52	)		(2.06	)		3.15
Total from Investment Operations		(0.20	)		(1.55	)		(2.09	)		3.13
Distributions from and/or in Excess of:
Net Realized Gain		—			(1.19	)		(1.95	)		(2.09	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	13.57		$	13.77		$	16.51		$	20.55
Total Return++		(1.45	)%#		(9.52	)%		(9.63	)%		16.50	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	424,804		$	660,134		$	671,885		$	125,351
Ratio of Expenses to Average Net Assets (1)		0.98	%+*		0.98	%+		0.97	%+		0.97	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.28	%+*		(0.21	)%+		(0.17	)%+		(0.30	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		22	%#		42	%		53	%		43	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.03	%*		0.99	%		0.98	%		0.99	%*
Net Investment Income (Loss) to Average Net Assets		0.23	%*		(0.22	)%		(0.18	)%		(0.32	)%*

^  Commencement of Offering.

†  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 0.98% for Class IS shares.

§  Amount is less than 0.005%.

#  Not Annualized.

*  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and

asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	39,474	$	—	$	—		$	39,474
Biotechnology		23,684		—		—			23,684
Capital Markets		25,747		—		—			25,747
Chemicals		4,326		—		—			4,326
Consumer Finance		4,401		—		—			4,401
Electronic Equipment, Instruments & Components		10,752		—		—			10,752
Health Care Equipment & Supplies		11,249		—		—			11,249
Health Care Providers & Services		17,957		—		—			17,957
Health Care Technology		123,597		—		—			123,597
Hotels, Restaurants & Leisure		89,063		—		—			89,063
Internet & Catalog Retail		34,110		6,945		—			41,055
Internet Software & Services		186,485		12,796		—			199,281
Machinery		76,949		—		—			76,949
Multi-line Retail		24,715		—		—			24,715
Multi-Utilities		—		—		—	†		—	†
Professional Services		62,164		—		—			62,164
Software		67,487		3,978		—			71,465
Specialty Retail		64,426		—		—			64,426
Total Common Stocks		866,586		23,719		—	†		890,305	†

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)			Total (000)
Preferred Stocks	$	—	$	—	$	84,887		$	84,887
Promissory Notes		—		—		495			495
Call Option Purchased		—		196		—			196
Short-Term Investments
Investment Company		196,978		—		—			196,978
Repurchase Agreements		—		32,143		—			32,143
Total Short-Term Investments		196,978		32,143		—			229,121
Total Assets	$	1,063,564	$	56,058	$	85,382	†	$	1,205,004	†

†  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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)			Promissory Notes (000)
Beginning Balance	$	7,611	†	$	99,647		$	540
Purchases		—			—			—
Sales		(9,081	)		—			—
Amortization of discount		—			—			(2	)
Transfers in		—			—			—
Transfers out		—			—			—
Corporate actions		—			—			—
Change in unrealized appreciation (depreciation)		(1,782	)		(14,760	)		(43	)
Realized gains (losses)		3,252			—			—
Ending Balance	$	—	†	$	84,887		$	495
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—		$	(14,760	)	$	(43	)

†  Includes one security which is valued at zero.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Health Care Technology
Preferred Stock	$	5,623	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		9.2	x	14.5	x		13.7	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Hotels, Restaurants & Leisure
Preferred Stock	$	16,823	Discounted Cash Flow	Weighted Average Cost of Capital		20.0	%	22.0	%		21.0	%	Decrease
				Perpetual Growth Rate		2.5	%	3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.1	x	4.2	x		3.2	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Internet & Catalog Retail
Preferred Stock	$	35,188	Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%	18.5	%		17.6	%	Decrease
				Perpetual Growth Rate		3.5	%	4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.8	x	3.6	x		2.7	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Internet Software & Services
Preferred Stocks	$	8,410	Discounted Cash Flow	Weighted Average Cost of Capital		23.5	%	25.5	%		24.5	%	Decrease
				Perpetual Growth Rate		3.0	%	4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.4	x	19.8	x		8.6x		Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
		$116	Discounted Cash Flow	Weighted Average Cost of Capital		21.0	%	23.0	%		22.0	%	Decrease
				Perpetual Growth Rate		2.0	%	3.0	%		2.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.3	x	3.4	x		2.1	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	Decrease
Preferred Stock — Escrow	$	8		Discount for Escrow		54.8	%	54.8	%		54.8	%	Decrease

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an Increase in Input
Promissory Note	$	487	Market Transaction Method	Valuation at Issuance as a Percentage of Principal		100.0	%		100.0	%		100	%	Increase
				Cost of Debt		17.7	%		17.7	%		17.7	%	Decrease
				Valuation as a Percentage of Principal		61.3	%		61.3	%		61.3	%	Increase
Promissory Note — Escrow	$	8	Market Transaction Method	Valuation as a Percentage of Principal		27.7	%		27.7	%		27.7	%	Increase
Software
Preferred Stocks	$	12,876	Discounted Cash Flow	Weighted Average Cost of Capital		18.0	%		20.0	%		19.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.0	x		12.2	x		11.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	5,674	Discounted Cash Flow	Weighted Average Cost of Capital		19.0	%		21.0	%		20.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		7.9	x		11.1	x		9.2	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Tobacco
Preferred Stock	$	169	Market Transaction Method	Pending Transaction	$	0.10		$	0.10		$	0.10		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		27.5	%		29.5	%		28.5	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		0.9	x		6.5	x		0.9	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	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, 2016

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 marked-to-market each day with the change in value reflected in

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the

underlying instrument or foreign currency, 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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	196	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)		$(1,006)(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 (Options Purchased)		$(3,774)(c)

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At June 30, 2016, 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)
Option Purchased	$	196	(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, 2016.

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	$	196	$	—	$	(196	)	$	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, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	252,693,000

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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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)
$	173,330	(f)	$	—	$	(173,330	)(g)(h)	$	0

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

(g) The Portfolio received cash collateral of approximately $165,806,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $10,324,000 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.

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	165,806	$	—	$	—	$	—	$	165,806
Total Borrowings	$	165,806	$	—	$	—	$	—	$	165,806
Gross amount of recognized liabilities for securities lending transactions									$	165,806

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.  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.

9.  Redemption Fees: The Portfolio will assess a 2% redemption fee, on Class I shares, Class A shares, Class L

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

10.  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.

11. 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 annually. Net realized capital gains, if any, are distributed at least annually.

12.  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			Next $500 million			Over $2 billion
	0.92	%		0.85	%		0.80	%		0.75	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/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 and 0.98% for Class IS shares. Effective July 1, 2016, the Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual portfolio operating expenses will not exceed 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L 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 as 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, 2016, approximately $302,000 of advisory fees were waived and approximately $321,000 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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $248,170,000 and $681,646,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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,

2016, advisory fees paid were reduced by approximately $28,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	310,562	$	545,807	$	659,391	$	90	$	196,978

During the six months ended June 30, 2016, the Portfolio incurred approximately $29,000 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio engaged in cross-trade purchases of approximately $2,830,000.

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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	—	$	126,283	$	—	$	229,940

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 and basis adjustments on partnerships, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Net Investment Loss (000)		Distributions in Excess of Net Realized Gain (000)		Paid-in- Capital (000)
$	6,538	$	4,024	$	(10,562	)

At December 31, 2015, 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)
$	—	$	17,394

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	1,088	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 44.9%.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

33

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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISCGSAN
1557932 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	7
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	12
Notes to Financial Statements	17
Investment Advisory Agreement Approval	27
Privacy Notice	29
Director and Officer Information	32

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,065.50	$	1,018.90	$	6.16	$	6.02		1.20	%
Emerging Markets Portfolio Class A		1,000.00		1,064.10		1,017.30		7.80		7.62		1.52
Emerging Markets Portfolio Class L		1,000.00		1,061.10		1,014.67		10.51		10.27		2.05
Emerging Markets Portfolio Class C		1,000.00		1,060.20		1,013.43		11.78		11.51		2.30
Emerging Markets Portfolio Class IS		1,000.00		1,066.10		1,019.39		5.65		5.52		1.10

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Emerging Markets Portfolio

	Shares		Value (000)
Common Stocks (97.9%)
Argentina (0.7%)
Banco Macro SA ADR		46,962	$	3,486
Grupo Financiero Galicia SA ADR		102,917		3,143
				6,629
Austria (1.3%)
Erste Group Bank AG (a)		355,605		8,132
Vienna Insurance Group AG Wiener Versicherung Gruppe		178,396		3,382
				11,514
Brazil (6.8%)
Banco Bradesco SA (Preference)		1,477,866		11,585
BRF SA		775,352		10,893
Itau Unibanco Holding SA (Preference)		1,212,430		11,436
Lojas Renner SA		539,338		3,978
MercadoLibre, Inc. (b)		63,946		8,995
Raia Drogasil SA		476,110		9,358
Ultrapar Participacoes SA		257,081		5,691
				61,936
Chile (0.6%)
SACI Falabella		737,524		5,614
China (16.9%)
Alibaba Group Holding Ltd. ADR (a)(b)		129,958		10,336
Bank of China Ltd. H Shares (c)		28,501,000		11,400
China Construction Bank Corp. H Shares (c)		24,267,750		16,127
China Machinery Engineering Corp. H Shares (c)		2,489,000		1,628
China Mengniu Dairy Co., Ltd. (c)		1,788,000		3,133
China Mobile Ltd. (c)		1,790,500		20,680
China Overseas Land & Investment Ltd. (c)		1,652,000		5,272
China Pacific Insurance Group Co., Ltd. H Shares (c)		2,182,600		7,451
China Taiping Insurance Holdings Co., Ltd. (a)(c)		1,221,800		2,298
China Unicom Hong Kong Ltd. (c)		3,578,000		3,713
Chongqing Changan Automobile Co., Ltd. B Shares		901,502		1,262
CRCC High-Tech Equipment Corp., Ltd. H Shares (c)		3,971,000		1,741
CSPC Pharmaceutical Group Ltd. (c)		3,482,000		3,109
Huadian Power International Corp., Ltd. H Shares (c)		3,594,000		1,714
JD.com, Inc. ADR (a)		203,577		4,322
NetEase, Inc. ADR		14,888		2,877
New Oriental Education & Technology Group, Inc. ADR (b)		51,034		2,137
Shanghai Jin Jiang International Hotels Group Co., Ltd. H Shares (b)(c)		3,796,000		1,248
Shenzhen International Holdings Ltd. (c)		1,705,000		2,477
Shenzhou International Group Holdings Ltd. (b)(c)		867,000		4,193
TAL Education Group ADR (a)(b)		54,533		3,384
Tencent Holdings Ltd. (c)		1,670,900		38,066
Yum! Brands, Inc.		64,609		5,358
				153,926

	Shares		Value (000)
Colombia (0.8%)
Cemex Latam Holdings SA (a)		599,961	$	2,588
Grupo de Inversiones Suramericana SA		211,073		2,768
Grupo de Inversiones Suramericana SA (Preference)		161,171		2,073
				7,429
Czech Republic (1.0%)
Komercni Banka AS		242,430		9,084
Egypt (0.4%)
Commercial International Bank Egypt SAE		879,085		3,910
Hong Kong (2.6%)
AIA Group Ltd.		1,834,800		11,056
Samsonite International SA		4,442,400		12,313
				23,369
India (10.8%)
Ashok Leyland Ltd.		7,983,203		11,694
Bharat Petroleum Corp., Ltd.		514,608		8,225
Glenmark Pharmaceuticals Ltd.		331,727		3,929
HDFC Bank Ltd.		485,861		9,849
IndusInd Bank Ltd.		645,902		10,691
Larsen & Toubro Ltd.		425,801		9,487
Marico Ltd.		1,767,051		6,915
Maruti Suzuki India Ltd.		129,463		8,062
Shree Cement Ltd.		48,304		10,449
Shriram Transport Finance Co., Ltd.		613,756		10,965
SKS Microfinance Ltd. (a)		264,315		2,918
Zee Entertainment Enterprises Ltd.		679,687		4,616
				97,800
Indonesia (4.0%)
Bank Mandiri Persero Tbk PT		365,200		265
Bank Negara Indonesia Persero Tbk PT		10,620,300		4,199
Bumi Serpong Damai Tbk PT		23,492,600		3,772
Jasa Marga Persero Tbk PT		7,526,600		3,013
Link Net Tbk PT		10,900,100		3,347
Matahari Department Store Tbk PT		6,211,700		9,431
Semen Indonesia Persero Tbk PT		553,400		393
Surya Citra Media Tbk PT		12,095,200		3,034
United Tractors Tbk PT		3,052,800		3,438
XL Axiata Tbk PT (a)		19,787,000		5,500
				36,392
Korea, Republic of (12.2%)
Amorepacific Corp.		22,601		8,518
CJ CheilJedang Corp.		4,318		1,457
CJ Corp.		15,006		2,645
Cosmax, Inc. (b)		17,067		2,552
Coway Co., Ltd.		72,120		6,555
Hotel Shilla Co., Ltd. (b)		29,892		1,784
Hugel, Inc. (a)		10,039		2,788
Hyundai Development Co-Engineering & Construction		147,155		5,094
Hyundai Wia Corp.		28,501		2,220
Innocean Worldwide, Inc. (b)		42,672		3,009

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

	Shares		Value (000)
Korea, Republic of (cont'd)
Kia Motors Corp.		79,890	$	3,009
Korea Aerospace Industries Ltd.		90,468		5,800
Korea Electric Power Corp.		114,650		6,051
LG Chem Ltd.		16,669		3,812
Mando Corp.		9,166		1,734
NAVER Corp.		12,498		7,771
Nexon Co., Ltd.		342,000		5,024
Samsung Electronics Co., Ltd.		17,150		21,349
Samsung Electronics Co., Ltd. (Preference)		8,777		9,061
Samsung Fire & Marine Insurance Co., Ltd.		17,627		4,034
SK Holdings Co., Ltd.		34,712		6,114
				110,381
Mexico (6.3%)
Alfa SAB de CV		2,747,311		4,723
Alsea SAB de CV		1,179,206		4,489
Cemex SAB de CV ADR (a)		1,457,097		8,990
Fomento Economico Mexicano SAB de CV ADR		176,490		16,324
Grupo Financiero Banorte SAB de CV Series O		2,442,769		13,652
Grupo Financiero Santander Mexico SAB de CV ADR (b)		499,576		4,541
Mexichem SAB de CV		2,102,235		4,432
				57,151
Pakistan (1.4%)
Lucky Cement Ltd.		864,000		5,336
United Bank Ltd.		4,266,800		7,235
				12,571
Panama (0.4%)
Copa Holdings SA, Class A		64,211		3,356
Peru (2.2%)
Cia de Minas Buenaventura SA ADR (a)		448,948		5,365
Credicorp Ltd.		97,846		15,100
				20,465
Philippines (4.3%)
Ayala Corp.		188,110		3,414
BDO Unibank, Inc.		1,637,000		3,908
DMCI Holdings, Inc.		15,428,600		4,156
International Container Terminal Services, Inc.		2,257,810		2,973
LT Group, Inc.		10,778,600		3,649
Metro Pacific Investments Corp.		36,001,500		5,349
Metropolitan Bank & Trust Co.		4,359,987		8,390
SM Investments Corp.		356,670		7,360
				39,199
Poland (3.4%)
Bank Pekao SA		134,085		4,693
CCC SA		135,108		5,496
Eurocash SA		326,532		3,824
Jeronimo Martins SGPS SA		500,386		7,883
LPP SA		2,373		3,041
PKP Cargo SA (a)		121,790		1,024
Polski Koncern Naftowy Orlen SA		260,454		4,557
				30,518

	Shares		Value (000)
Russia (2.0%)
Mail.ru Group Ltd. GDR (a)		287,251	$	5,224
MMC Norilsk Nickel PJSC ADR		317,556		4,227
X5 Retail Group N.V. GDR (a)		146,309		2,905
Yandex N.V., Class A (a)		276,382		6,039
				18,395
South Africa (6.3%)
Clicks Group Ltd.		232,201		1,939
Life Healthcare Group Holdings Ltd. (b)		1,868,484		4,601
Mondi PLC		390,594		7,130
Naspers Ltd., Class N		114,582		17,557
Sasol Ltd.		259,559		7,046
Steinhoff International Holdings N.V. H Shares		1,845,608		10,573
Vodacom Group Ltd. (b)		699,976		8,006
				56,852
Taiwan (9.6%)
Advanced Semiconductor Engineering, Inc.		5,831,000		6,701
Catcher Technology Co., Ltd.		754,000		5,629
Chailease Holding Co., Ltd.		571,088		924
Delta Electronics, Inc.		1,113,557		5,440
E.Sun Financial Holding Co. Ltd.		3,888,000		2,301
Eclat Textile Co., Ltd.		343,657		3,316
Formosa Plastics Corp.		1,040,000		2,512
Fubon Financial Holding Co., Ltd.		2,598,490		3,060
Hon Hai Precision Industry Co., Ltd.		3,619,000		9,312
PChome Online, Inc.		284,000		3,143
Pegatron Corp.		2,305,000		4,885
President Chain Store Corp.		177,000		1,385
Taiwan Mobile Co., Ltd.		1,044,000		3,654
Taiwan Semiconductor Manufacturing Co., Ltd.		4,866,205		24,606
Uni-President Enterprises Corp.		4,173,290		8,233
Yeong Guan Energy Technology Group Co. Ltd.		394,000		2,508
				87,609
Thailand (2.4%)
Central Pattana PCL (Foreign)		1,743,500		2,974
DKSH Holding AG (b)		93,320		6,109
Kasikornbank PCL NVDR		966,500		4,695
Land and Houses PCL (Foreign) (b)		11,940,040		3,084
Minor International PCL (Foreign)		4,486,770		5,147
Sino-Thai Engineering & Construction PCL (Foreign)		164,300		112
				22,121
Turkey (1.2%)
Arcelik AS		864,078		5,700
Ulker Biskuvi Sanayi AS		664,864		4,869
				10,569
United States (0.3%)
Nien Made Enterprise Co., Ltd. (a)		257,000		2,339
Total Common Stocks (Cost $776,446)				889,129

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Portfolio

	Shares		Value (000)
Investment Company (0.4%)
Thailand (0.4%)
BTS Rail Mass Transit Growth Infrastructure Fund (Foreign) (Units) (d) (Cost $3,851)		10,484,829	$	3,758
Short-Term Investments (4.1%)
Securities held as Collateral on Loaned Securities (2.8%)
Investment Company (2.8%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $25,595)		25,595,384		25,595
Investment Company (1.3%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $11,841)		11,841,078		11,841
Total Short-Term Investments (Cost $37,436)				37,436
Total Investments (102.4%) (Cost $817,733) Including $36,625 of Securities Loaned (e)(f)(g)				930,323
Liabilities in Excess of Other Assets (–2.4%)				(22,191	)
Net Assets (100.0%)			$	908,132

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2016.

(c)  Security trades on the Hong Kong exchange.

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

(e)  Securities are available for collateral in connection with an open foreign currency forward exchange contract.

(f)  The approximate fair value and percentage of net assets, $692,096,000 and 76.2%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $176,786,000 and the aggregate gross unrealized depreciation is approximately $64,196,000 resulting in net unrealized appreciation of approximately $112,590,000.

ADR  American Depositary Receipt.

GDR  Global Depositary Receipt.

NVDR  Non-Voting Depositary Receipt.

PJSC  Public Joint Stock Company.

Foreign Currency Forward Exchange Contract:

The Portfolio had the following foreign currency forward exchange contract open at June 30, 2016:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (000)
UBS AG	EUR	16,500	$	18,637	7/21/16	$	315

EUR  —  Euro

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		72.3	%
Banks		18.6
Internet Software & Services		9.1
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

***  Does not include an open foreign currency forward exchange contract with unrealized appreciation of approximately $315,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $780,297)	$	892,887
Investment in Security of Affiliated Issuer, at Value (Cost $37,436)		37,436
Total Investments in Securities, at Value (Cost $817,733)		930,323
Foreign Currency, at Value (Cost $1,980)		1,974
Dividends Receivable		4,621
Receivable for Investments Sold		1,718
Receivable for Portfolio Shares Sold		417
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		315
Tax Reclaim Receivable		165
Receivable from Affiliate		3
Other Assets		139
Total Assets		939,675
Liabilities:
Collateral on Securities Loaned, at Value		25,595
Payable for Investments Purchased		2,168
Payable for Advisory Fees		1,918
Deferred Capital Gain Country Tax		930
Payable for Portfolio Shares Redeemed		282
Payable for Custodian Fees		219
Payable for Sub Transfer Agency Fees — Class I		176
Payable for Sub Transfer Agency Fees — Class A		4
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Directors' Fees and Expenses		80
Payable for Administration Fees		58
Payable for Professional Fees		32
Payable for Transfer Agency Fees — Class I		4
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		—	@
Payable for Shareholder Services Fees — Class A		4
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		72
Total Liabilities		31,543
Net Assets	$	908,132
Net Assets Consist Of:
Paid-in-Capital	$	868,726
Undistributed Net Investment Income		3,749
Accumulated Net Realized Loss		(76,296	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $928 of Deferred Capital Gain Country Tax)		111,662
Foreign Currency Forward Exchange Contracts		315
Foreign Currency Translations		(24	)
Net Assets	$	908,132

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	269,046
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		12,830,615
Net Asset Value, Offering and Redemption Price Per Share	$	20.97
CLASS A:
Net Assets	$	18,689
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		915,243
Net Asset Value, Redemption Price Per Share	$	20.42
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.13
Maximum Offering Price Per Share	$	21.55
CLASS L:
Net Assets	$	240
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		11,899
Net Asset Value, Offering and Redemption Price Per Share	$	20.14
CLASS C:
Net Assets	$	595
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		29,637
Net Asset Value, Offering and Redemption Price Per Share	$	20.09
CLASS IS:
Net Assets	$	619,562
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		29,527,687
Net Asset Value, Offering and Redemption Price Per Share	$	20.98
(1) Including: Securities on Loan, at Value:	$	36,625

@  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, 2016 (unaudited)

Emerging Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,511 of Foreign Taxes Withheld)	$	11,650
Income from Securities Loaned — Net		176
Dividends from Securities of Affiliated Issuer (Note G)		36
Total Investment Income		11,862
Expenses:
Advisory Fees (Note B)		3,832
Custodian Fees (Note F)		381
Administration Fees (Note C)		337
Sub Transfer Agency Fees — Class I		268
Sub Transfer Agency Fees — Class A		13
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Professional Fees		62
Registration Fees		35
Shareholder Services Fees — Class A (Note D)		22
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		1
Shareholder Reporting Fees		23
Transfer Agency Fees — Class I (Note E)		6
Transfer Agency Fees — Class A (Note E)		3
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Directors' Fees and Expenses		10
Pricing Fees		7
Other Expenses		22
Total Expenses		5,026
Reimbursement of Class Specific Expenses — Class I (Note B)		(114	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Waiver of Advisory Fees (Note B)		(73	)
Rebate from Morgan Stanley Affiliate (Note G)		(11	)
Net Expenses		4,825
Net Investment Income		7,037
Realized Gain (Loss):
Investments Sold		(22,738	)
Foreign Currency Forward Exchange Contracts		(562	)
Foreign Currency Transactions		110
Net Realized Loss		(23,190	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $928)		72,271
Foreign Currency Forward Exchange Contracts		191
Foreign Currency Translations		52
Net Change in Unrealized Appreciation (Depreciation)		72,514
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		49,324
Net Increase in Net Assets Resulting from Operations	$	56,361

@  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, 2016

Emerging Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	7,037		$	6,806
Net Realized Loss		(23,190	)		(41,172	)
Net Change in Unrealized Appreciation (Depreciation)		72,514			(65,235	)
Net Increase (Decrease) in Net Assets Resulting from Operations		56,361			(99,601	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(4,657	)
Class A:
Net Investment Income		—			(96	)
Class L:
Net Investment Income		—			(1	)
Class C:
Net Investment Income		—			(—	@)
Class IS:
Net Investment Income		—			(2,842	)
Total Distributions		—			(7,596	)
Capital Share Transactions:(1)
Class I:
Subscribed		20,010			69,057
Distributions Reinvested		—			4,608
Redeemed		(282,122	)		(119,585	)
Class A:
Subscribed		2,993			6,118
Distributions Reinvested		—			94
Redeemed		(4,310	)		(11,629	)
Class L:
Subscribed		—			106
Distributions Reinvested		—			—	@
Redeemed		—			(57	)
Class C:
Subscribed		546			12	*
Class IS:
Subscribed		289,451			38,438
Distributions Reinvested		—			2,841
Redeemed		(22,762	)		(31,338	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		3,806			(41,335	)
Redemption Fees		1			19
Total Increase (Decrease) in Net Assets		60,168			(148,513	)
Net Assets:
Beginning of Period		847,964			996,477
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $3,749 and $(3,288), respectively)	$	908,132		$	847,964

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,049			3,093
Shares Issued on Distributions Reinvested		—			225
Shares Redeemed		(15,210	)		(5,446	)
Net Decrease in Class I Shares Outstanding		(14,161	)		(2,128	)
Class A:
Shares Subscribed		157			293
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(235	)		(542	)
Net Decrease in Class A Shares Outstanding		(78	)		(244	)
Class L:
Shares Subscribed		—			5
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(3	)
Net Increase in Class L Shares Outstanding		—			2
Class C:
Shares Subscribed		29			1	*
Class IS:
Shares Subscribed		15,582			1,728
Shares Issued on Distributions Reinvested		—			139
Shares Redeemed		(1,170	)		(1,435	)
Net Increase in Class IS Shares Outstanding		14,412			432

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	19.68		$	22.13		$	24.64		$	25.94		$	21.73		$	27.14
Income (Loss) from Investment Operations:
Net Investment Income†		0.13			0.15			0.17			0.20			0.19			0.22
Net Realized and Unrealized Gain (Loss)		1.16			(2.43	)		(1.30	)		(0.44	)		4.19			(5.22	)
Total from Investment Operations		1.29			(2.28	)		(1.13	)		(0.24	)		4.38			(5.00	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.20	)		(0.20	)		(0.17	)		—
Net Realized Gain		—			—			(1.18	)		(0.86	)		—			(0.41	)
Total Distributions		—			(0.17	)		(1.38	)		(1.06	)		(0.17	)		(0.41	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.97		$	19.68		$	22.13		$	24.64		$	25.94		$	21.73
Total Return++		6.55	%#		(10.33	)%		(4.47	)%		(0.80	)%		20.19	%		(18.41	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	269,046		$	531,194		$	644,537		$	1,128,618		$	1,278,837		$	1,198,857
Ratio of Expenses to Average Net Assets (1)		1.20	%+*		1.24	%+^^		1.25	%+		1.24	%+		1.28	%+^		1.48	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			1.24	%+		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		1.35	%+*		0.68	%+		0.68	%+		0.79	%+		0.80	%+^		0.86	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		15	%#		40	%		43	%		49	%		47	%		60	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.29	%*		1.45	%		1.52	%		1.51	%		1.49	%		N/A
Net Investment Income to Average Net Assets		1.26	%*		0.47	%		0.41	%		0.52	%		0.59	%		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 September 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.20% for Class I shares. Prior to September 30, 2015, the maximum ratio was 1.25% for Class I shares.

^  Effective March 1, 2012, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.25% 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	19.19		$	21.57		$	24.02		$	25.31		$	21.20		$	26.56
Income (Loss) from Investment Operations:
Net Investment Income†		0.12			0.07			0.11			0.12			0.14			0.15
Net Realized and Unrealized Gain (Loss)		1.11			(2.36	)		(1.28	)		(0.42	)		4.07			(5.10	)
Total from Investment Operations		1.23			(2.29	)		(1.17	)		(0.30	)		4.21			(4.95	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.09	)		(0.10	)		(0.13	)		(0.10	)		—
Net Realized Gain		—			—			(1.18	)		(0.86	)		—			(0.41	)
Total Distributions		—			(0.09	)		(1.28	)		(0.99	)		(0.10	)		(0.41	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.42		$	19.19		$	21.57		$	24.02		$	25.31		$	21.20
Total Return++		6.41	%#		(10.63	)%		(4.77	)%		(1.07	)%		19.87	%		(18.63	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	18,689		$	19,065		$	26,701		$	35,863		$	40,824		$	46,521
Ratio of Expenses to Average Net Assets (1)		1.52	%+*		1.56	%+^^^		1.57	%+		1.52	%+^^		1.53	%+^		1.73	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			1.52	%+^^		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		1.28	%+*		0.34	%+		0.45	%+		0.49	%+		0.61	%+^		0.61	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.01	%		0.01	%
Portfolio Turnover Rate		15	%#		40	%		43	%		49	%		47	%		60	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.54	%*		1.76	%		1.82	%		1.78	%		1.74	%		N/A
Net Investment Income to Average Net Assets		1.26	%*		0.14	%		0.20	%		0.23	%		0.40	%		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 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.55% for Class A shares. Prior to September 30, 2015, the maximum ratio was 1.60% for Class A shares.

^^  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	18.98		$	21.39		$	23.91		$	25.27		$	23.85
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.07			(0.04	)		(0.05	)		(0.05	)		0.04
Net Realized and Unrealized Gain (Loss)		1.09			(2.33	)		(1.23	)		(0.37	)		1.44
Total from Investment Operations		1.16			(2.37	)		(1.28	)		(0.42	)		1.48
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)		(0.06	)		(0.08	)		(0.06	)
Net Realized Gain		—			—			(1.18	)		(0.86	)		—
Total Distributions		—			(0.04	)		(1.24	)		(0.94	)		(0.06	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.14		$	18.98		$	21.39		$	23.91		$	25.27
Total Return++		6.11	%#		(11.11	)%		(5.26	)%		(1.56	)%		6.20	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	240		$	226		$	210		$	203		$	11
Ratio of Expenses to Average Net Assets (1)		2.05	%+*		2.09	%+^^^		2.10	%+		2.03	%+^^		1.99	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			2.03	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.76	%+*		(0.19	)%+		(0.21	)%+		(0.18	)%+		0.27	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.01	%*
Portfolio Turnover Rate		15	%#		40	%		43	%		49	%		47	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.67	%*		2.78	%		2.97	%		2.54	%		2.28	%*
Net Investment Income (Loss) to Average Net Assets		0.14	%*		(0.88	)%		(1.08	)%		(0.69	)%		(0.02	)%*

^  Commencement of Offering.

†  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 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.05% for Class L shares. Prior to September 30, 2015, the maximum ratio was 2.10% for Class L shares.

^^  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	18.95		$	23.16
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.20			(0.03	)
Net Realized and Unrealized Gain (Loss)		0.94			(4.14	)
Total from Investment Operations		1.14			(4.17	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.09		$	18.95
Total Return++		6.02	%#		(18.03	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	595		$	10
Ratios of Expenses to Average Net Assets (1)		2.30	%+*		2.33	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.04	%+*		(0.23	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		15	%#		40	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.03	%*		22.89	%*
Net Investment Income (Loss) to Average Net Assets		1.31	%*		(20.79	)%*

^  Commencement of Offering.

†  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 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.30% for Class C shares. Prior to September 30, 2015, the maximum ratio was 2.35% for Class C 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, 2016

Financial Highlights

Emerging Markets Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	19.68		$	22.14		$	24.64		$	24.92
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.19			0.17			0.22			(0.01	)
Net Realized and Unrealized Gain (Loss)		1.11			(2.44	)		(1.32	)		0.46
Total from Investment Operations		1.30			(2.27	)		(1.10	)		0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.19	)		(0.22	)		(0.14	)
Net Realized Gain		—			—			(1.18	)		(0.59	)
Total Distributions		—			(0.19	)		(1.40	)		(0.73	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	20.98		$	19.68		$	22.14		$	24.64
Total Return++		6.61	%#		(10.29	)%		(4.36	)%		1.85	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	619,562		$	297,469		$	325,029		$	10
Ratio of Expenses to Average Net Assets (1)		1.10	%+*		1.16	%+^^^		1.18	%+		1.17	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			N/A			1.17	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.89	%+*		0.75	%+		0.89	%+		(0.21	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		15	%#		40	%		43	%		49	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.12	%*		1.35	%		1.42	%		6.65	%*
Net Investment Income (Loss) to Average Net Assets		1.87	%*		0.56	%		0.65	%		(5.69	)%*

^  Commencement of Offering.

†  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 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.10% for Class IS shares. Prior to September 30, 2015, the maximum ratio was 1.18% for Class IS shares.

^^  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.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks long-term capital appreciation by investing primarily in growth-oriented equity securities of issuers in emerging market countries.

Effective June 30, 2016, Morgan Stanley Investment Management Limited is no longer a Sub-Adviser to the Portfolio.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the

valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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, 2016.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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)
Assets:
Common Stocks
Aerospace & Defense	$	—	$	5,800	$	—	$	5,800
Airlines		3,356		—		—		3,356
Auto Components		—		3,954		—		3,954
Automobiles		—		12,333		—		12,333
Banks		62,943		104,879		—		167,822
Beverages		16,324		—		—		16,324
Biotechnology		—		2,788		—		2,788
Chemicals		4,432		6,324		—		10,756
Construction & Engineering		—		16,321		—		16,321
Construction Materials		11,578		16,178		—		27,756
Consumer Finance		—		13,883		—		13,883
Diversified Consumer Services		5,521		—		—		5,521
Diversified Financial Services		4,841		12,747		—		17,588
Diversified Telecommunication Services		—		7,060		—		7,060
Electric Utilities		—		6,051		—		6,051
Electronic Equipment, Instruments & Components		—		14,752		—		14,752
Food & Staples Retailing		9,358		17,936		—		27,294
Food Products		10,893		17,692		—		28,585
Health Care Providers & Services		—		4,601		—		4,601
Hotels, Restaurants & Leisure		9,847		6,395		—		16,242
Household Durables		—		25,167		—		25,167
Independent Power Producers & Energy Traders		—		1,714		—		1,714
Industrial Conglomerates		4,723		23,924		—		28,647
Insurance		—		28,221		—		28,221
Internet & Catalog Retail		4,322		—		—		4,322
Internet Software & Services		28,247		54,204		—		82,451
Machinery		—		13,435		—		13,435
Media		—		28,216		—		28,216
Metals & Mining		5,365		6,735		—		12,100
Multi-line Retail		9,592		9,431		—		19,023
Oil, Gas & Consumable Fuels		5,691		23,266		—		28,957
Paper & Forest Products		—		7,130		—		7,130
Personal Products		—		17,985		—		17,985
Pharmaceuticals		—		7,038		—		7,038
Professional Services		—		6,109		—		6,109
Real Estate Management & Development		—		15,102		—		15,102
Road & Rail		—		1,024		—		1,024
Semiconductors & Semiconductor Equipment		—		31,307		—		31,307
Software		—		5,024		—		5,024
Specialty Retail		—		1,784		—		1,784
Tech Hardware, Storage & Peripherals		—		40,924		—		40,924

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Textiles, Apparel & Luxury Goods	$	—	$	28,359	$	—	$	28,359
Transportation Infrastructure		—		8,463		—		8,463
Wireless Telecommunication Services		—		37,840		—		37,840
Total Common Stocks		197,033		692,096		—		889,129
Investment Company		—		3,758		—		3,758
Short-Term Investments
Investment Company		37,436		—		—		37,436
Foreign Currency Forward Exchange Contract		—		315		—		315
Total Assets	$	234,469	$	696,169	$	—	$	930,638

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, 2016, securities with a total value of approximately $12,313,000 transferred from Level 1 to Level 2. Securities that were valued using unadjusted quoted prices at December 31, 2015 were valued using other significant observable inputs at June 30, 2016. As of June 30, 2016, securities with a total value of approximately $62,006,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

	Common Stock (000)
Beginning Balance	$	3,114
Purchases		—
Sales		(1,974	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(91	)
Realized gains (losses)		(1,049	)
Ending Balance	$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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, 2016.

	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	$	315

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(562	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	191

At June 30, 2016, 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	$	315	$	—

(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, 2016.

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	$	315	$	—	$	—	$	315

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	21,679,000

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,

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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)
$	36,625	(b)	$	—	$	(36,625	)(c)(d)	$	0

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

(c) The Portfolio received cash collateral of approximately $25,595,000, which was subsequently invested in Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $11,594,000 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.

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	25,595	$	—	$	—	$	—	$	25,595
Total Borrowings	$	25,595	$	—	$	—	$	—	$	25,595
Gross amount of recognized liabilities for securities lending transactions									$	25,595

6.  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.

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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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
	0.95	%		0.85	%		0.80	%		0.75	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.89% 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, 2.05% for Class L shares, 2.30% for Class C shares and 1.10% 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 as 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, 2016, approximately $73,000 of advisory fees were waived and approximately $117,000 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 Sub-Advisers 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $140,541,000 and $126,570,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $11,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	43,038	$	108,517	$	114,119	$	36	$	37,436

During the six months ended June 30, 2016, the Portfolio incurred approximately $6,000 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to

procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	7,596	$	—	$	8,694	$	50,634

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, 2015:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	565	$	(565	)	$	—

At December 31, 2015, 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)
$	111	$	—

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $33,080,000 and long-term capital losses of approximately $13,941,000 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. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed,

unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 63.0%.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 lower than its peer group average, while its actual management fee and total expense ratio were higher than 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 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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMSAN
1559362 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Growth Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	27
Privacy Notice	29
Director and Officer Information	32

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Growth Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	959.90	$	1,021.73	$	3.07	$	3.17		0.63	%
Growth Portfolio Class A		1,000.00		958.50		1,020.29		4.48		4.62		0.92
Growth Portfolio Class L		1,000.00		956.00		1,017.55		7.15		7.37		1.47
Growth Portfolio Class C		1,000.00		955.20		1,016.76		7.92		8.17		1.63
Growth Portfolio Class IS		1,000.00		960.30		1,022.18		2.63		2.72		0.54

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Growth Portfolio

	Shares		Value (000)
Common Stocks (94.3%)
Aerospace & Defense (1.6%)
United Technologies Corp.		518,150	$	53,136
Automobiles (4.4%)
Tesla Motors, Inc. (a)(b)		704,479		149,547
Beverages (1.2%)
Monster Beverage Corp. (a)		256,240		41,180
Biotechnology (0.9%)
Alnylam Pharmaceuticals, Inc. (a)		184,894		10,260
Intrexon Corp. (a)(b)		448,885		11,047
Juno Therapeutics, Inc. (a)(b)		228,759		8,793
				30,100
Diversified Financial Services (5.0%)
S&P Global, Inc.		1,574,392		168,869
Food Products (3.6%)
Mead Johnson Nutrition Co.		1,355,105		122,976
Health Care Equipment & Supplies (5.2%)
Intuitive Surgical, Inc. (a)		267,462		176,902
Health Care Technology (1.6%)
athenahealth, Inc. (a)		400,819		55,317
Information Technology Services (7.0%)
Mastercard, Inc., Class A		1,574,430		138,644
Visa, Inc., Class A		1,311,515		97,275
				235,919
Internet & Catalog Retail (15.2%)
Amazon.com, Inc. (a)		455,612		326,045
JD.com, Inc. ADR (China) (a)		1,419,075		30,127
Netflix, Inc. (a)		867,625		79,370
Priceline Group, Inc. (The) (Netherlands) (a)		62,649		78,212
				513,754
Internet Software & Services (20.5%)
Alphabet, Inc., Class C (a)		242,429		167,785
Facebook, Inc., Class A (a)		2,662,710		304,295
LinkedIn Corp., Class A (a)		526,403		99,622
Tencent Holdings Ltd. (China) (c)		1,828,500		41,656
Twitter, Inc. (a)		4,643,543		78,522
				691,880
Life Sciences Tools & Services (5.1%)
Illumina, Inc. (a)		1,214,166		170,445
Pharmaceuticals (3.3%)
Zoetis, Inc.		2,329,773		110,571
Semiconductors & Semiconductor Equipment (0.7%)
NVIDIA Corp.		482,447		22,680
Software (10.8%)
Mobileye N.V. (a)(b)		461,856		21,310
Salesforce.com, Inc. (a)		2,216,956		176,048
Splunk, Inc. (a)		912,914		49,462
Workday, Inc., Class A (a)		1,584,854		118,341
				365,161

	Shares		Value (000)
Tech Hardware, Storage & Peripherals (6.7%)
Apple, Inc.		2,358,185	$	225,443
Textiles, Apparel & Luxury Goods (1.5%)
Michael Kors Holdings Ltd. (a)		1,050,000		51,954
Total Common Stocks (Cost $2,053,820)				3,185,834
Preferred Stocks (4.2%)
Electronic Equipment, Instruments & Components (0.6%)
Magic Leap Series C (a)(d)(e)(f) (acquisition cost — $18,812; acquired 12/22/15)		816,725		18,956
Internet & Catalog Retail (3.5%)
Airbnb, Inc. Series D (a)(d)(e)(f) (acquisition cost — $20,638; acquired 4/16/14)		506,928		45,897
Flipkart Online Services Pvt Ltd. Series F (a)(d)(e)(f) (acquisition cost — $15,000; acquired 8/18/14)		207,900		17,524
Uber Technologies Series G (a)(d)(e)(f) (acquisition cost — $54,173; acquired 12/3/15)		1,110,729		54,173
				117,594
Internet Software & Services (0.1%)
Dropbox, Inc. Series C (a)(d)(e)(f) (acquisition cost — $7,182; acquired 1/30/14)		375,979		4,482
Total Preferred Stocks (Cost $115,805)				141,032
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $1,794)		388,198		682
	Shares
Short-Term Investments (5.6%)
Securities held as Collateral on Loaned Securities (3.9%)
Investment Company (3.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		106,671,040		106,671
	Face Amount (000)
Repurchase Agreements (0.8%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $24,646; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $25,139)	$	24,646		24,646

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Growth Portfolio

	Face Amount (000)		Value (000)
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $1,006; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $1,026)	$	1,006	$	1,006
				25,652
Total Securities held as Collateral on Loaned Securities (Cost $132,323)				132,323
	Shares
Investment Company (1.7%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $58,428)		58,428,054		58,428
Total Short-Term Investments (Cost $190,751)				190,751
Total Investments (104.1%) (Cost $2,362,170) Including $182,549 of Securities Loaned (g)(h)				3,518,299
Liabilities in Excess of Other Assets (–4.1%)				(137,299	)
Net Assets (100.0%)			$	3,381,000

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2016.

(c)  Security trades on the Hong Kong exchange.

(d)  Security has been deemed illiquid at June 30, 2016.

(e)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $141,032,000, representing 4.2% 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.

(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, 2016 amounts to $141,032,000 and represents 4.2% of net assets.

(g)  The approximate fair value and percentage of net assets, $41,656,000 and 1.2%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(h)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,302,321,000 and the aggregate gross unrealized depreciation is approximately $146,192,000 resulting in net unrealized appreciation of approximately $1,156,129,000.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		21.1	%
Internet Software & Services		20.6
Internet & Catalog Retail		18.6
Software		10.8
Information Technology Services		7.0
Tech Hardware, Storage & Peripherals		6.7
Health Care Equipment & Supplies		5.2
Life Sciences Tools & Services		5.0
Diversified Financial Services		5.0
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $2,197,071)	$	3,353,200
Investment in Security of Affiliated Issuer, at Value (Cost $165,099)		165,099
Total Investments in Securities, at Value (Cost $2,362,170)		3,518,299
Dividends Receivable		1,459
Receivable for Portfolio Shares Sold		1,212
Tax Reclaim Receivable		493
Receivable from Affiliate		9
Other Assets		253
Total Assets		3,521,725
Liabilities:
Collateral on Securities Loaned, at Value		132,323
Payable for Advisory Fees		3,675
Payable for Portfolio Shares Redeemed		2,615
Due to Broker		770
Payable for Shareholder Services Fees — Class A		316
Payable for Distribution and Shareholder Services Fees — Class L		50
Payable for Distribution and Shareholder Services Fees — Class C		14
Payable for Sub Transfer Agency Fees — Class I		94
Payable for Sub Transfer Agency Fees — Class A		159
Payable for Sub Transfer Agency Fees — Class L		31
Payable for Administration Fees		225
Payable for Transfer Agency Fees — Class I		8
Payable for Transfer Agency Fees — Class A		76
Payable for Transfer Agency Fees — Class L		7
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		33
Payable for Professional Fees		22
Other Liabilities		245
Total Liabilities		140,725
Net Assets	$	3,381,000
Net Assets Consist of:
Paid-in-Capital	$	2,020,127
Accumulated Net Investment Loss		(1,791	)
Accumulated Net Realized Gain		206,535
Unrealized Appreciation (Depreciation) on:
Investments		1,156,129
Net Assets	$	3,381,000

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Growth Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	793,774
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		20,449,522
Net Asset Value, Offering and Redemption Price Per Share	$	38.82
CLASS A:
Net Assets	$	1,528,918
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		40,578,539
Net Asset Value, Redemption Price Per Share	$	37.68
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	2.09
Maximum Offering Price Per Share	$	39.77
CLASS L:
Net Assets	$	79,751
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,171,923
Net Asset Value, Offering and Redemption Price Per Share	$	36.72
CLASS C:
Net Assets	$	16,338
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		445,364
Net Asset Value, Offering and Redemption Price Per Share	$	36.68
CLASS IS:
Net Assets	$	962,219
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		24,715,025
Net Asset Value, Offering and Redemption Price Per Share	$	38.93
(1) Including: Securities on Loan, at Value:	$	182,549

@  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, 2016 (unaudited)

Growth Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers	$	7,915
Income from Securities Loaned — Net		3,436
Dividends from Security of Affiliated Issuer (Note G)		186
Total Investment Income		11,537
Expenses:
Advisory Fees (Note B)		7,322
Shareholder Services Fees — Class A (Note D)		1,858
Distribution and Shareholder Services Fees — Class L (Note D)		298
Distribution and Shareholder Services Fees — Class C (Note D)		74
Administration Fees (Note C)		1,333
Sub Transfer Agency Fees — Class I		349
Sub Transfer Agency Fees — Class A		828
Sub Transfer Agency Fees — Class L		60
Sub Transfer Agency Fees — Class C		5
Transfer Agency Fees — Class I (Note E)		24
Transfer Agency Fees — Class A (Note E)		135
Transfer Agency Fees — Class L (Note E)		11
Transfer Agency Fees — Class C (Note E)		2
Transfer Agency Fees — Class IS (Note E)		2
Shareholder Reporting Fees		150
Registration Fees		67
Professional Fees		64
Custodian Fees (Note F)		51
Directors' Fees and Expenses		29
Pricing Fees		2
Other Expenses		50
Total Expenses		12,714
Rebate from Morgan Stanley Affiliate (Note G)		(57	)
Net Expenses		12,657
Net Investment Loss		(1,120	)
Realized Gain:
Investments Sold		12,497
Foreign Currency Transactions		77
Net Realized Gain		12,574
Change in Unrealized Appreciation (Depreciation):
Investments		(159,016	)
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		(146,442	)
Net Decrease in Net Assets Resulting from Operations	$	(147,562	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Growth Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(1,120	)	$	(12,030	)
Net Realized Gain		12,574			440,001
Net Change in Unrealized Appreciation (Depreciation)		(159,016	)		(38,092	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(147,562	)		389,879
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(62,204	)
Class A:
Net Realized Gain		—			(119,469	)
Class L:
Net Realized Gain		—			(6,732	)
Class C:
Net Realized Gain		—			(797	)
Class IS:
Net Realized Gain		—			(72,693	)
Total Distributions		—			(261,895	)
Capital Share Transactions:(1)
Class I:
Subscribed		86,427			191,278
Distributions Reinvested		—			60,112
Redeemed		(133,337	)		(200,306	)
Class A:
Subscribed		96,639			180,513
Distributions Reinvested		—			115,656
Redeemed		(130,187	)		(269,270	)
Class L:
Subscribed		9			2,348
Distributions Reinvested		—			6,581
Redeemed		(5,389	)		(12,246	)
Class C:
Subscribed		4,876			13,781	*
Distributions Reinvested		—			677	*
Redeemed		(1,661	)		(484	)*
Class IS:
Subscribed		81,464			127,805
Distributions Reinvested		—			68,414
Redeemed		(100,187	)		(181,658	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(101,346	)		103,201
Total Increase (Decrease) in Net Assets		(248,908	)		231,185
Net Assets:
Beginning of Period		3,629,908			3,398,723
End of Period (Including Accumulated Net Investment Loss of $(1,791) and $(671))	$	3,381,000		$	3,629,908

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Growth Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		2,346			4,598
Shares Issued on Distributions Reinvested		—			1,464
Shares Redeemed		(3,576	)		(4,832	)
Net Increase (Decrease) in Class I Shares Outstanding		(1,230	)		1,230
Class A:
Shares Subscribed		2,704			4,418
Shares Issued on Distributions Reinvested		—			2,896
Shares Redeemed		(3,608	)		(6,635	)
Net Increase (Decrease) in Class A Shares Outstanding		(904	)		679
Class L:
Shares Subscribed		—	@		59
Shares Issued on Distributions Reinvested		—			168
Shares Redeemed		(152	)		(306	)
Net Decrease in Class L Shares Outstanding		(152	)		(79	)
Class C:
Shares Subscribed		139			348	*
Shares Issued on Distributions Reinvested		—			17	*
Shares Redeemed		(46	)		(12	)*
Net Increase in Class C Shares Outstanding		93			353
Class IS:
Shares Subscribed		2,233			3,094
Shares Issued on Distributions Reinvested		—			1,662
Shares Redeemed		(2,676	)		(4,375	)
Net Increase (Decrease) in Class IS Shares Outstanding		(443	)		381

@  Amount is less than $500.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Growth Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	40.44		$	38.86		$	38.38		$	27.05		$	23.46		$	24.24
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.07	)		(0.03	)		0.02			0.16			0.01
Net Realized and Unrealized Gain (Loss)		(1.63	)		4.70			2.43			13.02			3.52			(0.73	)
Total from Investment Operations		(1.62	)		4.63			2.40			13.04			3.68			(0.72	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.00	)‡		(0.13	)		(0.05	)		(0.06	)
Net Realized Gain		—			(3.05	)		(1.92	)		(1.58	)		(0.04	)		—
Total Distributions		—			(3.05	)		(1.92	)		(1.71	)		(0.09	)		(0.06	)
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	38.82		$	40.44		$	38.86		$	38.38		$	27.05		$	23.46
Total Return++		(4.01	)%#		11.91	%		6.42	%		48.60	%		15.66	%		(3.01	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	793,774		$	876,660		$	794,648		$	989,649		$	661,073		$	622,193
Ratio of Expenses to Average Net Assets (1)		0.63	%+*		0.61	%+		0.69	%+^		0.70	%+		0.72	%+		0.71	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.06	%+*		(0.18	)%+		(0.08	)%+		0.08	%+		0.59	%+		0.05	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		13	%#		34	%		44	%		31	%		49	%		26	%
(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			0.71	%		N/A			N/A
Net Investment Income to Average Net Assets		N/A			N/A			N/A			0.07	%		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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Growth Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	39.31		$	37.98		$	37.61		$	26.53		$	23.03		$	23.82
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.04	)		(0.21	)		(0.13	)		(0.06	)		0.09			(0.05	)
Net Realized and Unrealized Gain (Loss)		(1.59	)		4.59			2.42			12.78			3.45			(0.73	)
Total from Investment Operations		(1.63	)		4.38			2.29			12.72			3.54			(0.78	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			(0.06	)		—			(0.01	)
Net Realized Gain		—			(3.05	)		(1.92	)		(1.58	)		(0.04	)		—
Total Distributions		—			(3.05	)		(1.92	)		(1.64	)		(0.04	)		(0.01	)
Redemption Fees		—			0.00	‡		—			—			—			—
Net Asset Value, End of Period	$	37.68		$	39.31		$	37.98		$	37.61		$	26.53		$	23.03
Total Return++		(4.15	)%#		11.53	%		6.25	%		48.22	%		15.36	%		(3.27	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,528,918		$	1,630,538		$	1,549,756		$	205,286		$	138,416		$	135,777
Ratio of Expenses to Average Net Assets (1)		0.92	%+*		0.96	%+		0.83	%+^		0.95	%+^		0.97	%+		0.96	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.23	)%+*		(0.52	)%+		(0.34	)%+		(0.18	)%+		0.34	%+		(0.20	)%+
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		13	%#		34	%		44	%		31	%		49	%		26	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.96	%		N/A			0.96	%		N/A			N/A
Net Investment Loss to Average Net Assets		N/A			(0.52	)%		N/A			(0.19	)%		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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Growth Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	38.41		$	37.40		$	37.26		$	26.43		$	27.60
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.14	)		(0.44	)		(0.31	)		(0.38	)		0.03
Net Realized and Unrealized Gain (Loss)		(1.55	)		4.50			2.38			12.84			(1.16	)
Total from Investment Operations		(1.69	)		4.06			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		—			(3.05	)		(1.92	)		(1.58	)		(0.04	)
Total Distributions		—			(3.05	)		(1.93	)		(1.63	)		(0.04	)
Redemption Fees		—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	36.72		$	38.41		$	37.40		$	37.26		$	26.43
Total Return++		(4.40	)%#		10.85	%		5.72	%		47.44	%		(4.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	79,751		$	89,277		$	89,854		$	528		$	10
Ratio of Expenses to Average Net Assets (1)		1.47	%+*		1.55	%+		1.29	%+^^		1.60	%+^^		1.51	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.78	)%+*		(1.11	)%+		(0.82	)%+		(1.09	)%+		0.20	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%*§		0.01	%		0.00	%§*
Portfolio Turnover Rate		13	%#		34	%		44	%		31	%		49	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.57	%		N/A			1.72	%		N/A
Net Investment Loss to Average Net Assets		N/A			(1.13	)%		N/A			(1.21	)%		N/A

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Growth Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	38.40		$	40.33
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.17	)		(0.35	)
Net Realized and Unrealized Gain(Loss)		(1.55	)		1.47
Total from Investment Operations		(1.72	)		1.12
Distributions from and/or in Excess of:
Net Realized Gain		—			(3.05	)
Redemption Fees		—			0.00	‡
Net Asset Value, End of Period	$	36.68		$	38.40
Total Return++		(4.48	)%#		2.71	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	16,338		$	13,544
Ratios of Expenses to Average Net Assets		1.63	%+*		1.62	%+*
Ratio of Net Investment Loss to Average Net Assets		(0.94	)%+*		(1.29	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§*
Portfolio Turnover Rate		13	%#		34	%

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Growth Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	40.54		$	38.92		$	38.40		$	34.45
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			(0.04	)		(0.05	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(1.64	)		4.71			2.50			5.55
Total from Investment Operations		(1.61	)		4.67			2.45			5.53
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.01	)		—
Net Realized Gain		—			(3.05	)		(1.92	)		(1.58	)
Total Distributions		—			(3.05	)		(1.93	)		(1.58	)
Redemption Fees		—			0.00	‡		—			—
Net Asset Value, End of Period	$	38.93		$	40.54		$	38.92		$	38.40
Total Return++		(3.97	)%#		11.97	%		6.60	%		16.20	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	962,219		$	1,019,889		$	964,465		$	11
Ratio of Expenses to Average Net Assets (1)		0.54	%+*		0.54	%+		0.54	%+^^		0.60	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.15	%+*		(0.10	)%+		(0.12	)%+		(0.16	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%*
Portfolio Turnover Rate		13	%#		34	%		44	%		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		N/A			N/A			0.55	%		5.60	%*
Net Investment Loss to Average Net Assets		N/A			N/A			(0.13	)%		(5.16	)%*

^  Commencement of Offering.

†  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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more

reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps, 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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, 2016

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, 2016.

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	$	53,136	$	—	$	—	$	53,136
Automobiles		149,547		—		—		149,547
Beverages		41,180		—		—		41,180
Biotechnology		30,100		—		—		30,100
Diversified Financial Services		168,869		—		—		168,869
Food Products		122,976		—		—		122,976
Health Care Equipment & Supplies		176,902		—		—		176,902
Health Care Technology		55,317		—		—		55,317
Information Technology Services		235,919		—		—		235,919
Internet & Catalog Retail		513,754		—		—		513,754
Internet Software & Services		650,224		41,656		—		691,880
Life Sciences Tools & Services		170,445		—		—		170,445
Pharmaceuticals		110,571		—		—		110,571
Semiconductors & Semiconductor Equipment		22,680		—		—		22,680
Software		365,161		—		—		365,161
Tech Hardware, Storage & Peripherals		225,443		—		—		225,443
Textiles, Apparel & Luxury Goods		51,954		—		—		51,954
Total Common Stocks		3,144,178		41,656		—		3,185,834
Preferred Stocks		—		—		141,032		141,032
Call Option Purchased		—		682		—		682
Short-Term Investments
Investment Company		165,099		—		—		165,099
Repurchase Agreements		—		25,652		—		25,652
Total Short-Term Investments		165,099		25,652		—		190,751
Total Assets	$	3,309,277	$	67,990	$	141,032	$	3,518,299

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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	$	13,688		$	142,388
Purchases		—			—
Sales		(16,333	)		—
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—			—
Change in unrealized appreciation (depreciation)		7,093			(1,356	)
Realized gains (losses)		(4,448	)		—
Ending Balance	$	—		$	141,032
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—		$	(1,356	)

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Electronic Equipment, Instuments & Components
Preferred Stock	$	18,956	Discounted Cash Flow	Weighted Average Cost of Capital		27.0	%		29.0	%		28.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		10.8	x		24.1	x		19.6	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet & Catalog Retail
Preferred Stocks	$	45,897	Discounted Cash Flow	Weighted Average Cost of Capital		16.0	%		18.0	%		17.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.8	x		14.5	x		12.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
		$17,524	Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.6	%	Decrease
				Perpetual Growth Rate		3.5	%		4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.8	x		3.6	x		2.7	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	54,173	Market Transaction Method	Precedent Transaction	$	48.77		$	48.77		$	48.77		Increase
Internet Software & Services
Preferred Stock	$	4,482	Discounted Cash Flow	Weighted Average Cost of Capital		18.0	%		20.0	%		19.0	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		5.9	x		16.2	x		9.6	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 instru-

ment or foreign currency, or futures contract on the underlying instrument or foreign currency, 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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	682	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)	$	(1,856	)(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 (Options Purchased)	$	(7,481	)(c)

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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At June 30, 2016, 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)
Option Purchased	$	682	(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, 2016.

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	$	682	$	—	$	(682	)(e)	$	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, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	526,715,000

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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2016.

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)
$	182,549	(f)	$	—	$	(182,549	)(g)(h)	$	0

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

(g) The Portfolio received cash collateral of approximately $132,323,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $51,435,000 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.

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	132,323	$	—	$	—	$	—	$	132,323
Total Borrowings	$	132,323	$	—	$	—	$	—	$	132,323
Gross amount of recognized liabilities for securities lending transactions									$	132,323

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 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, 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.

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 shares, 1.05% for Class A shares, 1.55% for Class L shares, 1.80% for Class C shares and 0.67% for Class IS shares. 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%. Effective April 07, 2016, Adviser has agreed to reduce its advisory fee and/or reimburse the Portfolio so that total annual operating expenses, will not exceed 0.80% for Class I shares, 1.15% for Class A shares, 1.65% for Class L shares, 1.90% for Class C shares and 0.73% 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 as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. This arrangement had no effect during the most recent reporting period.

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

G. Security Transactions and Transactions with Affiliates: For the six months ended June 30, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $430,068,000 and $447,823,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $57,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	302,829	$	515,486	$	653,216	$	186	$	165,099

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	5,086	$	256,809	$	3,224	$	159,845

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)

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, a net operating loss and basis adjustments on partnerships, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	12,776	$	(12,732	)	$	(44	)

At December 31, 2015, 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)
$	—	$	196,806

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	513	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 56.1%.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRWSAN
1555536 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Franchise Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	7
Statements of Changes in Net Assets	8
Financial Highlights	10
Notes to Financial Statements	15
Investment Advisory Agreement Approval	21
Privacy Notice	23
Director and Officer Information	26

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,068.40	$	1,020.09	$	4.94	$	4.82		0.96	%
Global Franchise Portfolio Class A		1,000.00		1,066.60		1,018.80		6.27		6.12		1.22
Global Franchise Portfolio Class L		1,000.00		1,064.30		1,016.36		8.78		8.57		1.71
Global Franchise Portfolio Class C		1,000.00		1,063.30		1,015.22		9.95		9.72		1.94
Global Franchise Portfolio Class IS		1,000.00		1,068.90		1,020.34		4.68		4.57		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Franchise Portfolio

	Shares		Value (000)
Common Stocks (97.9%)
France (9.4%)
L'Oreal SA		275,262	$	52,654
Pernod Ricard SA		169,252		18,852
				71,506
Germany (2.5%)
SAP SE		254,432		19,018
Italy (1.0%)
Davide Campari-Milano SpA		787,342		7,801
Japan (2.5%)
Japan Tobacco, Inc.		463,400		18,564
Netherlands (0.9%)
RELX N.V.		384,946		6,718
Switzerland (4.8%)
Nestle SA (Registered)		471,748		36,389
United Kingdom (25.6%)
British American Tobacco PLC		911,071		59,284
Experian PLC		798,353		15,164
Reckitt Benckiser Group PLC		609,738		61,343
RELX PLC		557,200		10,267
Unilever PLC		990,646		47,519
				193,577
United States (51.2%)
Accenture PLC, Class A		299,580		33,939
Altria Group, Inc.		526,106		36,280
Automatic Data Processing, Inc.		259,963		23,883
Coca-Cola Co.		249,724		11,320
International Flavors & Fragrances, Inc.		112,647		14,201
Intuit, Inc.		88,421		9,869
Microsoft Corp.		1,012,758		51,823
Mondelez International, Inc., Class A		443,187		20,169
Moody's Corp.		72,089		6,755
NIKE, Inc., Class B		386,029		21,309
Philip Morris International, Inc.		213,089		21,675
Reynolds American, Inc.		674,717		36,388
Time Warner, Inc.		210,399		15,473
Twenty-First Century Fox, Inc., Class A		499,626		13,515
Twenty-First Century Fox, Inc., Class B		635,787		17,325
Visa, Inc., Class A		411,643		30,532
Walt Disney Co. (The)		241,105		23,585
				388,041
Total Common Stocks (Cost $601,571)				741,614

	Shares		Value (000)
Short-Term Investment (2.5%)
Investment Company (2.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $19,302)		19,302,043	$	19,302
Total Investments (100.4%) (Cost $620,873) (a)(b)				760,916
Liabilities in Excess of Other Assets (–0.4%)				(3,179	)
Net Assets (100.0%)			$	757,737

(a)  The approximate fair value and percentage of net assets, $353,573,000 and 46.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(b)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $144,421,000 and the aggregate gross unrealized depreciation is approximately $4,378,000 resulting in net unrealized appreciation of approximately $140,043,000.

Portfolio Composition

Classification	Percentage of Total Investments
Tobacco		22.6	%
Personal Products		13.2
Information Technology Services		11.6
Media		11.4
Software		10.6
Other*		10.1
Household Products		8.1
Food Products		7.4
Beverages		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Franchise Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $601,571)	$	741,614
Investment in Security of Affiliated Issuer, at Value (Cost $19,302)		19,302
Total Investments in Securities, at Value (Cost $620,873)		760,916
Receivable for Investments Sold		4,916
Dividends Receivable		1,662
Receivable for Portfolio Shares Sold		1,321
Tax Reclaim Receivable		890
Receivable from Affiliate		3
Other Assets		113
Total Assets		769,821
Liabilities:
Payable for Investments Purchased		5,722
Payable for Portfolio Shares Redeemed		4,749
Payable for Advisory Fees		1,399
Payable for Administration Fees		48
Payable for Shareholder Services Fees — Class A		21
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		17
Payable for Professional Fees		30
Payable for Custodian Fees		24
Payable for Sub Transfer Agency Fees — Class I		14
Payable for Sub Transfer Agency Fees — Class A		2
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Directors' Fees and Expenses		10
Payable for Transfer Agency Fees — Class I		3
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		40
Total Liabilities		12,084
Net Assets	$	757,737
Net Assets Consist Of:
Paid-in-Capital	$	601,973
Accumulated Undistributed Net Investment Income		6,509
Accumulated Net Realized Gain		9,266
Unrealized Appreciation (Depreciation) on:
Investments		140,043
Foreign Currency Translations		(54	)
Net Assets	$	757,737

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Franchise Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	624,891
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		28,775,722
Net Asset Value, Offering and Redemption Price Per Share	$	21.72
CLASS A:
Net Assets	$	101,277
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,757,340
Net Asset Value, Redemption Price Per Share	$	21.29
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.18
Maximum Offering Price Per Share	$	22.47
CLASS L:
Net Assets	$	8,863
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		418,381
Net Asset Value, Offering and Redemption Price Per Share	$	21.18
CLASS C:
Net Assets	$	22,693
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,080,920
Net Asset Value, Offering and Redemption Price Per Share	$	20.99
CLASS IS:
Net Assets	$	13
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		604
Net Asset Value, Offering and Redemption Price Per Share	$	21.71

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Franchise Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $480 of Foreign Taxes Withheld)	$	9,703
Dividends from Security of Affiliated Issuer (Note G)		15
Total Investment Income		9,718
Expenses:
Advisory Fees (Note B)		2,626
Administration Fees (Note C)		267
Shareholder Services Fees — Class A (Note D)		108
Distribution and Shareholder Services Fees — Class L (Note D)		32
Distribution and Shareholder Services Fees — Class C (Note D)		65
Sub Transfer Agency Fees — Class I		116
Sub Transfer Agency Fees — Class A		20
Sub Transfer Agency Fees — Class L		1
Sub Transfer Agency Fees — Class C		1
Professional Fees		62
Custodian Fees (Note F)		41
Registration Fees		39
Shareholder Reporting Fees		11
Transfer Agency Fees — Class I (Note E)		6
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Directors' Fees and Expenses		8
Pricing Fees		3
Other Expenses		22
Total Expenses		3,432
Rebate from Morgan Stanley Affiliate (Note G)		(15	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		3,416
Net Investment Income		6,302
Realized Gain (Loss):
Investments Sold		9,200
Foreign Currency Transactions		(45	)
Net Realized Gain		9,155
Change in Unrealized Appreciation (Depreciation):
Investments		31,879
Foreign Currency Translations		7
Net Change in Unrealized Appreciation (Depreciation)		31,886
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		41,041
Net Increase in Net Assets Resulting from Operations	$	47,343

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Franchise Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	6,302		$	7,944
Net Realized Gain		9,155			24,379
Net Change in Unrealized Appreciation (Depreciation)		31,886			3,732
Net Increase in Net Assets Resulting from Operations		47,343			36,055
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(7,968	)
Net Realized Gain		—			(20,632	)
Class A:
Net Investment Income		—			(1,064	)
Net Realized Gain		—			(3,228	)
Class L:
Net Investment Income		—			(84	)
Net Realized Gain		—			(397	)
Class C:
Net Investment Income		—			(52	)
Net Realized Gain		—			(148	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		—			(33,573	)
Capital Share Transactions:(1)
Class I:
Subscribed		129,061			92,850
Distributions Reinvested		—			27,499
Redeemed		(49,280	)		(133,336	)
Class A:
Subscribed		31,774			18,018
Distributions Reinvested		—			4,251
Redeemed		(11,758	)		(10,970	)
Class L:
Subscribed		133			216
Distributions Reinvested		—			480
Redeemed		(685	)		(1,167	)
Class C:
Subscribed		16,232			7,443	*
Distributions Reinvested		—			199	*
Redeemed		(376	)		(1,527	)*
Class IS:
Subscribed		3			10	**
Redeemed		(—	@)		—
Net Increase in Net Assets Resulting from Capital Share Transactions		115,104			3,966
Total Increase in Net Assets		162,447			6,448
Net Assets:
Beginning of Period		595,290			588,842
End of Period (Including Accumulated Undistributed Net Investment Income of $6,509 and $207)	$	757,737		$	595,290

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Franchise Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		6,284			4,439
Shares Issued on Distributions Reinvested		—			1,330
Shares Redeemed		(2,362	)		(6,324	)
Net Increase (Decrease) in Class I Shares Outstanding		3,922			(555	)
Class A:
Shares Subscribed		1,561			858
Shares Issued on Distributions Reinvested		—			209
Shares Redeemed		(577	)		(532	)
Net Increase in Class A Shares Outstanding		984			535
Class L:
Shares Subscribed		7			11
Shares Issued on Distributions Reinvested		—			24
Shares Redeemed		(36	)		(57	)
Net Decrease in Class L Shares Outstanding		(29	)		(22	)
Class C:
Shares Subscribed		808			353	*
Shares Issued on Distributions Reinvested		—			10	*
Shares Redeemed		(19	)		(71	)*
Net Increase in Class C Shares Outstanding		789			292
Class IS:
Shares Subscribed		—	@@		—	@@**
Shares Redeemed		(—	@@)		—
Net Increase in Class IS Shares Outstanding		—	@@		—	@@

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period September 30, 2015 through December 31, 2015.

**  For the period May 29, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Franchise Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	20.33		$	20.27		$	20.77		$	18.13		$	16.24		$	15.29
Income from Investment Operations:
Net Investment Income†		0.20			0.31			0.41			0.36			0.40			0.31
Net Realized and Unrealized Gain		1.19			1.02			0.57			3.17			2.11			1.11
Total from Investment Operations		1.39			1.33			0.98			3.53			2.51			1.42
Distributions from and/or in Excess of:
Net Investment Income		—			(0.35	)		(0.37	)		(0.35	)		(0.32	)		(0.30	)
Net Realized Gain		—			(0.92	)		(1.11	)		(0.54	)		(0.30	)		(0.17	)
Total Distributions		—			(1.27	)		(1.48	)		(0.89	)		(0.62	)		(0.47	)
Net Asset Value, End of Period	$	21.72		$	20.33		$	20.27		$	20.77		$	18.13		$	16.24
Total Return++		6.84	%#		6.50	%		4.82	%		19.71	%		15.38	%		9.38	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	624,891		$	505,321		$	515,012		$	570,261		$	404,762		$	211,677
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		0.98	%+		0.97	%+		0.95	%+		0.98	%+		1.00	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.95	%+*		1.46	%+		1.94	%+		1.79	%+		2.21	%+		1.87	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%		0.00	%§
Portfolio Turnover Rate		17	%#		37	%		33	%		24	%		34	%		30	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			0.99	%		N/A			N/A			N/A			1.01	%
Net Investment Income to Average Net Assets		N/A			1.45	%		N/A			N/A			N/A			1.86	%

†  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, 2016

Financial Highlights

Global Franchise Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	19.96		$	19.92		$	20.44		$	17.86		$	16.01		$	15.10
Income from Investment Operations:
Net Investment Income†		0.17			0.24			0.34			0.28			0.35			0.26
Net Realized and Unrealized Gain		1.16			1.02			0.55			3.14			2.09			1.09
Total from Investment Operations		1.33			1.26			0.89			3.42			2.44			1.35
Distributions from and/or in Excess of:
Net Investment Income		—			(0.30	)		(0.30	)		(0.30	)		(0.29	)		(0.27	)
Net Realized Gain		—			(0.92	)		(1.11	)		(0.54	)		(0.30	)		(0.17	)
Total Distributions		—			(1.22	)		(1.41	)		(0.84	)		(0.59	)		(0.44	)
Net Asset Value, End of Period	$	21.29		$	19.96		$	19.92		$	20.44		$	17.86		$	16.01
Total Return++		6.66	%#		6.25	%		4.45	%		19.42	%		15.14	%		8.98	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	101,277		$	75,297		$	64,515		$	83,135		$	35,901		$	15,327
Ratio of Expenses to Average Net Assets (1)		1.22	%+*		1.25	%+		1.27	%+		1.20	%+^		1.23	%+		1.25	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.70	%+*		1.15	%+		1.64	%+		1.42	%		1.99	%+		1.62	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%		0.00	%§
Portfolio Turnover Rate		17	%#		37	%		33	%		24	%		34	%		30	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.25	%		N/A			N/A			N/A			1.26	%
Net Investment Income to Average Net Assets		N/A			1.15	%		N/A			N/A			N/A			1.61	%

†  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, 2016

Financial Highlights

Global Franchise Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	19.91		$	19.87		$	20.39		$	17.83		$	18.13
Income from Investment Operations:
Net Investment Income†		0.11			0.15			0.25			0.20			0.10
Net Realized and Unrealized Gain		1.16			1.00			0.55			3.11			0.16
Total from Investment Operations		1.27			1.15			0.80			3.31			0.26
Distributions from and/or in Excess of:
Net Investment Income		—			(0.19	)		(0.21	)		(0.21	)		(0.26	)
Net Realized Gain		—			(0.92	)		(1.11	)		(0.54	)		(0.30	)
Total Distributions		—			(1.11	)		(1.32	)		(0.75	)		(0.56	)
Net Asset Value, End of Period	$	21.18		$	19.91		$	19.87		$	20.39		$	17.83
Total Return++		6.43	%#		5.72	%		4.00	%		18.78	%		1.36	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,863		$	8,898		$	9,315		$	9,112		$	4,525
Ratio of Expenses to Average Net Assets (1)		1.71	%+*		1.72	%+		1.72	%+		1.70	%+^^		1.73	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.12	%+*		0.72	%+		1.19	%+		1.03	%+		0.84	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		17	%#		37	%		33	%		24	%		34	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.73	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			0.71	%		N/A			N/A			N/A

^  Commencement of Offering.

†  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, 2016

Financial Highlights

Global Franchise Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from September 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	19.75		$	19.79
Income from Investment Operations:
Net Investment Income†		0.12			0.01
Net Realized and Unrealized Gain		1.12			1.02
Total from Investment Operations		1.24			1.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.28	)
Net Realized Gain		—			(0.79	)
Total Distributions		—			(1.07	)
Net Asset Value, End of Period	$	20.99		$	19.75
Total Return++		6.33	%#		5.11	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	22,693		$	5,765
Ratios of Expenses to Average Net Assets (1)		1.94	%+*		2.03	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.18	%+*		0.11	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		17	%#		37	%

^  Commencement of Offering.

†  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, 2016

Financial Highlights

Global Franchise Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from May 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	20.33		$	21.49
Income from Investment Operations:
Net Investment Income†		0.21			0.12
Net Realized and Unrealized Gain		1.17			0.00	‡
Total from Investment Operations		1.38			0.12
Distributions from and/or in Excess of:
Net Investment Income		—			(0.36	)
Net Realized Gain		—			(0.92	)
Total Distributions		—			(1.28	)
Net Asset Value, End of Period	$	21.71		$	20.33
Total Return++		6.89	%#		0.45	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	13		$	9
Ratio of Expenses to Average Net Assets (1)		0.91	%+*		0.94	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.00	%+*		0.95	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		17	%#		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		16.49	%*		16.54	%*
Net Investment Loss to Average Net Assets		(13.58	)%*		(14.65	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks long-term capital appreciation.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C and Class IS. 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one

or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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.

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	11,320	$	26,653	$	—	$	37,973
Chemicals		14,201		—		—		14,201
Diversified Financial Services		6,755		—		—		6,755
Food Products		20,169		36,389		—		56,558
Household Products		—		61,343		—		61,343
Information Technology Services		88,354		—		—		88,354
Media		69,898		16,985		—		86,883
Personal Products		—		100,173		—		100,173
Professional Services		—		15,164		—		15,164
Software		61,692		19,018		—		80,710
Textiles, Apparel & Luxury Goods		21,309		—		—		21,309
Tobacco		94,343		77,848		—		172,191
Total Common Stocks		388,041		353,573		—		741,614
Short-Term Investment
Investment Company		19,302		—		—		19,302
Total Assets	$	407,343	$	353,573	$	—	$	760,916

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.  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 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, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.78% 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 0.95% 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 as 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, 2016, approximately $1,000 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 Sub-Advisers and an indirect subsidiary of Morgan Stanley, serves as the Fund's Distributor of Portfolio shares pursuant to

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than

long-term U.S. Government securities and short-term investments, were approximately $240,364,000 and $109,924,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $15,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	20,401	$	119,384	$	120,483	$	15	$	19,302

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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,

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	9,168	$	24,405	$	9,800	$	30,290

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

nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	115	$	(81	)	$	(34	)

At December 31, 2015, 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)
$	213	$	3,019

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 35.6%.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 than but close to its peer group average and its total expense ratio was equal 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 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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGFSAN
1557918 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Equity Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	26
Privacy Notice	28
Director and Officer Information	31

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	979.50	$	1,020.14	$	4.68	$	4.77		0.95	%
International Equity Portfolio Class A		1,000.00		977.90		1,018.40		6.39		6.52		1.30
International Equity Portfolio Class L		1,000.00		975.10		1,015.91		8.84		9.02		1.80
International Equity Portfolio Class C		1,000.00		974.30		1,014.67		10.06		10.27		2.05
International Equity Portfolio Class IS		1,000.00		979.50		1,020.34		4.48		4.57		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

International Equity Portfolio

	Shares		Value (000)
Common Stocks (96.6%)
Canada (2.7%)
Barrick Gold Corp.		4,047,306	$	86,400
Turquoise Hill Resources Ltd. (a)		8,234,021		27,852
				114,252
China (0.9%)
China Petroleum & Chemical Corp. H Shares (b)		51,934,000		37,465
France (11.5%)
AXA SA		1,499,621		30,127
L'Oreal SA		846,198		161,866
Pernod Ricard SA (c)		1,048,109		116,746
Publicis Groupe SA		599,253		40,598
Safran SA		469,012		31,875
Sanofi		1,235,674		103,868
				485,080
Germany (6.2%)
BASF SE		552,584		42,155
Bayer AG (Registered)		1,127,331		113,423
Continental AG		216,276		40,645
SAP SE		890,988		66,599
				262,822
Ireland (2.3%)
Bank of Ireland (a)		79,268,627		16,519
CRH PLC		2,814,169		81,151
				97,670
Italy (0.4%)
Eni SpA		1,128,370		18,217
Japan (15.9%)
FANUC Corp.		265,300		42,943
Hitachi Ltd.		11,739,000		48,798
Inpex Corp.		4,997,800		38,990
Japan Tobacco, Inc.		3,937,900		157,755
Keyence Corp.		88,710		59,831
Kyocera Corp.		147,500		6,993
Mitsubishi Estate Co., Ltd.		2,538,000		46,405
MS&AD Insurance Group Holdings, Inc.		652,400		16,802
NGK Spark Plug Co., Ltd.		2,794,000		42,040
Nitto Denko Corp.		239,500		15,103
Sekisui House Ltd.		1,566,700		27,263
Shiseido Co., Ltd.		145,000		3,739
Sompo Japan Nipponkoa Holdings, Inc.		2,869,200		76,003
Sumco Corp. (c)		1,225,600		7,795
Sumitomo Mitsui Financial Group, Inc. (c)		525,051		15,053
Sumitomo Mitsui Trust Holdings, Inc.		1,466,999		4,748
Toyota Motor Corp.		1,028,000		51,397
USS Co., Ltd.		684,300		11,223
				672,881

	Shares		Value (000)
Netherlands (7.7%)
Akzo Nobel N.V.		811,709	$	51,067
RELX N.V.		4,071,807		71,059
Unilever N.V. CVA		4,365,279		203,505
				325,631
Sweden (0.9%)
Nordea Bank AB		4,409,370		37,245
Switzerland (13.7%)
Nestle SA (Registered)		2,540,179		195,939
Novartis AG (Registered)		2,084,563		171,484
Roche Holding AG (Genusschein)		541,978		143,099
Swisscom AG (Registered) (c)		87,802		43,616
Zurich Insurance Group AG (a)		105,279		26,048
				580,186
United Kingdom (33.6%)
Admiral Group PLC		999,121		27,270
ARM Holdings PLC		4,027,857		61,006
Aviva PLC		8,556,601		45,986
British American Tobacco PLC		3,160,611		205,662
BT Group PLC		14,035,321		77,501
Bunzl PLC		2,619,026		81,008
Experian PLC		3,242,444		61,589
GlaxoSmithKline PLC		8,249,657		177,353
Imperial Brands PLC		2,376,986		129,034
Lloyds Banking Group PLC		44,052,768		32,393
Meggitt PLC		8,425,694		45,706
Prudential PLC		6,267,028		106,764
Reckitt Benckiser Group PLC		2,039,020		205,137
RELX PLC		2,960,489		54,549
Smiths Group PLC		1,373,384		21,154
Travis Perkins PLC		898,165		17,968
Wolseley PLC		1,402,726		72,697
				1,422,777
United States (0.8%)
AAC Technologies Holdings, Inc. (b)		3,784,064		32,522
Total Common Stocks (Cost $3,450,367)				4,086,748
Short-Term Investments (1.7%)
Securities held as Collateral on Loaned Securities (0.1%)
Investment Company (0.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		5,199,318		5,199
	Face Amount (000)
Repurchase Agreements (0.0%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $1,202; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $1,225)	$	1,202		1,202

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

International Equity Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (cont'd)
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $49; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $50)	$	49	$	49
				1,251
Total Securities held as Collateral on Loaned Securities (Cost $6,450)				6,450
	Shares
Investment Company (1.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $66,708)		66,708,254	$	66,708
Total Short-Term Investments (Cost $73,158)				73,158
Total Investments (98.3%) (Cost $3,523,525) Including $8,557 of Securities Loaned (d)(e)(f)				4,159,906
Other Assets in Excess of Liabilities (1.7%)				69,841
Net Assets (100.0%)			$	4,229,747

(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, 2016.

(d)  Securities are available for collateral in connection with an open foreign currency forward exchange contract.

(e)  The approximate fair value and percentage of net assets, $3,972,496,000 and 93.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(f)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $847,433,000 and the aggregate gross unrealized depreciation is approximately $211,052,000 resulting in net unrealized appreciation of approximately $636,381,000.

CVA  Certificaten Van Aandelen.

Foreign Currency Forward Exchange Contract:

The Portfolio had the following foreign currency forward exchange contract open at June 30, 2016:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Depreciation (000)
Commonwealth Bank of Australia	JPY	23,640,000	$	223,408	7/22/16	$	(5,635	)

JPY  —  Japanese Yen

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		54.3	%
Pharmaceuticals		17.1
Tobacco		11.8
Personal Products		8.9
Insurance		7.9
Total Investments		100.0	%***

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

**  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 $5,635,000.

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $3,451,618)	$	4,087,999
Investment in Security of Affiliated Issuer, at Value (Cost $71,907)		71,907
Total Investments in Securities, at Value (Cost $3,523,525)		4,159,906
Foreign Currency, at Value (Cost $4,282)		4,259
Receivable for Investments Sold		95,307
Tax Reclaim Receivable		11,585
Dividends Receivable		6,929
Receivable for Portfolio Shares Sold		1,357
Receivable from Affiliate		12
Other Assets		367
Total Assets		4,279,722
Liabilities:
Payable for Investments Purchased		25,162
Payable for Advisory Fees		8,346
Collateral on Securities Loaned, at Value		6,450
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		5,635
Payable for Portfolio Shares Redeemed		2,183
Payable for Sub Transfer Agency Fees — Class I		576
Payable for Sub Transfer Agency Fees — Class A		357
Payable for Sub Transfer Agency Fees — Class L		5
Payable for Administration Fees		279
Payable for Shareholder Services Fees — Class A		273
Payable for Distribution and Shareholder Services Fees — Class L		5
Payable for Distribution and Shareholder Services Fees — Class C		1
Payable for Directors' Fees and Expenses		230
Payable for Custodian Fees		188
Payable for Professional Fees		20
Payable for Transfer Agency Fees — Class I		10
Payable for Transfer Agency Fees — Class A		6
Payable for Transfer Agency Fees — Class L		1
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		1
Other Liabilities		247
Total Liabilities		49,975
Net Assets	$	4,229,747
Net Assets Consist Of:
Paid-in-Capital	$	3,833,931
Accumulated Undistributed Net Investment Income		72,685
Accumulated Net Realized Loss		(306,933	)
Unrealized Appreciation (Depreciation) on:
Investments		636,381
Foreign Currency Forward Exchange Contracts		(5,635	)
Foreign Currency Translations		(682	)
Net Assets	$	4,229,747

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Equity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	1,823,205
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		123,275,275
Net Asset Value, Offering and Redemption Price Per Share	$	14.79
CLASS A:
Net Assets	$	1,303,312
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		89,395,510
Net Asset Value, Redemption Price Per Share	$	14.58
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.81
Maximum Offering Price Per Share	$	15.39
CLASS L:
Net Assets	$	7,785
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		536,932
Net Asset Value, Offering and Redemption Price Per Share	$	14.50
CLASS C:
Net Assets	$	821
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		57,081
Net Asset Value, Offering and Redemption Price Per Share	$	14.39
CLASS IS:
Net Assets	$	1,094,624
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		74,005,165
Net Asset Value, Offering and Redemption Price Per Share	$	14.79
(1) Including: Securities on Loan, at Value:	$	8,557

@  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, 2016 (unaudited)

International Equity Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $7,858 of Foreign Taxes Withheld)	$	84,778
Income from Securities Loaned — Net		385
Dividends from Security of Affiliated Issuer (Note G)		64
Total Investment Income		85,227
Expenses:
Advisory Fees (Note B)		16,649
Sub Transfer Agency Fees — Class I		916
Sub Transfer Agency Fees — Class A		966
Sub Transfer Agency Fees — Class L		9
Sub Transfer Agency Fees — Class C		—	@
Shareholder Services Fees — Class A (Note D)		1,653
Distribution and Shareholder Services Fees — Class L (Note D)		31
Distribution and Shareholder Services Fees — Class C (Note D)		3
Administration Fees (Note C)		1,665
Custodian Fees (Note F)		325
Registration Fees		110
Shareholder Reporting Fees		91
Directors' Fees and Expenses		53
Professional Fees		52
Transfer Agency Fees — Class I (Note E)		18
Transfer Agency Fees — Class A (Note E)		10
Transfer Agency Fees — Class L (Note E)		2
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		2
Pricing Fees		4
Other Expenses		71
Expenses Before Non Operating Expenses		22,631
Bank Overdraft Expense		5
Total Expenses		22,636
Reimbursement of Class Specific Expenses — Class I (Note B)		(573	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(51	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(6	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(2	)
Waiver of Advisory Fees (Note B)		(81	)
Rebate from Morgan Stanley Affiliate (Note G)		(66	)
Net Expenses		21,856
Net Investment Income		63,371
Realized Loss:
Investments Sold		(130,992	)
Foreign Currency Forward Exchange Contracts		(40,016	)
Foreign Currency Transactions		(587	)
Net Realized Loss		(171,595	)
Change in Unrealized Appreciation (Depreciation):
Investments		17,737
Foreign Currency Forward Exchange Contracts		768
Foreign Currency Translations		82
Net Change in Unrealized Appreciation (Depreciation)		18,587
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(153,008	)
Net Decrease in Net Assets Resulting from Operations	$	(89,637	)

@  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, 2016

International Equity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	63,371		$	83,904
Net Realized Loss		(171,595	)		(81,009	)
Net Change in Unrealized Appreciation (Depreciation)		18,587			40,881
Net Increase (Decrease) in Net Assets Resulting from Operations		(89,637	)		43,776
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(63,421	)
Class A:
Net Investment Income		—			(34,301	)
Class L:
Net Investment Income		—			(186	)
Class C:
Net Investment Income		—			(7	)
Class IS:
Net Investment Income		—			(23,788	)
Total Distributions		—			(121,703	)
Capital Share Transactions:(1)
Class I:
Subscribed		167,811			249,465
Distributions Reinvested		—			60,713
Redeemed		(365,157	)		(821,490	)
Class A:
Subscribed		277,831			221,012
Distributions Reinvested		—			34,196
Redeemed		(316,285	)		(441,011	)
Class L:
Subscribed		3			1,036
Distributions Reinvested		—			183
Redeemed		(1,041	)		(1,712	)
Class C:
Subscribed		508			524	*
Distributions Reinvested		—			7	*
Redeemed		(57	)		(128	)*
Class IS:
Subscribed		275,043			246,796
Distributions Reinvested		—			22,149
Redeemed		(44,220	)		(90,463	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(5,564	)		(518,723	)
Redemption Fees		8			50
Total Decrease in Net Assets		(95,193	)		(596,600	)
Net Assets:
Beginning of Period		4,324,940			4,921,540
End of Period (Including Accumulated Undistributed Net Investment Income of $72,685 and $9,314)	$	4,229,747		$	4,324,940

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

International Equity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		11,524			15,470
Shares Issued on Distributions Reinvested		—			3,885
Shares Redeemed		(25,602	)		(51,356	)
Net Decrease in Class I Shares Outstanding		(14,078	)		(32,001	)
Class A:
Shares Subscribed		20,036			14,515
Shares Issued on Distributions Reinvested		—			2,210
Shares Redeemed		(22,492	)		(28,049	)
Net Decrease in Class A Shares Outstanding		(2,456	)		(11,324	)
Class L:
Shares Subscribed		—	@@		65
Shares Issued on Distributions Reinvested		—			12
Shares Redeemed		(72	)		(109	)
Net Decrease in Class L Shares Outstanding		(72	)		(32	)
Class C:
Shares Subscribed		36			33	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		(4	)		(8	)*
Net Increase in Class C Shares Outstanding		32			25
Class IS:
Shares Subscribed		19,271			15,745
Shares Issued on Distributions Reinvested		—			1,418
Shares Redeemed		(3,021	)		(5,630	)
Net Increase in Class IS Shares Outstanding		16,250			11,533

*  For the period April 30, 2015 through December 31, 2015.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Equity Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	15.10		$	15.47		$	16.98		$	14.35		$	12.25		$	13.61
Income (Loss) from Investment Operations:
Net Investment Income†		0.22			0.30			0.39			0.32			0.31			0.32
Net Realized and Unrealized Gain (Loss)		(0.53	)		(0.23	)		(1.42	)		2.59			2.09			(1.37	)
Total from Investment Operations		(0.31	)		0.07			(1.03	)		2.91			2.40			(1.05	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.44	)		(0.48	)		(0.28	)		(0.30	)		(0.31	)
Redemption Fees		(0.00	)‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.79		$	15.10		$	15.47		$	16.98		$	14.35		$	12.25
Total Return++		(2.05	)%#		0.36	%		(6.08	)%		20.39	%		19.60	%		(7.63	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,823,205		$	2,073,782		$	2,620,040		$	3,694,164		$	3,631,307		$	2,959,403
Ratio of Expenses to Average Net Assets (1)		0.95	%+*		0.95	%+		0.95	%+		0.94	%+		0.95	%+		0.95	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.95	%+*		0.95	%+		0.95	%+		0.95	%+		N/A			0.95	%+
Ratio of Net Investment Income to Average Net Assets (1)		3.07	%+*		1.85	%+		2.33	%+		2.04	%+		2.31	%+		2.36	%+
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		16	%#		29	%		29	%		29	%		23	%		34	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.02	%*		1.01	%		1.04	%		0.99	%		0.97	%		0.98	%
Net Investment Income to Average Net Assets		3.00	%*		1.79	%		2.24	%		1.99	%		2.29	%		2.33	%

†  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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Equity Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	14.91		$	15.28		$	16.78		$	14.18		$	12.11		$	13.45
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.24			0.31			0.25			0.27			0.28
Net Realized and Unrealized Gain (Loss)		(0.53	)		(0.23	)		(1.38	)		2.59			2.07			(1.34	)
Total from Investment Operations		(0.33	)		0.01			(1.07	)		2.84			2.34			(1.06	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.38	)		(0.43	)		(0.24	)		(0.27	)		(0.28	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.58		$	14.91		$	15.28		$	16.78		$	14.18		$	12.11
Total Return++		(2.21	)%#		(0.02	)%		(6.43	)%		20.13	%		19.31	%		(7.83	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,303,312		$	1,369,566		$	1,576,475		$	1,508,564		$	1,012,956		$	916,002
Ratio of Expenses to Average Net Assets (1)		1.30	%+*		1.30	%+		1.30	%+		1.22	%+^		1.20	%+		1.20	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.30	%+*		1.30	%+		1.30	%+		1.22	%+^		N/A			1.20	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.82	%+*		1.48	%+		1.89	%+		1.60	%+		2.06	%+		2.11	%+
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		16	%#		29	%		29	%		29	%		23	%		34	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.31	%*		1.32	%		1.34	%		1.25	%		1.22	%		1.23	%
Net Investment Income to Average Net Assets		2.81	%*		1.46	%		1.85	%		1.57	%		2.04	%		2.08	%

†  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Equity Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from June 14, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	14.87		$	15.23		$	16.71		$	14.12		$	12.36
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.16			0.15			0.24			0.19			(0.07	)
Net Realized and Unrealized Gain (Loss)		(0.53	)		(0.21	)		(1.39	)		2.55			2.11
Total from Investment Operations		(0.37	)		(0.06	)		(1.15	)		2.74			2.04
Distributions from and/or in Excess of:
Net Investment Income		—			(0.30	)		(0.33	)		(0.15	)		(0.28	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.50		$	14.87		$	15.23		$	16.71		$	14.12
Total Return++		(2.49	)%#		(0.47	)%		(6.91	)%		19.49	%		16.53	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,785		$	9,053		$	9,763		$	12,072		$	11,982
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.80	%+		1.80	%+		1.72	%+^^		1.70	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		1.80	%+*		1.80	%+		1.80	%+		1.73	%+^^		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.26	%+*		0.97	%+		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	%§		0.00	%§*
Portfolio Turnover Rate		16	%#		29	%		29	%		29	%		23	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.95	%*		1.89	%		1.89	%		1.78	%		1.70	%*
Net Investment Income (Loss) to Average Net Assets		2.11	%*		0.88	%		1.38	%		1.18	%		(0.91	)%*

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Equity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	14.77		$	16.70
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.17			(0.03	)
Net Realized and Unrealized Loss		(0.55	)		(1.53	)
Total from Investment Operations		(0.38	)		(1.56	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.37	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.39		$	14.77
Total Return++		(2.57	)%#		(9.41	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	821		$	372
Ratio of Expenses to Average Net Assets (1)		2.05	%+*		2.05	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		2.05	%+*		2.05	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.42	%+*		(0.27	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		16	%#		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.32	%*		2.75	%*
Net Investment Income (Loss) to Average Net Assets		2.15	%*		(0.97	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Equity Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	15.10		$	15.47		$	16.98		$	16.08
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.24			0.30			0.40			(0.01	)
Net Realized and Unrealized Gain (Loss)		(0.55	)		(0.23	)		(1.43	)		1.19
Total from Investment Operations		(0.31	)		0.07			(1.03	)		1.18
Distributions from and/or in Excess of:
Net Investment Income		—			(0.44	)		(0.48	)		(0.28	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.79		$	15.10		$	15.47		$	16.98
Total Return++		(2.05	)%#		0.40	%		(6.07	)%		7.42	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,094,624		$	872,167		$	715,262		$	285,253
Ratio of Expenses to Average Net Assets (1)		0.91	%+*		0.91	%+		0.91	%+		0.91	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		0.91	%+*		0.91	%+		0.91	%+		0.91	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		3.29	%+*		1.84	%+		2.36	%+		(0.29	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		16	%#		29	%		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	%		0.91	%*
Net Investment Income (Loss) to Average Net Assets		3.29	%		1.84	%		2.36	%		(0.29	)%*

^  Commencement of Offering.

†  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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at

the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—	$	77,581		$	—	$	77,581
Auto Components		—		82,685			—		82,685
Automobiles		—		51,397			—		51,397
Banks		—		105,958			—		105,958
Beverages		—		116,746			—		116,746
Chemicals		—		108,325			—		108,325
Construction Materials		—		81,151			—		81,151
Diversified Telecommunication Services		—		121,117			—		121,117
Electronic Equipment, Instruments & Components		—		148,144			—		148,144
Food Products		—		195,939			—		195,939
Household Durables		—		27,263			—		27,263
Household Products		—		205,137			—		205,137
Industrial Conglomerates		—		21,154			—		21,154
Insurance		—		329,000			—		329,000
Machinery		—		42,943			—		42,943
Media		—		166,206			—		166,206
Metals & Mining		114,252		—			—		114,252
Oil, Gas & Consumable Fuels		—		94,672			—		94,672
Personal Products		—		369,110			—		369,110
Pharmaceuticals		—		709,227			—		709,227
Professional Services		—		61,589			—		61,589
Real Estate Management & Development		—		46,405			—		46,405
Semiconductors & Semiconductor Equipment		—		68,801			—		68,801
Software		—		66,599			—		66,599
Specialty Retail		—		11,223			—		11,223
Tobacco		—		492,451			—		492,451
Trading Companies & Distributors		—		171,673			—		171,673
Total Common Stocks		114,252		3,972,496			—		4,086,748
Short-Term Investments
Investment Company		71,907		—			—		71,907
Repurchase Agreements		—		1,251			—		1,251
Total Short-Term Investments		71,907		1,251			—		73,158
Total Assets		186,159		3,973,747			—		4,159,906
Liabilities:
Foreign Currency Forward Exchange Contract		—		(5,635	)		—		(5,635	)
Total	$	186,159	$	3,968,112		$	—	$	4,154,271

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of June 30, 2016.

	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 Contract	Currency Risk	$	(5,635	)

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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(40,016	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	768

At June 30, 2016, 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	$	—	$	(5,635	)

(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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	5,635	$	—	$	—	$	5,635

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	241,321,000

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, 2016.

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)
$	8,557	(b)	$	—	$	(8,557	)(c)(d)	$	0

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

(c) The Portfolio received cash collateral of approximately $6,450,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $2,559,000 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.

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	6,450	$	—	$	—	$	—	$	6,450
Total Borrowings	$	6,450	$	—	$	—	$	—	$	6,450
Gross amount of recognized liabilities for securities lending transactions									$	6,450

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 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, 2016, the advisory fee rate (net of waivers/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 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 as 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, 2016, approximately $81,000 of advisory fees were waived and approximately $633,000 of other expenses were reimbursed by the Adviser pursuant to this arrangement.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 Sub-Advisers 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $665,748,000 and $659,065,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $66,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	114,192	$	391,530	$	433,815	$	64	$	71,907

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	121,703	$	—	$	144,283	$	—

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, 2015:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in-Capital (000)
$	6,723	$	(6,723	)	$	—

At December 31, 2015, 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)
$	4,435	$	—

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short term and long term capital

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

losses of approximately $20,709,000 and $60,377,000, respectively, that do not have an expiration date.

In addition, at December 31, 2015, the Portfolio had available for Federal income tax purposes unused capital losses which will expire on the indicated 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, reducing the total carryforwad available.

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. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 41.8%.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 than 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 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the BoardW. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIESAN
1557926 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Real Estate Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

International Real Estate Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,014.40	$	1,019.89	$	5.01	$	5.02		1.00	%
International Real Estate Portfolio Class A		1,000.00		1,012.30		1,018.15		6.75		6.77		1.35
International Real Estate Portfolio Class L		1,000.00		1,010.20		1,015.66		9.25		9.27		1.85
International Real Estate Portfolio Class C		1,000.00		1,009.20		1,014.42		10.49		10.52		2.10
International Real Estate Portfolio Class IS		1,000.00		1,014.40		1,020.04		4.86		4.87		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

International Real Estate Portfolio

	Shares		Value (000)
Common Stocks (99.0%)
Australia (12.2%)
Dexus Property Group REIT		67,348	$	455
Goodman Group REIT		256,737		1,369
GPT Group REIT		270,658		1,095
Investa Office Fund REIT		59,875		191
Mirvac Group REIT		296,222		448
Scentre Group REIT		738,239		2,715
Shopping Centres Australasia Property Group REIT		38,010		65
Stockland REIT		238,109		839
Vicinity Centres REIT		158,952		395
Westfield Corp. REIT		284,358		2,266
				9,838
Austria (0.4%)
Atrium European Real Estate Ltd. (a)		57,416		247
BUWOG AG (a)		3,816		88
				335
China (1.1%)
China Overseas Land & Investment Ltd. (b)		108,000		345
China Resources Land Ltd. (b)		22,000		51
Global Logistic Properties Ltd.		384,300		519
				915
Finland (1.0%)
Citycon Oyj		355,556		809
France (7.2%)
Fonciere Des Regions REIT		3,525		314
Gecina SA REIT		6,454		882
ICADE REIT		10,081		717
Klepierre REIT		24,332		1,085
Unibail-Rodamco SE REIT		10,863		2,846
				5,844
Germany (3.7%)
ADO Properties SA (c)		3,121		120
Alstria Office AG REIT (a)		4,489		61
Deutsche Euroshop AG		2,597		119
Deutsche Wohnen AG		28,715		974
LEG Immobilien AG (a)		1,447		135
Vonovia SE		44,504		1,624
				3,033
Hong Kong (24.4%)
Cheung Kong Property Holdings Ltd.		400,500		2,521
Hang Lung Properties Ltd.		123,000		250
Henderson Land Development Co., Ltd.		160,193		908
Hongkong Land Holdings Ltd.		545,700		3,335
Hysan Development Co., Ltd.		432,836		1,930
Kerry Properties Ltd.		86,271		213
Link REIT		240,395		1,645
New World Development Co., Ltd.		656,748		667
Sino Land Co., Ltd.		66,945		110
Sun Hung Kai Properties Ltd.		436,456		5,259

	Shares		Value (000)
Swire Properties Ltd.		636,300	$	1,693
Wharf Holdings Ltd. (The)		197,117		1,206
				19,737
Ireland (1.4%)
Green REIT PLC		331,951		514
Hibernia REIT PLC		430,522		642
				1,156
Italy (0.1%)
Beni Stabili SpA REIT (a)		93,158		58
Japan (25.7%)
Activia Properties, Inc. REIT		97		512
Advance Residence Investment Corp. REIT		107		286
Aeon Mall Co., Ltd.		4,000		52
Daiwa Office Investment Corp. REIT		43		254
Frontier Real Estate Investment Corp. REIT		19		98
GLP J-REIT		314		396
Hulic Co., Ltd.		27,100		284
Hulic REIT, Inc.		53		96
Invincible Investment Corp. REIT		296		186
Japan Hotel REIT Investment Corp. REIT		64		54
Japan Prime Realty Investment Corp. REIT		19		81
Japan Real Estate Investment Corp. REIT		191		1,176
Japan Retail Fund Investment Corp. REIT		292		743
Kenedix Office Investment Corp. REIT		29		172
Mitsubishi Estate Co., Ltd.		238,000		4,352
Mitsui Fudosan Co., Ltd.		185,000		4,223
Mori Hills Investment Corp. REIT		191		299
Mori Trust Sogo Reit, Inc. REIT		158		299
Nippon Building Fund, Inc. REIT		246		1,512
Nippon Prologis, Inc. REIT		237		576
Nomura Real Estate Master Fund, Inc. REIT		717		1,133
Orix, Inc. J-REIT		272		467
Premier Investment Corp. REIT		23		30
Sumitomo Realty & Development Co., Ltd.		90,000		2,429
Tokyo Tatemono Co., Ltd.		4,400		53
Top REIT, Inc. REIT		13		52
United Urban Investment Corp. REIT		567		1,019
				20,834
Malta (0.0%)
BGP Holdings PLC (a)(d)(e)		4,769,371		—
Netherlands (1.6%)
Eurocommercial Properties N.V. CVA REIT		15,757		676
Vastned Retail N.V. REIT		2,028		82
Wereldhave N.V. REIT		10,948		497
				1,255
Norway (1.0%)
Entra ASA (c)		77,008		728
Norwegian Property ASA		91,290		100
				828

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

International Real Estate Portfolio

	Shares		Value (000)
Singapore (2.3%)
Ascendas Real Estate Investment Trust REIT		133,300	$	246
CapitaLand Commercial Trust Ltd. REIT		205,200		226
CapitaLand Ltd.		146,500		337
CapitaLand Mall Trust REIT		244,900		389
Mapletree Logistics Trust REIT		336,600		251
Suntec REIT		67,500		89
UOL Group Ltd.		76,022		310
				1,848
Spain (0.6%)
Hispania Activos Inmobiliarios SAU REIT		1,292		15
Inmobiliaria Colonial SA		249,317		181
Merlin Properties Socimi SA REIT		28,940		306
				502
Sweden (1.7%)
Atrium Ljungberg AB, Class B		16,607		268
Castellum AB		31,401		447
Fabege AB		4,895		83
Hufvudstaden AB, Class A		39,173		613
				1,411
Switzerland (1.9%)
Mobimo Holding AG (Registered) (a)		106		24
PSP Swiss Property AG (Registered)		13,813		1,338
Swiss Prime Site AG (Registered) (a)		1,700		154
				1,516
United Kingdom (12.7%)
British Land Co., PLC REIT		237,963		1,971
Capital & Regional PLC REIT		326,012		229
Derwent London PLC REIT		23,020		811
Great Portland Estates PLC REIT		82,775		693
Hammerson PLC REIT		142,044		1,038
Helical Bar PLC		16,072		61
Intu Properties PLC REIT		198,851		778
Kennedy Wilson Europe Real Estate PLC		14,949		192
Land Securities Group PLC REIT		172,827		2,446
LXB Retail Properties PLC (a)		291,600		245
Segro PLC REIT		95,156		534
Shaftesbury PLC REIT		10,449		123
ST Modwen Properties PLC		110,978		398
Unite Group PLC		22,437		186
Urban & Civic PLC		142,753		398
Workspace Group PLC REIT		19,560		182
				10,285
Total Common Stocks (Cost $80,170)				80,204

	Shares		Value (000)
Short-Term Investment (0.6%)
Investment Company (0.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $470)		469,538	$	470
Total Investments (99.6%) (Cost $80,640) (f)(g)				80,674
Other Assets in Excess of Liabilities (0.4%)				314
Net Assets (100.0%)			$	80,988

(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, 2016.

(e)  At June 30, 2016, the Portfolio held a fair valued security valued at $0, representing 0.00% 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.

(f)  The approximate fair value and percentage of net assets, $80,204,000 and 99.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $6,396,000 and the aggregate gross unrealized depreciation is approximately $6,362,000 resulting in net unrealized appreciation of approximately $34,000.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Diversified		53.3	%
Retail		21.1
Office		14.9
Other*		10.7
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $80,170)	$	80,204
Investment in Security of Affiliated Issuer, at Value (Cost $470)		470
Total Investments in Securities, at Value (Cost $80,640)		80,674
Foreign Currency, at Value (Cost $105)		103
Receivable for Investments Sold		573
Dividends Receivable		207
Tax Reclaim Receivable		48
Receivable for Portfolio Shares Sold		1
Receivable from Affiliate		—	@
Other Assets		62
Total Assets		81,668
Liabilities:
Payable for Investments Purchased		343
Payable for Portfolio Shares Redeemed		129
Payable for Advisory Fees		103
Payable for Custodian Fees		50
Payable for Professional Fees		27
Payable for Administration Fees		5
Payable for Transfer Agency Fees — Class I		1
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 Sub Transfer Agency Fees — Class I		1
Payable for Sub Transfer Agency Fees — Class A		1
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Directors' Fees and Expenses		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		—	@
Other Liabilities		19
Total Liabilities		680
Net Assets	$	80,988
Net Assets Consist Of:
Paid-in-Capital	$	688,336
Undistributed Net Investment Income		902
Accumulated Net Realized Loss		(608,275	)
Unrealized Appreciation (Depreciation) on:
Investments		34
Foreign Currency Translations		(9	)
Net Assets	$	80,988

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	57,629
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		3,035,316
Net Asset Value, Offering and Redemption Price Per Share	$	18.99
CLASS A:
Net Assets	$	2,039
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		107,542
Net Asset Value, Redemption Price Per Share	$	18.96
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	1.05
Maximum Offering Price Per Share	$	20.01
CLASS L:
Net Assets	$	55
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,934
Net Asset Value, Offering and Redemption Price Per Share	$	18.80
CLASS C:
Net Assets	$	23
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	$	18.66
CLASS IS:
Net Assets	$	21,242
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,119,047
Net Asset Value, Offering and Redemption Price Per Share	$	18.98

@  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, 2016 (unaudited)

International Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $112 of Foreign Taxes Withheld)	$	1,678
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		1,678
Expenses:
Advisory Fees (Note B)		334
Custodian Fees (Note F)		59
Professional Fees		55
Registration Fees		36
Administration Fees (Note C)		33
Sub Transfer Agency Fees — Class I		11
Sub Transfer Agency Fees — Class A		2
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Shareholder Reporting Fees		7
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		5
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)		—	@
Directors' Fees and Expenses		2
Other Expenses		9
Total Expenses		562
Waiver of Advisory Fees (Note B)		(135	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(4	)
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)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		419
Net Investment Income		1,259
Realized Loss:
Investments Sold		(1,918	)
Foreign Currency Transactions		(1	)
Net Realized Loss		(1,919	)
Change in Unrealized Appreciation (Depreciation):
Investments		1,584
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		1,585
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(334	)
Net Increase in Net Assets Resulting from Operations	$	925

@  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, 2016

International Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	1,259		$	1,774
Net Realized Loss		(1,919	)		(4,948	)
Net Change in Unrealized Appreciation (Depreciation)		1,585			199
Net Increase (Decrease) in Net Assets Resulting from Operations		925			(2,975	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(1,912	)
Class A:
Net Investment Income		—			(53	)
Class H:**
Net Investment Income		—			(1	)
Class L:
Net Investment Income		—			(1	)
Class C:
Net Investment Income		—			(—	@)
Class IS:
Net Investment Income		—			(294	)
Total Distributions		—			(2,261	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,400			5,627
Distributions Reinvested		—			1,015
Redeemed		(11,840	)		(29,676	)
Class A:
Subscribed		14			128
Distributions Reinvested		—			47
Redeemed		(297	)		(525	)
Class H:**
Distributions Reinvested		—			1
Redeemed		(10	)		(103	)
Class L:
Distributions Reinvested		—			1
Redeemed		—			(40	)
Class C:
Subscribed		—			25	*
Distributions Reinvested		—			—	@*
Redeemed		—			(—	@)*
Class IS:
Subscribed		112			19,970
Distributions Reinvested		—			294
Redeemed		(115	)		(555	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(10,736	)		(3,791	)
Redemption Fees		—	@		—	@
Total Decrease in Net Assets		(9,811	)		(9,027	)
Net Assets:
Beginning of Period		90,799			99,826
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $902 and $(357), respectively)	$	80,988		$	90,799

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

International Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		78			272
Shares Issued on Distributions Reinvested		—			52
Shares Redeemed		(646	)		(1,473	)
Net Decrease in Class I Shares Outstanding		(568	)		(1,149	)
Class A:
Shares Subscribed		—	@@		6
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(16	)		(26	)
Net Decrease in Class A Shares Outstanding		(16	)		(18	)
Class H:**
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		(5	)
Net Decrease in Class H Shares Outstanding		(1	)		(5	)
Class L:
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(2	)
Net Decrease in Class L Shares Outstanding		—			(2	)
Class C:
Shares Subscribed		—			1	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		—			(—	@@)*
Net Increase in Class C Shares Outstanding		—			1
Class IS:
Shares Subscribed		6			1,002
Shares Issued on Distributions Reinvested		—			15
Shares Redeemed		(6	)		(27	)
Net Increase (Decrease) in Class IS Shares Outstanding		(—	@@)		990

*  For the period April 30, 2015 through December 31, 2015.

**  Class H shares were liquidated on February 29, 2016.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	18.72		$	19.84		$	19.99		$	20.16		$	14.66		$	18.85
Income (Loss) from Investment Operations:
Net Investment Income†		0.28			0.37			0.39			0.41			0.44			0.39
Net Realized and Unrealized Gain (Loss)		(0.01	)		(1.00	)		(0.07	)		0.65			5.89			(4.04	)
Total from Investment Operations		0.27			(0.63	)		0.32			1.06			6.33			(3.65	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.49	)		(0.47	)		(1.23	)		(0.83	)		(0.54	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	18.99		$	18.72		$	19.84		$	19.99		$	20.16		$	14.66
Total Return++		1.44	%#		(3.29	)%		1.61	%		5.56	%		44.05	%		(19.92	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	57,629		$	67,459		$	94,269		$	130,023		$	138,390		$	207,695
Ratio of Expenses to Average Net Assets (1)		1.00	%+*		1.00	%+		1.00	%+		1.00	%+		1.00	%+		1.00	%+
Ratio of Net Investment Income to Average Net Assets (1)		3.00	%+*		1.84	%+		1.91	%+		2.00	%+		2.54	%+		2.17	%+
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		12	%#		37	%		59	%		40	%		31	%		18	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.34	%*		1.29	%		1.16	%		1.23	%+		1.12	%		N/A
Net Investment Income to Average Net Assets		2.66	%*		1.55	%		1.75	%		1.76	%+		2.42	%		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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	18.73		$	19.84		$	19.98		$	20.14		$	14.65		$	18.83
Income (Loss) from Investment Operations:
Net Investment Income†		0.25			0.30			0.31			0.35			0.39			0.34
Net Realized and Unrealized Gain (Loss)		(0.02	)		(1.00	)		(0.06	)		0.66			5.89			(4.04	)
Total from Investment Operations		0.23			(0.70	)		0.25			1.01			6.28			(3.70	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.41	)		(0.39	)		(1.17	)		(0.79	)		(0.48	)
Redemption Fees		0.00	‡		—			0.00	‡		0.00	‡		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	18.96		$	18.73		$	19.84		$	19.98		$	20.14		$	14.65
Total Return++		1.23	%#		(3.61	)%		1.27	%		5.28	%		43.71	%		(20.16	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,039		$	2,308		$	2,792		$	3,331		$	4,431		$	3,400
Ratio of Expenses to Average Net Assets (1)		1.35	%+*		1.35	%+		1.35	%+		1.27	%+^		1.25	%+		1.25	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.66	%+*		1.48	%+		1.55	%+		1.72	%+		2.23	%+		1.92	%+
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		12	%#		37	%		59	%		40	%		31	%		18	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.81	%*		1.70	%		1.58	%		1.53	%+		1.38	%		N/A
Net Investment Income to Average Net Assets		2.20	%*		1.13	%		1.32	%		1.47	%+		2.10	%		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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from April 27, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	18.61		$	19.69		$	19.86		$	20.13		$	17.31
Income (Loss) from Investment Operations:
Net Investment Income†		0.20			0.18			0.21			0.22			0.16
Net Realized and Unrealized Gain (Loss)		(0.01	)		(0.97	)		(0.06	)		0.68			3.40
Total from Investment Operations		0.19			(0.79	)		0.15			0.90			3.56
Distributions from and/or in Excess of:
Net Investment Income		—			(0.29	)		(0.32	)		(1.17	)		(0.74	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	18.80		$	18.61		$	19.69		$	19.86		$	20.13
Total Return++		1.02	%#		(4.11	)%		0.75	%		4.73	%		21.28	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	55		$	55		$	95		$	73		$	12
Ratio of Expenses to Average Net Assets (1)		1.85	%+*		1.85	%+		1.85	%+		1.81	%+^^		1.75	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.23	%+*		0.90	%+		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	%§		0.00	%§*
Portfolio Turnover Rate		12	%#		37	%		59	%		40	%		31	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.17	%*		4.58	%		3.90	%		3.44	%+		1.93	%*
Net Investment Income (Loss) to Average Net Assets		(1.09	)%*		(1.83	)%		(1.00	)%		(0.55	)%+		1.19	%*

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	18.50		$	21.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.18			0.06
Net Realized and Unrealized Loss		(0.02	)		(2.48	)
Total from Investment Operations		0.16			(2.42	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.36	)
Redemption Fees		—			0.00	‡
Net Asset Value, End of Period	$	18.66		$	18.50
Total Return++		0.92	%#		(11.47	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	23		$	22
Ratios of Expenses to Average Net Assets (1)		2.10	%+*		2.10	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.98	%+*		0.45	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		12	%#		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		11.39	%*		10.98	%*
Net Investment Loss to Average Net Assets		(7.31	)%*		(8.43	)%*

^  Commencement of Offering.

†  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."

§  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, 2016

Financial Highlights

International Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	18.71		$	19.83		$	19.99		$	19.97
Income (Loss) from Investment Operations:
Net Investment Income†		0.29			0.37			0.23			0.11
Net Realized and Unrealized Gain (Loss)		(0.02	)		(1.00	)		0.09			0.22
Total from Investment Operations		0.27			(0.63	)		0.32			0.33
Distributions from and/or in Excess of:
Net Investment Income		—			(0.49	)		(0.48	)		(0.31	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—
Net Asset Value, End of Period	$	18.98		$	18.71		$	19.83		$	19.99
Total Return++		1.44	%#		(3.26	)%		1.60	%		1.68	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21,242		$	20,944		$	2,557		$	10
Ratio of Expenses to Average Net Assets (1)		0.97	%+*		0.97	%+		0.97	%+		0.97	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		3.11	%+*		1.86	%+		1.14	%+		1.76	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		12	%#		37	%		59	%		40	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.30	%*		1.30	%		1.13	%		6.46	%*
Net Investment Income (Loss) to Average Net Assets		2.78	%*		1.53	%		0.98	%		(3.73	)%*

^  Commencement of Offering.

†  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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks to provide current income and long-term capital appreciation.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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.

Effective February 29, 2016, the Fund's Board of Directors (the "Directors") approved the elimination of the H share class.

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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant

markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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; (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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—	$	42,979	$	—	†	$	42,979	†
Industrial		—		3,891		—			3,891
Lodging/Resorts		—		54		—			54
Mixed Industrial/Office		—		455		—			455
Office		—		11,997		—			11,997
Residential		—		3,809		—			3,809
Retail		—		17,019		—			17,019
Total Common Stocks		—		80,204		—	†		80,204	†
Short-Term Investment
Investment Company		470		—		—			470
Total Assets	$	470	$	80,204	$	—	†	$	80,674	†

†  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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, 2016	$	—

†  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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.  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.

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 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 0.97% 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 as 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, 2016, approximately $135,000 of advisory fees were waived and approximately $8,000 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 Sub-Advisers 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $9,911,000 and $19,436,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

"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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	602	$	7,001	$	7,133	$	—	@	$	470

@ Amount is less than $500.

During the six months ended June 30, 2016, 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio engaged in cross-trade purchases of approximately $17,000.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	2,263	$	—	$	3,177	$	—

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, 2016

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

reclassifications among the components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in Capital (000)
$	323	$	(329	)	$	6

At December 31, 2015, 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)
$	454	$	—

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $2,733,000 and long-term capital losses of approximately $207,449,000 that do not have an expiration date.

In addition, at December 31, 2015, 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. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 70.3%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIRESAN
1558902 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Real Estate Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	7
Statement of Operations	9
Statements of Changes in Net Assets	10
Financial Highlights	12
Notes to Financial Statements	17
Investment Advisory Agreement Approval	24
Privacy Notice	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,068.50	$	1,019.69	$	5.35	$	5.22		1.04	%
Global Real Estate Portfolio Class A		1,000.00		1,066.10		1,018.20		6.88		6.72		1.34
Global Real Estate Portfolio Class L		1,000.00		1,064.10		1,015.91		9.24		9.02		1.80
Global Real Estate Portfolio Class C		1,000.00		1,062.50		1,014.17		11.03		10.77		2.15
Global Real Estate Portfolio Class IS		1,000.00		1,067.50		1,020.09		4.93		4.82		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Real Estate Portfolio

	Shares		Value (000)
Common Stocks (98.1%)
Australia (5.1%)
Dexus Property Group REIT		769,553	$	5,197
Goodman Group REIT		2,736,908		14,589
GPT Group REIT		2,835,366		11,470
Investa Office Fund REIT		627,236		2,007
Mirvac Group REIT		3,500,870		5,296
Scentre Group REIT		7,513,051		27,633
Shopping Centres Australasia Property Group REIT		401,222		685
Stockland REIT		2,483,008		8,745
Vicinity Centres REIT		1,874,708		4,665
Westfield Corp. REIT		2,998,967		23,894
				104,181
Austria (0.2%)
Atrium European Real Estate Ltd. (a)		573,247		2,465
BUWOG AG (a)		35,053		809
				3,274
Brazil (0.0%)
BR Properties SA		107,590		251
Canada (2.1%)
Boardwalk REIT		155,661		6,935
Brookfield Canada Office Properties REIT		251,432		5,586
Crombie Real Estate Investment Trust REIT		275,920		3,278
Dream Office Real Estate Investment Trust REIT		193,248		2,779
Extendicare, Inc.		159,067		1,002
First Capital Realty, Inc.		388,492		6,664
RioCan REIT		640,921		14,550
Smart Real Estate Investment Trust REIT		81,154		2,400
				43,194
China (0.5%)
China Overseas Land & Investment Ltd. (b)		1,332,000		4,251
China Resources Land Ltd. (b)		234,000		549
Global Logistic Properties Ltd.		3,770,900		5,089
				9,889
Finland (0.4%)
Citycon Oyj		3,530,593		8,034
France (2.8%)
Fonciere Des Regions REIT		33,390		2,972
Gecina SA REIT		63,951		8,742
ICADE REIT		98,349		6,993
Klepierre REIT		237,783		10,608
Unibail-Rodamco SE REIT		107,395		28,137
				57,452
Germany (1.4%)
ADO Properties SA (c)		30,522		1,173
Alstria Office AG REIT (a)		83,069		1,122
Deutsche Euroshop AG		25,753		1,178
Deutsche Wohnen AG		274,750		9,324
LEG Immobilien AG (a)		11,291		1,055
Vonovia SE		425,483		15,528
				29,380

	Shares		Value (000)
Hong Kong (10.0%)
Cheung Kong Property Holdings Ltd.		4,056,500	$	25,534
Hang Lung Properties Ltd.		1,392,000		2,826
Henderson Land Development Co., Ltd.		1,623,602		9,200
Hongkong Land Holdings Ltd.		5,525,300		33,772
Hysan Development Co., Ltd.		4,517,014		20,142
Kerry Properties Ltd.		875,220		2,159
Link REIT		2,866,775		19,612
New World Development Co., Ltd.		7,000,109		7,111
Sino Land Co., Ltd.		973,637		1,606
Sun Hung Kai Properties Ltd.		4,387,367		52,859
Swire Properties Ltd.		6,871,600		18,288
Wharf Holdings Ltd. (The)		2,056,763		12,583
				205,692
Ireland (0.6%)
Green REIT PLC		3,266,825		5,054
Hibernia REIT PLC		4,256,096		6,350
				11,404
Italy (0.0%)
Beni Stabili SpA REIT (a)		935,285		579
Japan (10.3%)
Activia Properties, Inc. REIT		1,267		6,687
Advance Residence Investment Corp. REIT		1,064		2,844
Aeon Mall Co., Ltd.		42,400		553
Daiwa Office Investment Corp. REIT		425		2,511
Frontier Real Estate Investment Corp. REIT		199		1,030
GLP J-REIT		3,876		4,894
Hulic Co., Ltd.		292,600		3,068
Invincible Investment Corp. REIT		3,255		2,050
Japan Hotel REIT Investment Corp. REIT		667		559
Japan Prime Realty Investment Corp. REIT		206		882
Japan Real Estate Investment Corp. REIT		1,905		11,725
Japan Retail Fund Investment Corp. REIT		2,887		7,347
Kenedix Office Investment Corp. REIT		338		2,009
Mitsubishi Estate Co., Ltd.		2,388,000		43,662
Mitsui Fudosan Co., Ltd.		1,878,000		42,871
Mori Hills Investment Corp. REIT		1,905		2,977
Mori Trust Sogo Reit, Inc. REIT		1,576		2,978
Nippon Building Fund, Inc. REIT		2,466		15,158
Nippon Prologis, Inc. REIT		2,936		7,130
Nomura Real Estate Master Fund, Inc. REIT		7,243		11,449
Orix, Inc. J-REIT		2,707		4,649
Premier Investment Corp. REIT		285		374
Sumitomo Realty & Development Co., Ltd.		919,000		24,800
Tokyo Tatemono Co., Ltd.		42,700		510
Tokyu, Inc. REIT		208		295
Top REIT, Inc. REIT		141		568
United Urban Investment Corp. REIT		5,338		9,588
				213,168
Malta (0.0%)
BGP Holdings PLC (a)(d)(e)(f)		12,867,024		—

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	Shares		Value (000)
Netherlands (0.6%)
Eurocommercial Properties N.V. CVA REIT		156,252	$	6,704
Vastned Retail N.V. REIT		19,820		805
Wereldhave N.V. REIT		106,993		4,855
				12,364
Norway (0.4%)
Entra ASA (c)		750,270		7,094
Norwegian Property ASA		865,679		944
				8,038
Singapore (0.9%)
Ascendas Real Estate Investment Trust REIT		1,412,600		2,610
CapitaLand Commercial Trust Ltd. REIT		2,035,700		2,239
CapitaLand Ltd.		1,741,000		4,000
CapitaLand Mall Trust REIT		2,495,300		3,962
Mapletree Logistics Trust REIT		3,589,800		2,676
Suntec REIT		704,400		931
UOL Group Ltd.		747,893		3,051
				19,469
Spain (0.2%)
Hispania Activos Inmobiliarios SAU REIT		12,753		150
Inmobiliaria Colonial SA		2,443,851		1,771
Merlin Properties Socimi SA REIT		274,070		2,898
				4,819
Sweden (0.7%)
Atrium Ljungberg AB, Class B		178,347		2,881
Castellum AB		306,869		4,368
Fabege AB		47,840		810
Hufvudstaden AB, Class A		407,379		6,379
				14,438
Switzerland (0.7%)
Mobimo Holding AG (Registered) (a)		1,054		240
PSP Swiss Property AG (Registered)		124,649		12,077
Swiss Prime Site AG (Registered) (a)		15,116		1,367
				13,684
United Kingdom (6.1%)
British Land Co., PLC REIT		3,207,480		26,562
Capital & Regional PLC REIT		3,993,426		2,801
Derwent London PLC REIT		365,187		12,868
Great Portland Estates PLC REIT		1,409,419		11,809
Hammerson PLC REIT		1,420,829		10,380
Helical Bar PLC		156,428		594
Intu Properties PLC REIT		1,943,267		7,603
Kennedy Wilson Europe Real Estate PLC		148,222		1,906
Land Securities Group PLC REIT		2,187,987		30,966
LXB Retail Properties PLC (a)		3,172,353		2,665
Segro PLC REIT		931,514		5,229
Shaftesbury PLC REIT		102,218		1,207
ST Modwen Properties PLC		1,096,597		3,936
Unite Group PLC		166,281		1,378
Urban & Civic PLC		1,396,430		3,891
Workspace Group PLC REIT		191,340		1,782
				125,577

	Shares		Value (000)
United States (55.1%)
Acadia Realty Trust REIT		49,630	$	1,763
American Homes 4 Rent, Class A REIT		97,140		1,989
Apartment Investment & Management Co., Class A REIT		449,192		19,836
AvalonBay Communities, Inc. REIT		337,892		60,952
Boston Properties, Inc. REIT		483,052		63,715
Brixmor Property Group, Inc. REIT		239,044		6,325
Camden Property Trust REIT		394,891		34,916
CBL & Associates Properties, Inc. REIT		45,042		419
Chesapeake Lodging Trust REIT		395,401		9,193
Corporate Office Properties Trust REIT		127,543		3,772
Cousins Properties, Inc. REIT		655,168		6,814
CubeSmart REIT		198,706		6,136
DDR Corp. REIT		376,824		6,836
Douglas Emmett, Inc. REIT		434,494		15,433
Duke Realty Corp. REIT		421,440		11,236
Equity Lifestyle Properties, Inc. REIT		51,097		4,090
Equity One, Inc. REIT		91,210		2,935
Equity Residential REIT		1,219,701		84,013
Essex Property Trust, Inc. REIT		119,373		27,228
Exeter Industrial Value Fund, LP REIT (a)(d)(e)(f) (See Note A-4)		1,860,000		593
Gaming and Leisure Properties, Inc. REIT		200,668		6,919
General Growth Properties, Inc. REIT		1,544,249		46,050
HCP, Inc. REIT		101,981		3,608
Healthcare Realty Trust, Inc. REIT		216,453		7,574
Hilton Worldwide Holdings, Inc.		771,251		17,376
Host Hotels & Resorts, Inc. REIT		3,409,314		55,265
Hudson Pacific Properties, Inc. REIT		570,402		16,644
Kimco Realty Corp. REIT		840,380		26,371
LaSalle Hotel Properties REIT		1,124,177		26,508
Lexington Realty Trust REIT		23,753		240
Liberty Property Trust REIT		220,305		8,751
Macerich Co. (The) REIT		4,129		353
Mack-Cali Realty Corp. REIT		89,022		2,404
Mid-America Apartment Communities, Inc. REIT		14,356		1,528
National Retail Properties, Inc. REIT		347,648		17,980
Omega Healthcare Investors, Inc. REIT		277,941		9,436
Paramount Group, Inc. REIT		297,860		4,748
Post Properties, Inc. REIT		44,266		2,703
ProLogis, Inc. REIT		461,377		22,626
Public Storage REIT		212,441		54,298
QTS Realty Trust, Inc., Class A REIT		91,962		5,148
Realty Income Corp. REIT		15,215		1,055
Regency Centers Corp. REIT		480,411		40,225
Rexford Industrial Realty, Inc. REIT		219,901		4,638
Senior Housing Properties Trust REIT		426,998		8,894
Simon Property Group, Inc. REIT		754,096		163,563
Sovran Self Storage, Inc. REIT		78,462		8,232
Spirit Realty Capital, Inc. REIT		206,810		2,641
STORE Capital Corp. REIT		294,884		8,684
Sunstone Hotel Investors, Inc. REIT		364,243		4,396

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Real Estate Portfolio

	Shares		Value (000)
United States (cont'd)
Tanger Factory Outlet Centers, Inc. REIT		662,741	$	26,629
Taubman Centers, Inc. REIT		127,890		9,490
Ventas, Inc. REIT		447,546		32,590
Vornado Realty Trust REIT		888,851		88,992
Welltower, Inc. REIT		302,375		23,032
WP GLIMCHER, Inc. REIT		140,427		1,571
Xenia Hotels & Resorts, Inc. REIT		319,891		5,368
				1,134,724
Total Common Stocks (Cost $1,622,509)				2,019,611
Short-Term Investment (0.2%)
Investment Company (0.2%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (Cost $3,891)		3,890,725		3,891
Total Investments (98.3%) (Cost $1,626,400) (g)(h)				2,023,502
Other Assets in Excess of Liabilities (1.7%)				35,880
Net Assets (100.0%)			$	2,059,382

(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, 2016.

(e)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $593,000, representing less than 0.05% 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.

(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 $110,000. At June 30, 2016, this security had an aggregate market value of approximately $593,000, representing less than 0.05% of net assets.

(g)  The approximate fair value and percentage of net assets, $841,442,000 and 40.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(h)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $441,956,000 and the aggregate gross unrealized depreciation is approximately $44,854,000 resulting in net unrealized appreciation of approximately $397,102,000.

CVA  Certificaten Van Aandelen.

REIT  Real Estate Investment Trust.

Portfolio Composition

Classification	Percentage of Total Investments
Retail		27.9	%
Diversified		27.6
Residential		13.9
Other*		12.6
Office		12.1
Lodging/Resorts		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.
6

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,622,509)	$	2,019,611
Investment in Security of Affiliated Issuer, at Value (Cost $3,891)		3,891
Total Investments in Securities, at Value (Cost $1,626,400)		2,023,502
Foreign Currency, at Value (Cost $4,865)		4,834
Receivable for Investments Sold		33,491
Dividends Receivable		6,647
Receivable for Portfolio Shares Sold		2,928
Tax Reclaim Receivable		396
Receivable from Affiliate		5
Other Assets		187
Total Assets		2,071,990
Liabilities:
Payable for Investments Purchased		6,313
Payable for Advisory Fees		4,780
Payable for Portfolio Shares Redeemed		876
Payable for Sub Transfer Agency Fees — Class I		252
Payable for Sub Transfer Agency Fees — Class A		5
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		134
Payable for Custodian Fees		89
Payable for Shareholder Services Fees — Class A		31
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Professional Fees		23
Payable for Transfer Agency Fees — Class I		4
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		98
Total Liabilities		12,608
Net Assets	$	2,059,382
Net Assets Consist Of:
Paid-in-Capital	$	1,700,625
Undistributed Net Investment Income		23,509
Accumulated Net Realized Loss		(61,769	)
Unrealized Appreciation (Depreciation) on:
Investments		397,102
Foreign Currency Translations		(85	)
Net Assets	$	2,059,382

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Real Estate Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	604,820
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		52,432,423
Net Asset Value, Offering and Redemption Price Per Share	$	11.54
CLASS A:
Net Assets	$	156,127
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		13,632,263
Net Asset Value, Redemption Price Per Share	$	11.45
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.63
Maximum Offering Price Per Share	$	12.08
CLASS L:
Net Assets	$	2,828
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		250,455
Net Asset Value, Offering and Redemption Price Per Share	$	11.29
CLASS C:
Net Assets	$	275
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		24,467
Net Asset Value, Offering and Redemption Price Per Share	$	11.22
CLASS IS:
Net Assets	$	1,295,332
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		112,210,915
Net Asset Value, Offering and Redemption Price Per Share	$	11.54

@  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, 2016 (unaudited)

Global Real Estate Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,519 of Foreign Taxes Withheld)	$	52,121
Dividends from Security of Affiliated Issuer (Note G)		42
Total Investment Income		52,163
Expenses:
Advisory Fees (Note B)		9,606
Administration Fees (Note C)		904
Sub Transfer Agency Fees — Class I		353
Sub Transfer Agency Fees — Class A		80
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Shareholder Services Fees — Class A (Note D)		166
Distribution and Shareholder Services Fees — Class L (Note D)		13
Distribution and Shareholder Services Fees — Class C (Note D)		1
Custodian Fees (Note F)		138
Shareholder Reporting Fees		82
Professional Fees		56
Registration Fees		44
Directors' Fees and Expenses		26
Transfer Agency Fees — Class I (Note E)		8
Transfer Agency Fees — Class A (Note E)		4
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		3
Pricing Fees		7
Other Expenses		45
Total Expenses		11,538
Rebate from Morgan Stanley Affiliate (Note G)		(31	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Net Expenses		11,506
Net Investment Income		40,657
Realized Gain (Loss):
Investments Sold		(11,120	)
Foreign Currency Transactions		461
Net Realized Loss		(10,659	)
Change in Unrealized Appreciation (Depreciation):
Investments		111,088
Foreign Currency Translations		(27	)
Net Change in Unrealized Appreciation (Depreciation)		111,061
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		100,402
Net Increase in Net Assets Resulting from Operations	$	141,059

@  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, 2016

Global Real Estate Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	40,657		$	40,749
Net Realized Gain (Loss)		(10,659	)		41,627
Net Change in Unrealized Appreciation (Depreciation)		111,061			(106,276	)
Net Increase (Decrease) in Net Assets Resulting from Operations		141,059			(23,900	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(21,346	)
Class A:
Net Investment Income		—			(2,184	)
Class L:
Net Investment Income		—			(48	)
Class C:
Net Investment Income		—			(3	)
Class IS:
Net Investment Income		—			(18,420	)
Total Distributions		—			(42,001	)
Capital Share Transactions:(1)
Class I:
Subscribed		63,805			271,674
Distributions Reinvested		—			20,026
Redeemed		(697,299	)		(900,616	)
Class A:
Subscribed		60,913			75,282
Distributions Reinvested		—			2,164
Redeemed		(48,353	)		(44,823	)
Class L:
Subscribed		—			392
Distributions Reinvested		—			48
Redeemed		(1,832	)		(554	)
Class C:
Subscribed		70			195	*
Distributions Reinvested		—			2	*
Class IS:
Subscribed		688,483			611,395
Distributions Reinvested		—			16,673
Redeemed		(493,188	)		(165,921	)
Net Decrease in Net Assets Resulting from Capital Share Transactions		(427,401	)		(114,063	)
Total Decrease in Net Assets		(286,342	)		(179,964	)
Net Assets:
Beginning of Period		2,345,724			2,525,688
End of Period (Including Undistributed Net Investment Income and Accumulated Undistributed Distributions in Excess of Net Investment Income of $23,509 and $(17,148), respectively)	$	2,059,382		$	2,345,724

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Real Estate Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		5,844			24,005
Shares Issued on Distributions Reinvested		—			1,847
Shares Redeemed		(63,819	)		(80,137	)
Net Decrease in Class I Shares Outstanding		(57,975	)		(54,285	)
Class A:
Shares Subscribed		5,768			6,969
Shares Issued on Distributions Reinvested		—			201
Shares Redeemed		(4,753	)		(4,125	)
Net Increase in Class A Shares Outstanding		1,015			3,045
Class L:
Shares Subscribed		—			34
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(174	)		(50	)
Net Decrease in Class L Shares Outstanding		(174	)		(11	)
Class C:
Shares Subscribed		6			18	*
Shares Issued on Distributions Reinvested		—			—	@@*
Net Increase in Class C Shares Outstanding		6			18
Class IS:
Shares Subscribed		63,036			54,250
Shares Issued on Distributions Reinvested		—			1,537
Shares Redeemed		(44,560	)		(14,851	)
Net Increase in Class IS Shares Outstanding		18,476			40,936

*  For the period April 30, 2015 through December 31, 2015.

@@  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, 2016

Financial Highlights

Global Real Estate Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	10.80		$	11.10		$	9.91		$	9.77		$	7.77		$	8.78
Income (Loss) from Investment Operations:
Net Investment Income†		0.18			0.18			0.20			0.18			0.17			0.14
Net Realized and Unrealized Gain (Loss)		0.56			(0.28	)		1.19			0.16			2.17			(0.99	)
Total from Investment Operations		0.74			(0.10	)		1.39			0.34			2.34			(0.85	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.20	)		(0.20	)		(0.20	)		(0.34	)		(0.16	)
Net Asset Value, End of Period	$	11.54		$	10.80		$	11.10		$	9.91		$	9.77		$	7.77
Total Return++		6.85	%#		(0.94	)%		14.08	%		3.55	%		30.19	%		(9.67	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	604,820		$	1,192,624		$	1,828,656		$	1,793,614		$	1,880,999		$	1,337,853
Ratio of Expenses to Average Net Assets (1)		1.04	%+*		1.05	%+		1.05	%+		1.02	%+		1.02	%+		1.04	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.05	%+		N/A			1.02	%+		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		3.43	%+*		1.65	%+		1.85	%+		1.77	%+		2.42	%+		2.12	%+
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	%#		29	%		32	%		33	%		29	%		28	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			1.05	%		1.05	%		N/A			N/A			N/A
Net Investment Income to Average Net Assets		N/A			1.65	%		1.85	%		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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Real Estate Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	10.74		$	11.05		$	9.86		$	9.72		$	7.73		$	8.74
Income (Loss) from Investment Operations:
Net Investment Income†		0.18			0.16			0.17			0.15			0.15			0.12
Net Realized and Unrealized Gain (Loss)		0.53			(0.30	)		1.19			0.15			2.16			(0.98	)
Total from Investment Operations		0.71			(0.14	)		1.36			0.30			2.31			(0.86	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.17	)		(0.17	)		(0.16	)		(0.32	)		(0.15	)
Net Asset Value, End of Period	$	11.45		$	10.74		$	11.05		$	9.86		$	9.72		$	7.73
Total Return++		6.61	%#		(1.25	)%		13.88	%		3.18	%		29.93	%		(9.91	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	156,127		$	135,517		$	105,766		$	96,046		$	171,413		$	130,244
Ratio of Expenses to Average Net Assets (1)		1.34	%+*		1.34	%+		1.31	%+		1.30	%+^		1.27	%+		1.29	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.34	%+		N/A			1.30	%+^		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		3.26	%+*		1.47	%+		1.60	%+		1.43	%+		2.17	%+		1.87	%+
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	%#		29	%		32	%		33	%		29	%		28	%
(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			1.32	%		N/A			1.29	%
Net Investment Income to Average Net Assets		N/A			N/A			N/A			1.41	%		N/A			1.87	%

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Real Estate Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	10.61		$	10.91		$	9.74		$	9.59		$	7.63		$	8.62
Income (Loss) from Investment Operations:
Net Investment Income†		0.14			0.12			0.12			0.10			0.10			0.07
Net Realized and Unrealized Gain (Loss)		0.54			(0.31	)		1.17			0.16			2.13			(0.96	)
Total from Investment Operations		0.68			(0.19	)		1.29			0.26			2.23			(0.89	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.11	)		(0.12	)		(0.11	)		(0.27	)		(0.10	)
Net Asset Value, End of Period	$	11.29		$	10.61		$	10.91		$	9.74		$	9.59		$	7.63
Total Return++		6.41	%#		(1.71	)%		13.27	%		2.77	%		29.26	%		(10.33	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,828		$	4,509		$	4,755		$	5,844		$	7,050		$	6,418
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.78	%+		1.79	%+		1.77	%+^		1.77	%+		1.79	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			1.77	%+		N/A			1.77	%+^		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		2.72	%+*		1.12	%+		1.08	%+		0.98	%+		1.67	%+		1.37	%+
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	%#		29	%		32	%		33	%		29	%		28	%
(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			N/A			1.79	%
Net Investment Income to Average Net Assets		N/A			N/A			N/A			N/A			N/A			1.37	%

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Real Estate Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.56		$	11.23
Income (Loss) from Investment Operations:
Net Investment Income†		0.13			0.07
Net Realized and Unrealized Gain (Loss)		0.53			(0.60	)
Total from Investment Operations		0.66			(0.53	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)
Net Asset Value, End of Period	$	11.22		$	10.56
Total Return++		6.25	%#		(4.71	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	275		$	191
Ratio of Expenses to Average Net Assets (1)		2.15	%+*		2.15	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A%+*			2.15	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.49	%+*		1.01	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		15	%#		29	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.86	%*		3.25	%*
Net Investment Income (Loss) to Average Net Assets		1.78	%*		(0.09	)%*

^  Commencement of Offering.

†  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, 2016

Financial Highlights

Global Real Estate Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	10.81		$	11.11		$	9.91		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income†		0.21			0.20			0.22			0.08
Net Realized and Unrealized Gain (Loss)		0.52			(0.29	)		1.19			0.02
Total from Investment Operations		0.73			(0.09	)		1.41			0.10
Distributions from and/or in Excess of:
Net Investment Income		—			(0.21	)		(0.21	)		(0.20	)
Net Asset Value, End of Period	$	11.54		$	10.81		$	11.11		$	9.91
Total Return++		6.75	%#		(0.84	)%		14.27	%		1.08	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,295,332		$	1,012,883		$	586,511		$	206,757
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		0.97	%+		0.96	%+		0.96	%+^^*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			0.97	%+		N/A			N/A
Ratio of Net Investment Income to Average Net Assets (1)		3.78	%+*		1.78	%+		2.01	%+		2.88	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		15	%#		29	%		32	%		33	%#
(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	%		0.97	%*
Net Investment Income to Average Net Assets		N/A			N/A			2.01	%		2.87	%*

^  Commencement of Offering.

†  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.
16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks to provide current income and capital appreciation. The Portfolio has capital subscription commitments to an 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded

on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	101,059	$	456,701	$	—	†	$	557,760	†
Health Care		86,136		—		—			86,136
Industrial		27,264		42,217		593			70,074
Lodging/Resorts		118,106		559		—			118,665
Mixed Industrial/Office		20,478		5,197		—			25,675
Office		121,895		124,241		—			246,136
Residential		244,190		36,911		—			281,101
Retail		389,782		175,616		—			565,398
Self Storage		68,666		—		—			68,666
Total Common Stocks		1,177,576		841,442		593	†		2,019,611	†
Short-Term Investment
Investment Company		3,891		—		—			3,891
Total Assets	$	1,181,467	$	841,442	$	593	†	$	2,023,502	†

†  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, 2016, securities with a total value of approximately $251,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016. At December 31, 2015, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

	Common Stocks (000)
Beginning Balance	$	603	†
Purchases		22
Sales		—
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(32	)
Realized gains (losses)		—
Ending Balance	$	593	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	(32	)

†  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, 2016.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input
Industrial
Common Stock	$	593	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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

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, 2016, 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 annually. Net realized capital gains, if any, are distributed at least annually.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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/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	%

Effective July 1, 2016, the Portfolio's annual rate based on the daily net assets was reduced and is as follows:

First $2 billion			Over $2 billion
	0.85	%		0.80	%

For the six months ended June 30, 2016, 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, 2016, approximately $1,000 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 Sub-Advisers 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $322,756,000 and $682,669,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $31,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	24,444	$	228,767	$	249,320	$	42	$	3,891

During the six months ended June 30, 2016, the Portfolio incurred approximately $10,000 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio engaged in cross-trade sales of approximately $220,000 with loss of approximately $9,000.

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	42,001	$	—	$	45,000	$	—

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, redemptions-in-kind 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, 2015:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	2,280	$	5,488	$	(7,768	)

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

At December 31, 2015, 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
$	6,431	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, 2015, the Portfolio utilized capital loss carryforwards for U.S. Federal income tax purposes of approximately $45,146,000.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	6,975	$	—

For the year ended December 31, 2015, the Portfolio realized gains from in-kind redemptions of approximately $6,767,000. These gains are not taxable to the Portfolio.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 than 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 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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGRESAN
1559391 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Opportunity Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	26
Privacy Notice	28
Director and Officer Information	31

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	977.40	$	1,020.04	$	4.77	$	4.87		0.97	%
International Opportunity Portfolio Class A		1,000.00		975.90		1,018.45		6.34		6.47		1.29
International Opportunity Portfolio Class L		1,000.00		972.80		1,015.66		9.07		9.27		1.85
International Opportunity Portfolio Class C		1,000.00		971.30		1,014.47		10.24		10.47		2.09
International Opportunity Portfolio Class IS		1,000.00		977.40		1,020.24		4.57		4.67		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

International Opportunity Portfolio

	Shares		Value (000)
Common Stocks (92.7%)
Australia (0.0%)
AET&D Holdings No. 1 Ltd. (a)(b)(c)		16,699	$	—
Belgium (2.6%)
Anheuser-Busch InBev N.V.		14,359		1,887
Canada (1.4%)
Brookfield Asset Management, Inc., Class A		30,868		1,021
China (20.4%)
58.com, Inc. ADR (a)		13,208		606
Autohome, Inc. ADR (a)		8,310		167
China Resources Beer Holdings Company Ltd. (d)		752,000		1,647
Foshan Haitian Flavouring & Food Co., Ltd., Class A		305,300		1,399
Jiangsu Hengrui Medicine Co., Ltd., Class A		242,280		1,464
Kweichow Moutai Co., Ltd., Class A		5,000		220
Phoenix Healthcare Group Co., Ltd. (d)		618,000		856
TAL Education Group ADR (a)		89,251		5,539
Tencent Holdings Ltd. (d)		118,800		2,707
				14,605
Denmark (5.5%)
DSV A/S		93,001		3,910
France (6.3%)
Christian Dior SE		9,366		1,517
Hermes International		8,036		3,029
				4,546
Germany (2.3%)
Adidas AG		11,570		1,650
Hong Kong (2.2%)
AIA Group Ltd.		257,400		1,551
India (2.3%)
HDFC Bank Ltd. ADR		25,230		1,674
Japan (4.3%)
Calbee, Inc.		73,400		3,047
Korea, Republic of (7.9%)
Amorepacific Corp.		4,350		1,639
Loen Entertainment, Inc. (a)		16,080		1,026
Medy-Tox, Inc.		3,531		1,334
Osstem Implant Co., Ltd. (a)		17,609		1,195
ViroMed Co., Ltd. (a)		3,815		472
				5,666
Netherlands (3.8%)
Priceline Group, Inc. (The) (a)		2,160		2,697
South Africa (2.4%)
Naspers Ltd., Class N		11,359		1,740
Switzerland (2.1%)
Nestle SA (Registered)		19,042		1,469
United Kingdom (11.3%)
ARM Holdings PLC		127,773		1,935
Burberry Group PLC		120,826		1,889
Hargreaves Lansdown PLC		85,424		1,421
Just Eat PLC (a)		224,224		1,279
Reckitt Benckiser Group PLC		15,861		1,596
				8,120

	Shares		Value (000)
United States (17.9%)
Cognizant Technology Solutions Corp., Class A (a)		48,060	$	2,751
EPAM Systems, Inc. (a)		64,578		4,153
Globant SA (a)		67,699		2,664
Luxoft Holding, Inc. (a)		61,756		3,213
				12,781
Total Common Stocks (Cost $63,496)				66,364
Preferred Stock (0.2%)
India (0.2%)
Flipkart Online Services Pvt Ltd. Series D (a)(b)(c)(e) (acquisition cost — $36; acquired 10/4/13) (Cost $36)		1,590		134
Participation Notes (4.4%)
China (4.4%)
Foshan Haitian Flavouring & Food Company Ltd., Class A, Equity Linked Notes, expires 10/11/24 (a)		87,760		402
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/23/17 (a)		156,900		1,702
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 4/27/17 (a)		2,224		98
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a)		22,079		972
Total Participation Notes (Cost $2,714)				3,174
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $35)		7,552		13
	Shares
Short-Term Investment (2.3%)
Investment Company (2.3%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $1,656)		1,655,621		1,656
Total Investments (99.6%) (Cost $67,937) (f)(g)				71,341
Other Assets in Excess of Liabilities (0.4%)				303
Net Assets (100.0%)			$	71,644

(a)  Non-income producing security.

(b)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $134,000, representing 0.2% 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.

(c)  Security has been deemed illiquid at June 30, 2016.

(d)  Security trades on the Hong Kong exchange.

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

International Opportunity Portfolio

(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, 2016 amounts to approximately $134,000 and represents 0.2% of net assets.

(f)  The approximate fair value and percentage of net assets, $41,879,000 and 58.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $6,261,000 and the aggregate gross unrealized depreciation is approximately $2,857,000 resulting in net unrealized appreciation of approximately $3,404,000.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		36.6	%
Information Technology Services		14.2
Textiles, Apparel & Luxury Goods		11.3
Beverages		9.1
Food Products		8.8
Diversified Consumer Services		7.8
Internet Software & Services		6.7
Road & Rail		5.5
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $66,281)	$	69,685
Investment in Security of Affiliated Issuer, at Value (Cost $1,656)		1,656
Total Investments in Securities, at Value (Cost $67,937)		71,341
Foreign Currency, at Value (Cost $6)		6
Receivable for Investments Sold		411
Receivable for Portfolio Shares Sold		46
Tax Reclaim Receivable		30
Dividends Receivable		11
Receivable from Affiliate		—	@
Other Assets		83
Total Assets		71,928
Liabilities:
Payable for Portfolio Shares Redeemed		137
Payable for Advisory Fees		84
Payable for Professional Fees		31
Payable for Custodian Fees		19
Payable for Administration Fees		5
Payable for Shareholder Services Fees — Class A		2
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		2
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 L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Other Liabilities		4
Total Liabilities		284
Net Assets	$	71,644
Net Assets Consist Of:
Paid-in-Capital	$	70,186
Accumulated Undistributed Net Investment Income		11
Accumulated Net Realized Loss		(1,956	)
Unrealized Appreciation (Depreciation) on:
Investments		3,404
Foreign Currency Translations		(1	)
Net Assets	$	71,644

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	59,583
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		4,056,523
Net Asset Value, Offering and Redemption Price Per Share	$	14.69
CLASS A:
Net Assets	$	9,920
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		680,601
Net Asset Value, Redemption Price Per Share	$	14.58
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.81
Maximum Offering Price Per Share	$	15.39
CLASS L:
Net Assets	$	213
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		14,901
Net Asset Value, Offering and Redemption Price Per Share	$	14.29
CLASS C:
Net Assets	$	1,916
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		134,692
Net Asset Value, Offering and Redemption Price Per Share	$	14.22
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	$	14.70

@  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, 2016 (unaudited)

International Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $37 of Foreign Taxes Withheld)	$	339
Income from Securities Loaned — Net		14
Dividends from Securities of Affiliated Issuer (Note G)		4
Total Investment Income		357
Expenses:
Advisory Fees (Note B)		278
Professional Fees		50
Registration Fees		33
Custodian Fees (Note F)		29
Administration Fees (Note C)		28
Shareholder Services Fees — Class A (Note D)		14
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		9
Sub Transfer Agency Fees — Class I		8
Sub Transfer Agency Fees — Class A		5
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Shareholder Reporting Fees		6
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		3
Directors' Fees and Expenses		1
Other Expenses		13
Total Expenses		484
Waiver of Advisory Fees (Note B)		(114	)
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)		(1	)
Net Expenses		367
Net Investment Loss		(10	)
Realized Gain (Loss):
Investments Sold		(1,182	)
Foreign Currency Transactions		1
Net Realized Loss		(1,181	)
Change in Unrealized Appreciation (Depreciation):
Investments		604
Foreign Currency Translations		1
Net Change in Unrealized Appreciation (Depreciation)		605
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(576	)
Net Decrease in Net Assets Resulting from Operations	$	(586	)

@  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, 2016

International Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31,2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(10	)	$	(23	)
Net Realized Loss		(1,181	)		(96	)
Net Change in Unrealized Appreciation (Depreciation)		605			1,132
Net Increase (Decrease) in Net Assets Resulting from Operations		(586	)		1,013
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(39	)
Net Realized Gain		—			(847	)
Class A:
Net Investment Income		—			(1	)
Net Realized Gain		—			(135	)
Class L:
Net Realized Gain		—			(7	)
Class C:
Net Investment Income		—			(1	)
Net Realized Gain		—			(25	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		—			(1,055	)
Capital Share Transactions:(1)
Class I:
Subscribed		21,385			46,792
Distributions Reinvested		—			695
Redeemed		(13,395	)		(6,474	)
Class A:
Subscribed		6,766			9,679
Distributions Reinvested		—			127
Redeemed		(6,371	)		(1,112	)
Class L:
Subscribed		—			63
Distributions Reinvested		—			2
Redeemed		(45	)		(4	)
Class C:
Subscribed		300			1,921	*
Distributions Reinvested		—			26	*
Redeemed		(114	)		(111	)*
Net Increase in Net Assets Resulting from Capital Share Transactions		8,526			51,604
Redemption Fees		2			1
Total Increase in Net Assets		7,942			51,563
Net Assets:
Beginning of Period		63,702			12,139
End of Period (Including Accumulated Undistributed Net Investment Income of $11 and $21)	$	71,644		$	63,702

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

International Opportunity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)  Capital Share Transactions:
Class I:
Shares Subscribed		1,519			3,070
Shares Issued on Distributions Reinvested		—			45
Shares Redeemed		(931	)		(432	)
Net Increase in Class I Shares Outstanding		588			2,683
Class A:
Shares Subscribed		482			632
Shares Issued on Distributions Reinvested		—			8
Shares Redeemed		(439	)		(74	)
Net Increase in Class A Shares Outstanding		43			566
Class L:
Shares Subscribed		—			4
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(3	)		(—	@@)
Net Increase (Decrease) in Class L Shares Outstanding		(3	)		4
Class C:
Shares Subscribed		21			125	*
Shares Issued on Distributions Reinvested		—			2	*
Shares Redeemed		(8	)		(6	)*
Net Increase in Class C Shares Outstanding		13			121

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Opportunity Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	15.03		$	13.92		$	13.77		$	11.19		$	10.26		$	12.07
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.00	‡		(0.00	)‡		0.08			0.10			0.08			0.08
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.58			0.36			2.85			0.92			(1.31	)
Total from Investment Operations		(0.34	)		1.58			0.44			2.95			1.00			(1.23	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.01	)		(0.09	)		(0.07	)		(0.10	)
Net Realized Gain		—			(0.44	)		(0.28	)		(0.28	)		—			(0.48	)
Total Distributions		—			(0.47	)		(0.29	)		(0.37	)		(0.07	)		(0.58	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—			—
Net Asset Value, End of Period	$	14.69		$	15.03		$	13.92		$	13.77		$	11.19		$	10.26
Total Return++		(2.26	)%#		11.40	%		3.14	%		26.47	%		9.76	%		(10.16	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	59,583		$	52,128		$	10,943		$	7,647		$	5,259		$	4,822
Ratio of Expenses to Average Net Assets (1)		0.97	%+*		1.01	%+^		1.09	%+		1.13	%+		1.14	%+		1.15	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.05	%+*		(0.01	)%+		0.57	%+		0.82	%+		0.70	%+		0.67	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%§
Portfolio Turnover Rate		26	%#		51	%		33	%		40	%		33	%		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.30	%*		1.95	%		3.25	%		3.84	%		3.87	%		3.82	%
Net Investment Loss to Average Net Assets		(0.28	)%*		(0.95	)%		(1.59	)%		(1.89	)%		(2.03	)%		(2.00	)%

†  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 July 1, 2015, 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 July 1, 2015, the maximum ratio was 1.15% 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, 2016

Financial Highlights

International Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	14.93		$	13.87		$	13.78		$	11.19		$	10.26		$	12.04
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.02	)		(0.06	)		0.01			0.02			0.05			0.05
Net Realized and Unrealized Gain (Loss)		(0.33	)		1.57			0.37			2.89			0.92			(1.30	)
Total from Investment Operations		(0.35	)		1.51			0.38			2.91			0.97			(1.25	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.01	)		(0.01	)		(0.04	)		(0.04	)		(0.05	)
Net Realized Gain		—			(0.44	)		(0.28	)		(0.28	)		—			(0.48	)
Total Distributions		—			(0.45	)		(0.29	)		(0.32	)		(0.04	)		(0.53	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—			—
Net Asset Value, End of Period	$	14.58		$	14.93		$	13.87		$	13.78		$	11.19		$	10.26
Total Return++		(2.41	)%#		10.99	%		2.71	%		26.12	%		9.49	%		(10.33	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9,920		$	9,520		$	992		$	275		$	112		$	103
Ratio of Expenses to Average Net Assets (1)		1.29	%+*		1.34	%+^^		1.49	%+		1.44	%+^		1.39	%+		1.40	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.23	)%+*		(0.39	)%+		0.04	%+		0.13	%+		0.45	%+		0.42	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%§
Portfolio Turnover Rate		26	%#		51	%		33	%		40	%		33	%		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.62	%*		2.28	%		3.81	%		4.49	%		4.12	%		4.07	%
Net Investment Loss to Average Net Assets		(0.56	)%*		(1.33	)%		(2.28	)%		(2.92	)%		(2.28	)%		(2.25	)%

†  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.

^^  Effective July 1, 2015, 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 July 1, 2015, 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Opportunity Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	14.69		$	13.71		$	13.68		$	11.13		$	10.22		$	12.00
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.06	)		(0.12	)		(0.05	)		(0.00	)‡		(0.01	)		(0.01	)
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.54			0.36			2.83			0.92			(1.29	)
Total from Investment Operations		(0.40	)		1.42			0.31			2.83			0.91			(1.30	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.44	)		(0.28	)		(0.28	)		—			(0.48	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—			—			—
Net Asset Value, End of Period	$	14.29		$	14.69		$	13.71		$	13.68		$	11.13		$	10.22
Total Return++		(2.72	)%#		10.38	%		2.24	%		25.49	%		8.90	%		(10.81	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	213		$	266		$	193		$	137		$	112		$	102
Ratio of Expenses to Average Net Assets (1)		1.85	%+*		1.91	%+^^		1.99	%+		1.92	%+^		1.89	%+		1.90	%+
Ratio of Net Investment Loss to Average Net Assets (1)		(0.87	)%+*		(0.80	)%+		(0.38	)%+		(0.00	)%+§		(0.05	)%+		(0.08	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.01	%		0.01	%		0.00	%§
Portfolio Turnover Rate		26	%#		51	%		33	%		40	%		33	%		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.84	%*		3.54	%		5.06	%		4.91	%		4.62	%		4.57	%
Net Investment Loss to Average Net Assets		(1.86	)%*		(2.43	)%		(3.45	)%		(2.99	)%		(2.78	)%		(2.75	)%

†  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.

^^  Effective July 1, 2015, 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 July 1, 2015, 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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	14.63		$	15.39
Loss from Investment Operations:
Net Investment Loss†		(0.07	)		(0.13	)
Net Realized and Unrealized Loss		(0.34	)		(0.16	)
Total from Investment Operations		(0.41	)		(0.29	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)
Net Realized Gain		—			(0.44	)
Total Distributions		—			(0.47	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	14.22		$	14.63
Total Return++		(2.87	)%#		(1.85	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,916		$	1,776
Ratios of Expenses to Average Net Assets (1)		2.09	%+*		2.10	%+^^*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.07	)%+*		(1.28	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		26	%#		51	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.42	%*		3.03	%*
Net Investment Loss to Average Net Assets		(1.40	)%*		(2.21	)%*

^  Commencement of Offering.

†  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 July 1, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class C shares. Prior to July 1, 2015, the maximum ratio was 2.25% for Class C 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, 2016

Financial Highlights

International Opportunity Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	15.03		$	13.92		$	13.77		$	12.75
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			0.02			0.07			(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.34	)		1.56			0.37			1.41
Total from Investment Operations		(0.33	)		1.58			0.44			1.39
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.01	)		(0.09	)
Net Realized Gain		—			(0.44	)		(0.28	)		(0.28	)
Total Distributions		—			(0.47	)		(0.29	)		(0.37	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		—
Net Asset Value, End of Period	$	14.70		$	15.03		$	13.92		$	13.77
Total Return++		(2.26	)%#		11.40	%		3.22	%		10.96	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	12		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		0.93	%+*		1.01	%+^^^		1.08	%+		1.08	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.08	%+*		0.12	%+		0.51	%+		(0.47	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%*
Portfolio Turnover Rate		26	%#		51	%		33	%		40	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		15.99	%*		15.79	%		20.64	%		9.61	%*
Net Investment Loss to Average Net Assets		(14.98	)%*		(14.66	)%		(19.05	)%		(9.00	)%*

^  Commencement of Offering.

†  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.

^^^  Effective July 1, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.94% for Class IS shares. Prior to July 1, 2015, the maximum ratio was 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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security

that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	1,674	$	—	$	—		$	1,674
Beverages		—		3,754		—			3,754
Biotechnology		—		1,806		—			1,806
Capital Markets		—		1,421		—			1,421
Diversified Consumer Services		5,539		—		—			5,539
Food Products		—		5,915		—			5,915
Health Care Equipment & Supplies		—		1,195		—			1,195
Health Care Providers & Services		—		856		—			856
Household Products		—		1,596		—			1,596
Information Technology Services		10,117		—		—			10,117
Insurance		—		1,551		—			1,551
Internet & Catalog Retail		2,697		—		—			2,697
Internet Software & Services		773		3,986		—			4,759
Media		—		2,766		—			2,766
Multi-Utilities		—		—		—	†		—	†
Personal Products		—		1,639		—			1,639
Pharmaceuticals		—		1,464		—			1,464
Real Estate Management & Development		1,021		—		—			1,021
Road & Rail		—		3,910		—			3,910
Semiconductors & Semiconductor Equipment		—		1,935		—			1,935
Software		2,664		—		—			2,664
Textiles, Apparel & Luxury Goods		—		8,085		—			8,085
Total Common Stocks		24,485		41,879		—	†		66,364	†
Preferred Stock		—		—		134			134
Participation Notes		—		3,174		—			3,174
Call Option Purchased		—		13		—			13
Short-Term Investment
Investment Company		1,656		—		—			1,656
Total Assets	$	26,141	$	45,066	$	134	†	$	71,341	†

†  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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)
Beginning Balance	$	—	†	$	165
Purchases		—			—
Sales		—			—
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—			—
Change in unrealized appreciation (depreciation)		—			(31	)
Realized gains (losses)		—			—
Ending Balance	$	—	†	$	134
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—		$	(31	)

†  Includes one security which is valued at zero.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range					Selected Value			Impact to Valuation from an Increase in Input
Internet & Catalog Retail
Preferred Stock	$	134	Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%	18.5	%		17.6	%	Decrease
			Perpetual Growth	Rate		3.5	%	4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.8	x	3.6	x		2.7	x	Increase
				Discount for Lack of Marketability		20.0	%	20.0	%		20.0	%	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 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, 2016

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.  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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased (Option Purchased)	Investments, at Value Currency Risk		$13(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)	$	(10	)(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 (Options Purchased)	$	(55	)(c)

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

At June 30, 2016, the Portfolio's derivative assets and liabilities are as follows:

Assets and Liabilities	Gross Amounts of Assets and Liabilities Presented in the Statement of
Derivatives	Assets(d) (000)			Liabilities(d) (000)
Options Purchased	$	13	(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, 2016.

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	$	13	$	—	$	—	$	13

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	4,597,000

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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, 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.  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 annually.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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
	0.80	%		0.75	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.47% 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 0.94% 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 as 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, 2016, approximately $114,000 of

advisory fees were waived and approximately $2,000 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $27,935,000 and $17,787,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	4,275	$	23,226	$	25,845	$	4	$	1,656

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with

Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

treated as ordinary income for tax purposes. The tax character of distributions paid during fiscal years 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	96	$	960	$	102	$	139

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 and a nondeductible expense, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Undistributed Net Investment Income (000)		Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	44	$	(43	)	$	(1	)

At December 31, 2015, 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)
$	20	$	—

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	469

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility")

with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 51.8%.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that although the Portfolio's contractual management fee was higher than but close to 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 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

(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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIIOSAN
1558901 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Advantage Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	24
Privacy Notice	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Advantage Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	998.90	$	1,020.69	$	4.17	$	4.22		0.84	%
Advantage Portfolio Class A		1,000.00		997.10		1,019.10		5.76		5.82		1.16
Advantage Portfolio Class L		1,000.00		998.30		1,020.09		4.77		4.82		0.96
Advantage Portfolio Class C		1,000.00		993.60		1,015.22		9.62		9.72		1.94
Advantage Portfolio Class IS		1,000.00		998.30		1,020.89		3.97		4.02		0.80

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Advantage Portfolio

	Shares		Value (000)
Common Stocks (95.4%)
Aerospace & Defense (4.3%)
United Technologies Corp.		30,472	$	3,125
Beverages (1.1%)
Monster Beverage Corp. (a)		5,023		807
Chemicals (0.9%)
Sherwin-Williams Co. (The)		2,350		690
Diversified Financial Services (8.6%)
Berkshire Hathaway, Inc., Class B (a)		19,288		2,793
S&P Global, Inc.		32,168		3,450
				6,243
Food Products (13.6%)
Hershey Co. (The)		7,439		844
Kraft Heinz Co. (The)		21,800		1,929
Mead Johnson Nutrition Co.		39,801		3,612
Mondelez International, Inc., Class A		37,958		1,728
Nestle SA ADR (Switzerland)		22,731		1,757
				9,870
Healthcare Equipment & Supplies (1.0%)
Danaher Corp.		7,281		735
Hotels, Restaurants & Leisure (3.1%)
Marriott International, Inc., Class A		24,719		1,643
Starbucks Corp.		11,233		642
				2,285
Industrial Conglomerates (3.0%)
3M Co.		12,289		2,152
Information Technology Services (6.7%)
Mastercard, Inc., Class A		32,338		2,848
Visa, Inc., Class A		26,938		1,998
				4,846
Internet & Catalog Retail (9.3%)
Amazon.com, Inc. (a)		9,499		6,798
Internet Software & Services (18.3%)
Alphabet, Inc., Class C (a)		5,060		3,502
Facebook, Inc., Class A (a)		53,781		6,146
LinkedIn Corp., Class A (a)		11,182		2,116
Twitter, Inc. (a)		91,429		1,546
				13,310
Media (0.9%)
Walt Disney Co. (The)		7,010		686
Personal Products (0.9%)
Estee Lauder Cos., Inc. (The), Class A		7,141		650
Pharmaceuticals (4.2%)
Zoetis, Inc.		65,047		3,087
Software (3.5%)
Salesforce.com, Inc. (a)		32,389		2,572
Specialty Retail (6.6%)
Home Depot, Inc.		5,300		677
L Brands, Inc.		10,693		718

	Shares		Value (000)
Tiffany & Co.		11,359	$	689
TJX Cos., Inc. (The)		35,226		2,720
				4,804
Tech Hardware, Storage & Peripherals (5.7%)
Apple, Inc.		43,106		4,121
Textiles, Apparel & Luxury Goods (3.7%)
Christian Dior SE (France)		10,108		1,637
Michael Kors Holdings Ltd. (a)		21,742		1,076
				2,713
Total Common Stocks (Cost $60,493)				69,494
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $34)		7,480		13
	Shares
Short-Term Investment (4.6%)
Investment Company (4.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $3,322)		3,321,715		3,322
Total Investments (100.0%) (Cost $63,849) (b)(c)				72,829
Liabilities in Excess of Other Assets (0.0%) (d)				(7	)
Net Assets (100.0%)			$	72,822

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $1,637,000 and 2.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(c)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $10,224,000 and the aggregate gross unrealized depreciation is approximately $1,244,000 resulting in net unrealized appreciation of approximately $8,980,000.

(d)  Amount is less than 0.05%.

ADR  American Depositary Receipt.

CNY  —  Chinese Yuan Renminbi

USD  —  United States Dollar

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Advantage Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		31.4	%
Internet Software & Services		18.3
Food Products		13.5
Internet & Catalog Retail		9.3
Diversified Financial Services		8.6
Information Technology Services		6.6
Specialty Retail		6.6
Tech Hardware, Storage & Peripherals		5.7
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $60,527)	$	69,507
Investment in Security of Affiliated Issuer, at Value (Cost $3,322)		3,322
Total Investments in Securities, at Value (Cost $63,849)		72,829
Dividends Receivable		48
Receivable for Portfolio Shares Sold		23
Receivable from Affiliate		—	@
Other Assets		72
Total Assets		72,972
Liabilities:
Payable for Advisory Fees		78
Payable for Professional Fees		35
Payable for Custodian Fees		8
Payable for Portfolio Shares Redeemed		8
Payable for Shareholder Services Fees — Class A		3
Payable for Distribution and Shareholder Services Fees — Class L		—	@
Payable for Distribution and Shareholder Services Fees — Class C		3
Payable for Administration Fees		5
Payable for Sub Transfer Agency Fees — Class L		3
Payable for Transfer Agency Fees — Class I		—	@
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		6
Total Liabilities		150
Net Assets	$	72,822
Net Assets Consist Of:
Paid-in-Capital	$	63,900
Undistributed Net Investment Income		48
Net Realized Loss		(106	)
Unrealized Appreciation (Depreciation) on:
Investments		8,980
Net Assets	$	72,822

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	37,011
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,128,894
Net Asset Value, Offering and Redemption Price Per Share	$	17.39
CLASS A:
Net Assets	$	14,502
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		844,437
Net Asset Value, Redemption Price Per Share	$	17.17
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.95
Maximum Offering Price Per Share	$	18.12
CLASS L:
Net Assets	$	4,649
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		267,667
Net Asset Value, Offering and Redemption Price Per Share	$	17.37
CLASS C:
Net Assets	$	3,768
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		219,820
Net Asset Value, Offering and Redemption Price Per Share	$	17.14
CLASS IS:
Net Assets	$	12,892
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		740,768
Net Asset Value, Offering and Redemption Price Per Share	$	17.40

@  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, 2016 (unaudited)

Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $9 of Foreign Taxes Withheld)	$	342
Dividends from Security of Affiliated Issuers (Note G)		6
Total Investment Income		348
Expenses:
Advisory Fees (Note B)		194
Shareholder Services Fees — Class A (Note D)		18
Distribution and Shareholder Services Fees — Class L (Note D)		18
Distribution and Shareholder Services Fees — Class C (Note D)		13
Professional Fees		48
Registration Fees		28
Administration Fees (Note C)		24
Sub Transfer Agency Fees — Class I		7
Sub Transfer Agency Fees — Class A		6
Sub Transfer Agency Fees — Class L		2
Sub Transfer Agency Fees — Class C		1
Shareholder Reporting Fees		9
Custodian Fees (Note F)		7
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)		1
Transfer Agency Fees — Class IS (Note E)		1
Directors' Fees and Expenses		1
Pricing Fees		1
Other Expenses		11
Total Expenses		394
Waiver of Advisory Fees (Note B)		(82	)
Distribution Fees- Class L Shares Waived (Note D)		(17	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(2	)
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		290
Net Investment Income		58
Realized Gain (Loss):
Investments Sold		(1,144	)
Foreign Currency Transactions		1
Net Realized Loss		(1,143	)
Change in Unrealized Appreciation (Depreciation):
Investments		2,542
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		2,542
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		1,399
Net Increase in Net Assets Resulting from Operations	$	1,457

@  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, 2016

Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	58		$	(17	)
Net Realized Gain (Loss)		(1,143	)		3,974
Net Change in Unrealized Appreciation (Depreciation)		2,542			(475	)
Net Increase in Net Assets Resulting from Operations		1,457			3,482
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(18	)
Net Realized Gain		—			(1,736	)
Class A:
Net Realized Gain		—			(866	)
Class L:
Net Realized Gain		—			(453	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(114	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(1	)
Total Distributions		—			(3,188	)
Capital Share Transactions:(1)
Class I:
Subscribed		21,549			13,669
Distributions Reinvested		—			1,253
Redeemed		(9,990	)		(8,664	)
Class A:
Subscribed		7,276			11,449
Distributions Reinvested		—			864
Redeemed		(5,025	)		(3,697	)
Class L:
Subscribed		19			2,971
Distributions Reinvested		—			426
Redeemed		(702	)		(4,908	)
Class C:
Subscribed		2,095			1,907	*
Distributions Reinvested		—			113	*
Redeemed		(171	)		(133	)*
Class IS:
Subscribed		12,500			—
Net Increase in Net Assets Resulting from Capital Share Transactions		27,551			15,250
Total Increase in Net Assets		29,008			15,544
Net Assets:
Beginning of Period		43,814			28,270
End of Period (Including Undistributed Net Investment Income and Accumulated Net Investment Loss of $48 and $(10), respectively)	$	72,822		$	43,814

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		1,302			755
Shares Issued on Distributions Reinvested		—			71
Shares Redeemed		(593	)		(474	)
Net Increase in Class I Shares Outstanding		709			352
Class A:
Shares Subscribed		452			627
Shares Issued on Distributions Reinvested		—			50
Shares Redeemed		(301	)		(207	)
Net Increase in Class A Shares Outstanding		151			470
Class L:
Shares Subscribed		1			164
Shares Issued on Distributions Reinvested		—			24
Shares Redeemed		(42	)		(269	)
Net Decrease in Class L Shares Outstanding		(41	)		(81	)
Class C:
Shares Subscribed		127			104	*
Shares Issued on Distributions Reinvested		—			7	*
Shares Redeemed		(10	)		(8	)*
Net Increase in Class C Shares Outstanding		117			103
Class IS:
Shares Subscribed		740			—

@  Amount is less than $500.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Advantage Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	17.40		$	16.83		$	16.41		$	12.40		$	11.38		$	10.87
Income (Loss) from Investment Operations:
Net Investment Income†		0.03			0.01			0.04			0.01			0.14			0.04
Net Realized and Unrealized Gain (Loss)		(0.04	)		2.11			1.15			4.54			1.72			0.54
Total from Investment Operations		(0.01	)		2.12			1.19			4.55			1.86			0.58
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.01	)		—			(0.10	)		(0.07	)
Net Realized Gain		—			(1.53	)		(0.76	)		(0.54	)		(0.74	)		—
Total Distributions		—			(1.55	)		(0.77	)		(0.54	)		(0.84	)		(0.07	)
Net Asset Value, End of Period	$	17.39		$	17.40		$	16.83		$	16.41		$	12.40		$	11.38
Total Return++		(0.11	)%#		12.56	%		7.43	%		37.11	%		16.38	%		5.33	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	37,011		$	24,718		$	17,971		$	14,712		$	8,595		$	7,239
Ratio of Expenses to Average Net Assets (1)		0.84	%+*		0.86	%+^		1.04	%+		1.04	%+		1.05	%+		1.05	%+
Ratio of Net Investment Income to Average Net Assets (1)		0.31	%+*		0.06	%+		0.23	%+		0.11	%+		1.08	%+		0.39	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		44	%#		51	%		31	%		36	%		50	%		28	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.14	%*		1.49	%		1.78	%		2.33	%		2.34	%		3.43	%
Net Investment Income (Loss) to Average Net Assets		0.01	%*		(0.57	)%		(0.51	)%		(1.18	)%		(0.21	)%		(1.99	)%

†  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 ratio 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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Advantage Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	17.22		$	16.70		$	16.34		$	12.39		$	11.37		$	10.86
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.00	)‡		(0.06	)		(0.03	)		(0.07	)		0.11			0.02
Net Realized and Unrealized Gain (Loss)		(0.05	)		2.11			1.15			4.56			1.72			0.53
Total from Investment Operations		(0.05	)		2.05			1.12			4.49			1.83			0.55
Distributions from and/or in Excess of:
Net Investment Income		—			—			—			—			(0.07	)		(0.04	)
Net Realized Gain		—			(1.53	)		(0.76	)		(0.54	)		(0.74	)		—
Total Distributions		—			(1.53	)		(0.76	)		(0.54	)		(0.81	)		(0.04	)
Net Asset Value, End of Period	$	17.17		$	17.22		$	16.70		$	16.34		$	12.39		$	11.37
Total Return++		(0.29	)%#		12.20	%		7.05	%		36.65	%		16.11	%		5.07	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	14,502		$	11,939		$	3,738		$	3,134		$	12		$	11
Ratio of Expenses to Average Net Assets (1)		1.16	%+*		1.18	%+^^		1.39	%+		1.35	%+^		1.30	%+		1.30	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.01	)%+*		(0.31	)%+		(0.15	)%+		(0.44	)%+		0.83	%+		0.14	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		44	%#		51	%		31	%		36	%		50	%		28	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.44	%*		1.87	%		2.14	%		2.68	%		2.59	%		3.68	%
Net Investment Loss to Average Net Assets		(0.29	)%*		(1.00	)%		(0.90	)%		(1.77	)%		(0.46	)%		(2.24	)%

†  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.

^^  Effective January 23, 2015, 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 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Advantage Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	17.40		$	16.82		$	16.42		$	12.42		$	11.39		$	10.89
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.01	)		0.02			(0.01	)		0.13			0.04
Net Realized and Unrealized Gain (Loss)		(0.04	)		2.12			1.14			4.55			1.74			0.52
Total from Investment Operations		(0.03	)		2.11			1.16			4.54			1.87			0.56
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.00	)‡		—			(0.10	)		(0.06	)
Net Realized Gain		—			(1.53	)		(0.76	)		(0.54	)		(0.74	)		—
Total Distributions		—			(1.53	)		(0.76	)		(0.54	)		(0.84	)		(0.06	)
Net Asset Value, End of Period	$	17.37		$	17.40		$	16.82		$	16.42		$	12.42		$	11.39
Total Return++		(0.17	)%#		12.47	%		7.28	%		36.97	%		16.42	%		5.19	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,649		$	5,369		$	6,549		$	3,908		$	722		$	208
Ratio of Expenses to Average Net Assets (1)		0.96	%+*		0.97	%+^^		1.18	%+		1.08	%+^		1.09	%+		1.09	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.16	%+*		(0.03	)%+		0.12	%+		(0.06	)%+		1.04	%+		0.35	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		44	%#		51	%		31	%		36	%		50	%		28	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.95	%*		2.33	%		2.64	%		3.10	%		3.09	%		4.18	%
Net Investment Loss to Average Net Assets		(0.83	)%*		(1.39	)%		(1.34	)%		(2.08	)%		(0.96	)%		(2.74	)%

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	17.25		$	18.08
Income (Loss) from Investment Operations:
Net Investment Income Loss†		(0.06	)		(0.14	)
Net Realized and Unrealized Gain (Loss)		(0.05	)		0.86
Total from Investment Operations		(0.11	)		0.72
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)
Net Realized Gain		—			(1.53	)
Total Distributions		—			(1.55	)
Net Asset Value, End of Period	$	17.14		$	17.25
Total Return++		(0.64	)%#		3.91	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,768		$	1,776
Ratios of Expenses to Average Net Assets (1)		1.94	%+*		1.94	%+*
Ratio of Net Investment Loss to Average Net Assets Gain (1)		(0.79	)%+*		(1.15	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		44	%#		51	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.22	%*		2.83	%*
Net Investment Loss to Average Net Assets		(1.07	)%*		(2.04	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Advantage Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	17.42		$	16.84		$	16.41		$	14.59
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.04			0.02			0.04			(0.01	)
Net Realized and Unrealized Gain (Loss)		(0.06	)		2.11			1.16			2.21
Total from Investment Operations		(0.02	)		2.13			1.20			2.20
Distributions from and/or in Excess of:
Net Investment Income		—			(0.02	)		(0.01	)		—
Net Realized Gain		—			(1.53	)		(0.76	)		(0.38	)
Total Distributions		—			(1.55	)		(0.77	)		(0.38	)
Net Asset Value, End of Period	$	17.40		$	17.42		$	16.84		$	16.41
Total Return++		(0.17	)%#		12.65	%		7.50	%		15.15	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12,892		$	12		$	12		$	11
Ratio of Expenses to Average Net Assets (1)		0.80	%+*		0.82	%+^^^		1.00	%+		1.01	%+^^*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.49	%+*		0.10	%+		0.26	%+		(0.25	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.00	%§*
Portfolio Turnover Rate		44	%#		51	%		31	%		36	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.10	%*		14.53	%		18.84	%		7.31	%*
Net Investment Income (Loss) to Average Net Assets		0.19	%*		(13.61	)%		(17.58	)%		(6.55	)%*

^  Commencement of Offering.

†  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 ratio 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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 offers five classes of shares — Class I, Class A, Class L, Class C 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or

more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	3,125	$	—	$	—	$	3,125
Beverages		807		—		—		807
Chemicals		690		—		—		690
Diversified Financial Services		6,243		—		—		6,243
Food Products		9,870		—		—		9,870
Healthcare Equipment & Supplies		735		—		—		735
Hotels, Restaurants & Leisure		2,285		—		—		2,285
Industrial Conglomerates		2,152		—		—		2,152
Information Technology Services		4,846		—		—		4,846
Internet & Catalog Retail		6,798		—		—		6,798
Internet Software & Services		13,310		—		—		13,310
Media		686		—		—		686
Personal Products		650		—		—		650
Pharmaceuticals		3,087		—		—		3,087
Software		2,572		—		—		2,572
Specialty Retail		4,804		—		—		4,804
Tech Hardware, Storage & Peripherals		4,121		—		—		4,121
Textiles, Apparel & Luxury Goods		1,076		1,637		—		2,713
Total Common Stocks		67,857		1,637		—		69,494
Call Option Purchased		—		13		—		13
Short-Term Investment
Investment Company		3,322		—		—		3,322
Total Assets	$	71,179	$	1,650	$	—	$	72,829

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

underlying instrument or foreign currency, 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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Options Purchased)	Currency Risk	$	13	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)		$(19)(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 (Options Purchased)		$(85)(c)

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

At June 30, 2016, 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)
Option Purchased	$	13	(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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	13	$	—	$	—	$	13

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	6,504,000

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 investment income, if any, are declared and paid 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
	0.65	%		0.60	%		0.55	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.37% 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, 0.99% for Class L shares, 1.95% for Class C 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 as 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, 2016, approximately $82,000 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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, 2016, this waiver amounted to approximately $17,000.

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $55,019,000 and $25,556,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	3,368	$	39,961	$	40,007	$	6	$	3,322

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	18	$	3,170	$	121	$	1,100

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, 2015:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	3	$	1	$	(4	)

At December 31, 2015, 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)
$	—	$	1,201

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	14	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 45.3%.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIADVSAN
1558898 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Opportunity Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	26
Privacy Notice	28
Director and Officer Information	31

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	978.60	$	1,020.98	$	3.84	$	3.92		0.78	%
Global Opportunity Portfolio Class A		1,000.00		976.30		1,019.14		5.65		5.77		1.15
Global Opportunity Portfolio Class L		1,000.00		976.10		1,018.65		6.14		6.27		1.25
Global Opportunity Portfolio Class C		1,000.00		973.40		1,015.96		8.78		8.97		1.79
Global Opportunity Portfolio Class IS		1,000.00		978.60		1,021.28		3.54		3.62		0.72

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Opportunity Portfolio

	Shares		Value (000)
Common Stocks (89.6%)
Australia (0.0%)
AET&D Holdings No. 1 Ltd. (a)(b)(c)		36,846	$	—
Belgium (1.7%)
Anheuser-Busch InBev N.V.		85,767		11,274
China (15.2%)
China Resources Beer Holdings Company Ltd. (d)		5,482,000		12,010
Foshan Haitian Flavouring & Food Co., Ltd., Class A		2,766,574		12,680
Jiangsu Hengrui Medicine Co., Ltd., Class A		2,468,080		14,910
Kweichow Moutai Co., Ltd., Class A		47,250		2,080
TAL Education Group ADR (c)		639,604		39,694
Tencent Holdings Ltd. (d)		805,600		18,353
				99,727
Denmark (4.8%)
DSV A/S		748,042		31,451
France (3.1%)
Hermes International		54,553		20,559
India (0.5%)
Monsanto India Ltd.		89,475		3,452
Japan (3.0%)
Calbee, Inc.		465,800		19,336
Korea, Republic of (5.5%)
Amorepacific Corp.		44,291		16,692
Loen Entertainment, Inc. (c)		96,143		6,132
Medy-Tox, Inc.		25,284		9,557
ViroMed Co., Ltd. (c)		27,681		3,424
				35,805
Netherlands (4.6%)
Priceline Group, Inc. (The) (c)		24,298		30,334
South Africa (2.3%)
Naspers Ltd., Class N		99,091		15,184
United Kingdom (5.5%)
ARM Holdings PLC		867,706		13,142
Burberry Group PLC		738,066		11,537
Just Eat PLC (c)		1,947,356		11,111
				35,790
United States (43.4%)
Alphabet, Inc., Class C (c)		28,261		19,559
Amazon.com, Inc. (c)		56,137		40,173
Cognizant Technology Solutions Corp., Class A (c)		499,912		28,615
EPAM Systems, Inc. (c)		592,148		38,081
Facebook, Inc., Class A (c)		500,971		57,251
Globant SA (c)		364,953		14,361
Luxoft Holding, Inc. (c)		517,854		26,939
Mastercard, Inc., Class A		278,026		24,483
Visa, Inc., Class A		341,640		25,339
WisdomTree Investments, Inc.		941,419		9,217
				284,018
Total Common Stocks (Cost $492,165)				586,930

	Shares		Value (000)
Preferred Stocks (2.3%)
India (0.0%)
Flipkart Online Services Pvt Ltd. Series D (a)(b)(c)(e) (acquisition cost — $52; acquired 10/4/13)		2,242	$	189
United States (2.3%)
Airbnb, Inc. Series D (a)(b)(c)(e) (acquisition cost — $1,594; acquired 4/16/14)		39,153		3,545
Magic Leap Series C (a)(b)(c)(e) (acquisition cost — $3,175; acquired 12/22/15)		137,829		3,199
Uber Technologies Series G (a)(b)(c)(e) (acquisition cost — $8,232; acquired 12/3/15)		168,793		8,232
				14,976
Total Preferred Stocks (Cost $13,053)				15,165
Participation Notes (3.9%)
China (3.9%)
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/23/17 (c)		1,598,006		17,333
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (c)		184,523		8,122
Total Participation Notes (Cost $20,563)				25,455
	Notional Amount (000)
Purchased Options (0.0%)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $326)		70,499		124
	Shares
Short-Term Investment (4.4%)
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $28,606)		28,605,610		28,606
Total Investments (100.2%) (Cost $554,713) (f)(g)				656,280
Liabilities in Excess of Other Assets (–0.2%)				(1,044	)
Net Assets (100.0%)			$	655,236

(a)  Security has been deemed illiquid at June 30, 2016.

(b)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $15,165,000, representing 2.3% 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.

(c)  Non-income producing security.

(d)  Security trades on the Hong Kong exchange.

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Opportunity Portfolio

(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, 2016 amounts to approximately $15,165,000 and represents 2.3% of net assets.

(f)  The approximate fair value and percentage of net assets, $232,884,000 and 35.5%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $123,669,000 and the aggregate gross unrealized depreciation is approximately $22,102,000 resulting in net unrealized appreciation of approximately $101,567,000.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		35.6	%
Information Technology Services		21.9
Internet Software & Services		16.2
Internet & Catalog Retail		12.6
Beverages		7.7
Diversified Consumer Services		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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $526,107)	$	627,674
Investment in Security of Affiliated Issuer, at Value (Cost $28,606)		28,606
Total Investments in Securities, at Value (Cost $554,713)		656,280
Foreign Currency, at Value (Cost $42)		42
Receivable for Portfolio Shares Sold		1,112
Tax Reclaim Receivable		77
Receivable from Affiliate		6
Dividends Receivable		2
Other Assets		192
Total Assets		657,711
Liabilities:
Payable for Portfolio Shares Redeemed		1,202
Payable for Advisory Fees		903
Payable for Transfer Agency Fees — Class I		2
Payable for Transfer Agency Fees — Class A		101
Payable for Transfer Agency Fees — Class L		15
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Shareholder Services Fees — Class A		74
Payable for Distribution and Shareholder Services Fees — Class L		8
Payable for Distribution and Shareholder Services Fees — Class C		26
Payable for Professional Fees		45
Payable for Administration Fees		44
Payable for Custodian Fees		12
Payable for Reorganization Expense		11
Payable for Sub Transfer Agency Fees — Class L		5
Other Liabilities		27
Total Liabilities		2,475
Net Assets	$	655,236
Net Assets Consist Of:
Paid-in-Capital	$	523,136
Accumulated Net Investment Loss		(1,517	)
Accumulated Net Realized Gain		32,050
Unrealized Appreciation (Depreciation) on:
Investments		101,567
Foreign Currency Translations		—	@
Net Assets	$	655,236

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Opportunity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	237,600
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		14,842,531
Net Asset Value, Offering and Redemption Price Per Share	$	16.01
CLASS A:
Net Assets	$	354,741
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		22,664,082
Net Asset Value, Redemption Price Per Share	$	15.65
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.87
Maximum Offering Price Per Share	$	16.52
CLASS L:
Net Assets	$	31,430
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,028,989
Net Asset Value, Offering and Redemption Price Per Share	$	15.49
CLASS C:
Net Assets	$	31,444
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,043,970
Net Asset Value, Offering and Redemption Price Per Share	$	15.38
CLASS IS:
Net Assets	$	21
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,294
Net Asset Value, Offering and Redemption Price Per Share	$	16.03

@  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, 2016 (unaudited)

Global Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $137 of Foreign Taxes Withheld)	$	1,706
Dividends from Securities of Affiliated Issuer (Note G)		39
Total Investment Income		1,745
Expenses:
Advisory Fees (Note B)		2,492
Shareholder Services Fees — Class A (Note D)		419
Distribution and Shareholder Services Fees — Class L (Note D)		119
Distribution and Shareholder Services Fees — Class C (Note D)		129
Administration Fees (Note C)		249
Transfer Agency Fees — Class I (Note E)		5
Transfer Agency Fees — Class A (Note E)		187
Transfer Agency Fees — Class L (Note E)		22
Transfer Agency Fees — Class C (Note E)		3
Transfer Agency Fees — Class IS (Note E)		1
Sub Transfer Agency Fees — Class I		70
Sub Transfer Agency Fees — Class A		122
Sub Transfer Agency Fees — Class L		15
Sub Transfer Agency Fees — Class C		7
Custodian Fees (Note F)		57
Professional Fees		52
Registration Fees		46
Shareholder Reporting Fees		33
Directors' Fees and Expenses		5
Pricing Fees		3
Other Expenses		16
Total Expenses		4,052
Waiver of Advisory Fees (Note B)		(710	)
Distribution Fees — Class L Shares Waived (Note D)		(71	)
Rebate from Morgan Stanley Affiliate (Note G)		(17	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		3,253
Net Investment Loss		(1,508	)
Realized Loss:
Investments Sold		(6,689	)
Foreign Currency Transactions		(186	)
Net Realized Loss		(6,875	)
Change in Unrealized Appreciation (Depreciation):
Investments		(9,132	)
Foreign Currency Translations		7
Net Change in Unrealized Appreciation (Depreciation)		(9,125	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(16,000	)
Net Decrease in Net Assets Resulting from Operations	$	(17,508	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31,2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Loss	$	(1,508	)	$	(671	)
Net Realized Gain (Loss)		(6,875	)		40,641
Net Change in Unrealized Appreciation (Depreciation)		(9,125	)		(35,586	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(17,508	)		4,384
Distributions from and/or in Excess of:
Class I:
Net Realized Gain		—			(1,177	)
Class A:
Net Realized Gain		—			(910	)
Class L:
Net Realized Gain		—			(40	)
Class C:
Net Realized Gain		—			(123	)
Class IS:
Net Realized Gain		—			(—	@)
Total Distributions		—			(2,250	)
Capital Share Transactions:(1)
Class I:
Subscribed		132,816			163,052
Issued due to a tax-free reorganization		—			77,071
Distributions Reinvested		—			1,081
Redeemed		(126,710	)		(16,394	)
Class A:
Subscribed		83,362			113,695
Issued due to a tax-free reorganization		—			235,675
Distributions Reinvested		—			906
Redeemed		(67,495	)		(14,930	)
Class L:
Subscribed		13			2,004
Issued due to a tax-free reorganization		—			32,385
Distributions Reinvested		—			38
Redeemed		(2,305	)		(558	)
Class C:
Subscribed		13,568			21,201	*
Distributions Reinvested		—			122	*
Redeemed		(2,306	)		(869	)*
Class IS:
Subscribed		37			7
Issued due to a tax-free reorganization		—			799
Redeemed		(746	)		—
Net Increase in Net Assets Resulting from Capital Share Transactions		30,234			615,285
Total Increase in Net Assets		12,726			617,419
Net Assets:
Beginning of Period		642,510			25,091
End of Period (Including Accumulated Net Investment Loss of $(1,517) and $(9))	$	655,236		$	642,510

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Opportunity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		8,566			10,166
Shares Issued due to a tax-free reorganization		—			4,618
Shares Issued on Distributions Reinvested		—			65
Shares Redeemed		(8,324	)		(1,038	)
Net Increase in Class I Shares Outstanding		242			13,811
Class A:
Shares Subscribed		5,459			7,220
Shares Issued due to a tax-free reorganization		—			14,414
Shares Issued on Distributions Reinvested		—			56
Shares Redeemed		(4,486	)		(941	)
Net Increase in Class A Shares Outstanding		973			20,749
Class L:
Shares Subscribed		1			136
Shares Issued due to a tax-free reorganization		—			2,000
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(154	)		(36	)
Net Increase (Decrease) in Class L Shares Outstanding		(153	)		2,102
Class C:
Shares Subscribed		901			1,345	*
Shares Issued on Distributions Reinvested		—			8	*
Shares Redeemed		(153	)		(57	)*
Net Increase in Class C Shares Outstanding		748			1,296
Class IS:
Shares Subscribed		2			—	@@
Shares Issued due to a tax-free reorganization		—			48
Shares Redeemed		(50	)		—
Net Increase (Decrease) in Class IS Shares Outstanding		(48	)		48

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Opportunity Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	16.36		$	13.98		$	13.65		$	10.84		$	10.26		$	11.58
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.02	)		(0.05	)		(0.06	)		(0.02	)		0.01			0.02
Net Realized and Unrealized Gain (Loss)		(0.33	)		2.64			1.26			4.21			1.01			(0.57	)
Total from Investment Operations		(0.35	)		2.59			1.20			4.19			1.02			(0.55	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.21	)		(0.87	)		(1.38	)		(0.44	)		(0.77	)
Redemption Fees		—			—			—			—			—			0.00	‡
Net Asset Value, End of Period	$	16.01		$	16.36		$	13.98		$	13.65		$	10.84		$	10.26
Total Return++		(2.14	)%#		18.50	%		9.04	%		40.12	%		9.99	%		(4.90	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	237,600		$	238,920		$	11,037		$	7,293		$	5,069		$	8,386
Ratio of Expenses to Average Net Assets (1)		0.78	%+*		0.98	%+^		1.17	%+		1.24	%+		1.25	%+		1.25	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.22	)%+*		(0.33	)%+		(0.42	)%+		(0.21	)%+		0.06	%+		0.13	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		24	%#		115	%		29	%		38	%		33	%		39	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.01	%*		1.20	%		2.47	%		3.36	%		2.57	%		2.92	%
Net Investment Loss to Average Net Assets		(0.45	)%*		(0.55	)%		(1.72	)%		(2.33	)%		(1.26	)%		(1.54	)%

†  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 December 7, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.81% for Class I shares. Prior to December 7, 2015, the maximum ratio was 1.10% for Class I shares. Prior to January 23, 2015, the maximum ratio was 1.25% 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, 2016

Financial Highlights

Global Opportunity Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	16.03		$	13.75		$	13.48		$	10.75		$	10.21		$	11.56
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.04	)		(0.10	)		(0.11	)		(0.15	)		(0.02	)		(0.01	)
Net Realized and Unrealized Gain (Loss)		(0.34	)		2.59			1.25			4.26			1.00			(0.57	)
Total from Investment Operations		(0.38	)		2.49			1.14			4.11			0.98			(0.58	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.21	)		(0.87	)		(1.38	)		(0.44	)		(0.77	)
Redemption Fees		—			—			—			—			—			0.00	‡
Net Asset Value, End of Period	$	15.65		$	16.03		$	13.75		$	13.48		$	10.75		$	10.21
Total Return++		(2.37	)%#		18.16	%		8.55	%		39.80	%		9.65	%		(5.16	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	354,741		$	347,683		$	12,952		$	4,057		$	87		$	10
Ratio of Expenses to Average Net Assets (1)		1.15	%+*		1.25	%+^^		1.56	%+		1.59	%+^		1.50	%+		1.50	%+
Ratio of Net Investment Loss to Average Net Assets (1)		(0.59	)%+*		(0.64	)%+		(0.82	)%+		(1.15	)%+		(0.19	)%+		(0.12	)%+
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		24	%#		115	%		29	%		38	%		33	%		39	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.38	%*		1.50	%		2.86	%		3.93	%		2.82	%		3.17	%
Net Investment Loss to Average Net Assets		(0.82	)%*		(0.89	)%		(2.12	)%		(3.49	)%		(1.51	)%		(1.79	)%

†  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 December 7, 2015, 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 December 7, 2015, the maximum ratio was 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Opportunity Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	15.87		$	13.62		$	13.38		$	10.68		$	10.15		$	11.50
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.05	)		(0.11	)		(0.12	)		(0.07	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.33	)		2.57			1.23			4.15			1.00			(0.56	)
Total from Investment Operations		(0.38	)		2.46			1.11			4.08			0.97			(0.58	)
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.21	)		(0.87	)		(1.38	)		(0.44	)		(0.77	)
Redemption Fees		—			—			—			—			—			0.00	‡
Net Asset Value, End of Period	$	15.49		$	15.87		$	13.62		$	13.38		$	10.68		$	10.15
Total Return++		(2.39	)%#		18.03	%		8.46	%		39.79	%		9.61	%		(5.19	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	31,430		$	34,628		$	1,091		$	527		$	396		$	505
Ratio of Expenses to Average Net Assets (1)		1.25	%+*		1.30	%+^^		1.64	%+		1.58	%+^		1.55	%+		1.55	%+
Ratio of Net Investment Loss to Average Net Assets (1)		(0.70	)%+*		(0.70	)%+		(0.87	)%+		(0.57	)%+		(0.24	)%+		(0.17	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		24	%#		115	%		29	%		38	%		33	%		39	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.93	%*		2.03	%		3.52	%		4.23	%		3.32	%		3.67	%
Net Investment (Loss) to Average Net Assets		(1.38	)%*		(1.43	)%		(2.75	)%		(3.22	)%		(2.01	)%		(2.29	)%

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	15.80		$	15.25
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.09	)		(0.15	)
Net Realized and Unrealized Gain		(0.33	)		0.91
Total from Investment Operations		(0.42	)		0.76
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.21	)
Net Asset Value, End of Period	$	15.38		$	15.80
Total Return++		(2.66	)%#		4.95	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	31,444		$	20,475
Ratios of Expenses to Average Net Assets (1)		1.79	%+*		2.03	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.21	)%+*		(1.40	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		24	%#		115	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.03	%*		2.22	%*
Net Investment Loss to Average Net Assets		(1.45	)%*		(1.59	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Opportunity Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	16.38		$	13.99		$	13.65		$	12.43
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.05	)		(0.06	)		(0.03	)
Net Realized and Unrealized Gain (Loss)		(0.32	)		2.65			1.27			2.27
Total from Investment Operations		(0.35	)		2.60			1.21			2.24
Distributions from and/or in Excess of:
Net Realized Gain		—			(0.21	)		(0.87	)		(1.02	)
Net Asset Value, End of Period	$	16.03		$	16.38		$	13.99		$	13.65
Total Return++		(2.14	)%#		18.64	%		8.96	%		18.35	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21		$	804		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		0.72	%+*		0.77	%+^^^		1.17	%+		1.18	%+^^*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.43	)%+*		(0.28	)%+		(0.42	)%+		(0.74	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.01	%		0.01	%		0.00	%§*
Portfolio Turnover Rate		24	%#		115	%		29	%		38	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		2.94	%*		3.56	%		19.50	%		8.44	%*
Net Investment Loss to Average Net Assets		(2.65	)%*		(3.07	)%		(18.75	)%		(8.00	)%*

^  Commencement of Offering.

†  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 December 7, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 0.72% for Class IS shares. Prior to December 7, 2015, the maximum ratio was 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.
15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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.

On December 7, 2015, the Portfolio acquired the net assets of the Fund's Opportunity Portfolio ("Opportunity Portfolio"), an open-end investment company. Based on the respective valuations as of the close of business on December 4, 2015, pursuant to a Plan of Reorganization approved by the shareholders of Opportunity Portfolio on November 6, 2015 ("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 4,617,804 Class I shares of the Portfolio at a net asset value of $16.69 for 3,034,694 Class I shares of Opportunity Portfolio; 14,415,387 Class A shares of the Portfolio at a net asset value of $16.35 for 9,470,228 Class A shares of Opportunity Portfolio; 2,000,306 Class L shares of the Portfolio at a net asset value of $16.19 for 1,518,730 Class L shares of Opportunity Portfolio; 47,839 Class IS shares of the Portfolio at a net asset value of $16.70 for 31,397 Class IS shares of Opportunity Portfolio. The net assets of Opportunity Portfolio before the Reorganization were approximately $345,930,000, including unrealized appreciation of approximately $141,511,000 at December 4, 2015. The investment portfolio of Opportunity Portfolio, with a fair value of approximately $346,957,000 and identified cost of approximately $205,446,000 on December 4, 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 Opportunity Portfolio 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 $246,567,000. Immediately after the Reorganization, the net assets of the Portfolio were approximately $592,513,000.

Upon closing of the Reorganization, shareholders of Opportunity Portfolio received shares of the Portfolio as follows:

Opportunity Portfolio	Global Opportunity Portfolio
Class I	Class I
Class A	Class A
Class L	Class L
Class IS	Class IS

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 year ended December 31, 2015, are as follows:

Net investment loss(1)	$	3,760,000
Net realized gain and unrealized gain(2)	$	61,642,000
Net increase (decrease) in net assets resulting from operations	$	65,402,000

(1) Approximately $(671,000) as reported, plus approximately $1,533,000 Opportunity Portfolio prior to the Reorganization, plus approximately $2,898,000 of estimated pro-forma eliminated expenses.

(2) Approximately $40,641,000 as reported, plus approximately $21,001,000 Opportunity Portfolio 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 Opportunity Portfolio that have been included in the Portfolio's Statement of Operations since December 7, 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

asked prices; if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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 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 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	—	$	25,364	$	—		$	25,364
Biotechnology		—		12,981		—			12,981
Capital Markets		9,217		—		—			9,217
Chemicals		—		3,452		—			3,452
Diversified Consumer Services		39,694		—		—			39,694
Food Products		—		32,016		—			32,016
Information Technology Services		143,457		—		—			143,457
Internet & Catalog Retail		70,507		—		—			70,507
Internet Software & Services		76,810		29,464		—			106,274
Media		—		21,316		—			21,316
Multi-Utilities		—		—		—	†		—	†
Personal Products		—		16,692		—			16,692
Pharmaceuticals		—		14,910		—			14,910
Road & Rail		—		31,451		—			31,451
Semiconductors & Semiconductor Equipment		—		13,142		—			13,142
Software		14,361		—		—			14,361
Textiles, Apparel & Luxury Goods		—		32,096		—			32,096
Total Common Stocks		354,046		232,884		—	†		586,930	†

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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)
Preferred Stocks	$	—	$	—	$	15,165		$	15,165
Participation Notes		—		25,455		—			25,455
Call Option Purchased		—		124		—			124
Short-Term Investment
Investment Company		28,606		—		—			28,606
Total Assets	$	382,652	$	258,463	$	15,165	†	$	656,280	†

†  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

	Common Stock (000)			Stocks (000)
Beginning Balance	$	—	†	$	14,915
Purchases		—			—
Sales		—			—
Amortization of discount		—			—
Transfers in		—			—
Transfers out		—			—
Corporate actions		—			—
Change in unrealized appreciation (depreciation)		—			250
Realized gains (losses)		—			—
Ending Balance	$	—	†	$	15,165
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—		$	250

†  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, 2016. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Electronic Equipment, Instuments & Components
Preferred Stock	$	3,199	Discounted Cash Flow	Weighted Average Cost of Capital		27.0	%		29.0	%		28.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		10.8	x		24.1	x		19.6	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet & Catalog Retail
Preferred Stocks	$	3,545	Discounted Cash Flow	Weighted Average Cost of Capital		16.0	%		18.0	%		17.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.8	x		14.5	x		12.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	189	Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.6	%	Decrease
				Perpetual Growth Rate		3.5	%		4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.8	x		3.6	x		2.7	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	8,232	Market Transaction Method	Precedent Transaction	$	48.77		$	48.77		$	48.77		Increase

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 holdings, including derivative instruments, are marked-to-market each day

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the

underlying or foreign currency, 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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	124	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)	$	(152	)(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 (Options Purchased)	$	(723	)(c)

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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At June 30, 2016, 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)
Option Purchased	$	124	(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, 2016.

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	$	124	$	—	$	—		124

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	56,029,000

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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
	0.80	%		0.75	%		0.70	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.57% 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 0.81% for Class I shares, 1.23% for Class A shares, 1.50% for Class L shares, 2.20% for Class C shares and 0.72% 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 as 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, 2016, approximately $710,000 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,

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 Reorganization 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, 2016, this waiver amounted to approximately $71,000.

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term

investments, were approximately $190,346,000 and $143,308,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, advisory fees paid were reduced by approximately $17,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	33,417	$	182,635	$	187,446	$	39	$	28,606

During the six months ended June 30, 2016, the Portfolio incurred approximately $3,000 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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, 2016

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	3	$	2,247	$	160	$	1,020

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, a net operating loss and merger adjustments, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Net Investment Loss (000)		Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	662	$	209	$	(871	)

At December 31, 2015, 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)
$	—	$	41,756

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	1,260

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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%.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 and total expense ratio were lower than its peer group averages. The Board also noted that the Portfolio's 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 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGOSAN
1559329 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Infrastructure Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	24
Privacy Notice	26
Director and Officer Information	29

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,177.10	$	1,020.64	$	4.60	$	4.27		0.85	%
Global Infrastructure Portfolio Class A		1,000.00		1,176.00		1,019.34		6.01		5.57		1.11
Global Infrastructure Portfolio Class L		1,000.00		1,172.50		1,016.56		9.02		8.37		1.67
Global Infrastructure Portfolio Class C		1,000.00		1,171.60		1,015.07		10.64		9.87		1.97
Global Infrastructure Portfolio Class IS		1,000.00		1,178.10		1,020.69		4.55		4.22		0.84

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Infrastructure Portfolio

	Shares		Value (000)
Common Stocks (95.7%)
Australia (3.2%)
Macquarie Atlas Roads Group		1,000,970	$	3,886
Sydney Airport		388,183		2,017
Transurban Group		550,249		4,935
				10,838
Brazil (0.2%)
CCR SA		105,840		554
Canada (12.8%)
Enbridge, Inc. (a)		403,276		17,084
Hydro One Ltd. (b)		41,074		825
Inter Pipeline Ltd. (a)		280,808		5,955
Pembina Pipeline Corp.		150,652		4,578
TransCanada Corp. (a)		338,231		15,305
				43,747
China (5.5%)
China Everbright International Ltd. (c)		1,861,000		2,086
Guangdong Investment Ltd. (c)		4,712,000		7,198
Hopewell Highway Infrastructure Ltd. (c)		18,834,000		9,376
				18,660
France (3.5%)
Eutelsat Communications SA		27,781		530
Groupe Eurotunnel SE		309,260		3,291
SES SA		86,601		1,871
Vinci SA		88,460		6,300
				11,992
Italy (2.2%)
Atlantia SpA		158,926		3,964
Infrastrutture Wireless Italiane SpA (b)		630,860		2,795
Snam SpA		128,503		769
				7,528
Japan (1.3%)
Japan Airport Terminal Co., Ltd. (a)		13,000		468
Tokyo Gas Co., Ltd.		941,000		3,863
				4,331
Mexico (0.2%)
Infraestructura Energetica Nova SAB de CV		197,246		831
Spain (5.8%)
Abertis Infraestructuras SA		114,860		1,688
EDP Renovaveis SA		2,501		19
Ferrovial SA		235,755		4,581
Saeta Yield SA		1,345,302		13,479
				19,767
Switzerland (1.1%)
Flughafen Zuerich AG (Registered)		21,895		3,874
United Kingdom (12.3%)
John Laing Group PLC (b)		5,174,205		15,625
National Grid PLC		1,042,269		15,327
Pennon Group PLC		241,611		3,051

	Shares		Value (000)
Severn Trent PLC		115,810	$	3,783
United Utilities Group PLC		298,522		4,157
				41,943
United States (47.6%)
American Tower Corp. REIT		214,950		24,420
American Water Works Co., Inc. (a)		35,890		3,033
Atmos Energy Corp.		43,842		3,565
CenterPoint Energy, Inc.		31,822		764
Cheniere Energy, Inc. (a)(d)		26,219		985
Columbia Pipeline Group, Inc.		187,524		4,780
Crown Castle International Corp. REIT (a)		156,325		15,856
Enbridge Energy Management LLC (d)		1,409,969		32,443
Eversource Energy		85,411		5,116
Kinder Morgan, Inc.		276,850		5,183
NiSource, Inc.		116,554		3,091
Pattern Energy Group, Inc.		597,522		13,725
PG&E Corp.		243,586		15,570
SBA Communications Corp., Class A (d)		51,350		5,543
Sempra Energy		129,688		14,787
Spectra Energy Corp.		257,982		9,450
TransCanada Corp.		21,388		966
Union Pacific Corp.		33,250		2,901
				162,178
Total Common Stocks (Cost $252,745)				326,243
Short-Term Investments (8.8%)
Securities held as Collateral on Loaned Securities (4.8%)
Investment Company (3.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		13,200,240		13,200
	Face Amount (000)
Repurchase Agreements (0.9%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $3,050; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $3,111)	$	3,050		3,050
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $125; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $127)		125		125
				3,175
Total Securities held as Collateral on Loaned Securities (Cost $16,375)				16,375

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Infrastructure Portfolio

	Shares		Value (000)
Investment Company (4.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Portfolio — Institutional Class (See Note G) (Cost $13,486)		13,486,440	$	13,486
Total Short-Term Investments (Cost $29,861)				29,861
Total Investments (104.5%) (Cost $282,606) Including $47,833 of Securities Loaned (e)(f)				356,104
Liabilities in Excess of Other Assets (–4.5%)				(15,425	)
Net Assets (100.0%)			$	340,679

(a)  All or a portion of this security was on loan at June 30, 2016.

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

(c)  Security trades on the Hong Kong exchange.

(d)  Non-income producing security.

(e)  The approximate fair value and percentage of net assets, $118,933,000 and 34.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(f)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $81,321,000 and the aggregate gross unrealized depreciation is approximately $7,823,000 resulting in net unrealized appreciation of approximately $73,498,000.

REIT  Real Estate Investment Trust.

Portfolio Composition*

Classification	Percentage of Total Investments
Oil & Gas Storage & Transportation		36.4	%
Communications		15.0
Electricity Transmission & Distribution		10.8
Toll Roads		10.0
PPA Contracted Renewables		8.0
Water		6.9
Other**		6.7
Diversified		6.2
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $255,920)	$	329,418
Investment in Security of Affiliated Issuer, at Value (Cost $26,686)		26,686
Total Investments in Securities, at Value (Cost $282,606)		356,104
Foreign Currency, at Value (Cost $299)		298
Receivable for Investments Sold		3,558
Dividends Receivable		1,421
Receivable for Portfolio Shares Sold		210
Tax Reclaim Receivable		72
Receivable from Affiliate		2
Other Assets		82
Total Assets		361,747
Liabilities:
Collateral on Securities Loaned, at Value		16,375
Payable for Investments Purchased		3,319
Payable for Portfolio Shares Redeemed		545
Payable for Advisory Fees		501
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		66
Payable for Sub Transfer Agency Fees — Class L		2
Payable for Shareholder Services Fees — Class A		58
Payable for Distribution and Shareholder Services Fees — Class L		4
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Custodian Fees		41
Payable for Professional Fees		29
Payable for Administration Fees		22
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		18
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		88
Total Liabilities		21,068
Net Assets	$	340,679
Net Assets Consist Of:
Paid-in-Capital	$	276,189
Undistributed Net Investment Income		4,248
Net Realized Loss		(13,202	)
Unrealized Appreciation (Depreciation) on:
Investments		73,498
Foreign Currency Translations		(54	)
Net Assets	$	340,679

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Infrastructure Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	39,681
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,676,857
Net Asset Value, Offering and Redemption Price Per Share	$	14.82
CLASS A:
Net Assets	$	290,512
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,668,472
Net Asset Value, Redemption Price Per Share	$	14.77
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.82
Maximum Offering Price Per Share	$	15.59
CLASS L:
Net Assets	$	6,068
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		413,411
Net Asset Value, Offering and Redemption Price Per Share	$	14.68
CLASS C:
Net Assets	$	318
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		21,765
Net Asset Value, Offering and Redemption Price Per Share	$	14.61
CLASS IS:
Net Assets	$	4,100
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		276,720
Net Asset Value, Offering and Redemption Price Per Share	$	14.82
(1) Including: Securities on Loan, at Value:	$	47,833

@  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, 2016 (unaudited)

Global Infrastructure Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $254 of Foreign Taxes Withheld)	$	6,089
Income from Securities Loaned — Net		65
Dividends from Security of Affiliated Issuer (Note G)		10
Total Investment Income		6,164
Expenses:
Advisory Fees (Note B)		1,359
Shareholder Services Fees — Class A (Note D)		334
Distribution and Shareholder Services Fees — Class L (Note D)		21
Distribution and Shareholder Services Fees — Class C (Note D)		2
Administration Fees (Note C)		128
Sub Transfer Agency Fees — Class I		2
Sub Transfer Agency Fees — Class A		111
Sub Transfer Agency Fees — Class L		4
Sub Transfer Agency Fees — Class C		—	@
Custodian Fees (Note F)		44
Professional Fees		43
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		34
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Registration Fees		30
Shareholder Reporting Fees		20
Directors' Fees and Expenses		4
Pricing Fees		3
Other Expenses		11
Total Expenses		2,154
Waiver of Advisory Fees (Note B)		(298	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(118	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(3	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(7	)
Net Expenses		1,726
Net Investment Income		4,438
Realized Gain (Loss):
Investments Sold		(3,133	)
Foreign Currency Transactions		256
Net Realized Loss		(2,877	)
Change in Unrealized Appreciation (Depreciation):
Investments		51,463
Foreign Currency Translations		(36	)
Net Change in Unrealized Appreciation (Depreciation)		51,427
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		48,550
Net Increase in Net Assets Resulting from Operations	$	52,988

@  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, 2016

Global Infrastructure Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	4,438		$	8,128
Net Realized Loss		(2,877	)		(1,595	)
Net Change in Unrealized Appreciation (Depreciation)		51,427			(64,033	)
Net Increase (Decrease) in Net Assets Resulting from Operations		52,988			(57,500	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(1,297	)
Net Realized Gain		—			(1,192	)
Paid-in-Capital		—			(18	)
Class A:
Net Investment Income		—			(6,564	)
Net Realized Gain		—			(6,710	)
Paid-in-Capital		—			(101	)
Class L:
Net Investment Income		—			(110	)
Net Realized Gain		—			(145	)
Paid-in-Capital		—			(2	)
Class C:
Net Investment Income		—			(16	)
Net Realized Gain		—			(16	)
Paid-in-Capital		—			(—	@)
Class IS:
Net Investment Income		—			(49	)
Net Realized Gain		—			(39	)
Paid-in-Capital		—			(1	)
Total Distributions		—			(16,260	)
Capital Share Transactions:(1)
Class I:
Subscribed		1,713			24,423
Issued due to a tax-free reorganization		—			4,898
Distributions Reinvested		—			1,825
Redeemed		(17,003	)		(13,168	)
Class A:
Subscribed		758			4,487
Issued due to a tax-free reorganization		—			340,098
Distributions Reinvested		—			13,073
Redeemed		(18,342	)		(53,249	)
Class L:
Subscribed		—			234
Issued due to a tax-free reorganization		—			6,284
Distributions Reinvested		—			243
Redeemed		(375	)		(1,039	)
Class C:
Subscribed		23			844	*
Distributions Reinvested		—			31	*
Redeemed		(260	)		(220	)*
Class IS:
Subscribed		1,783			2,328
Distributions Reinvested		—			89
Redeemed		(398	)		(47	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(32,101	)		331,134
Total Increase in Net Assets		20,887			257,374
Net Assets:
Beginning of Period		319,792			62,418
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $4,248 and $(190), respectively)	$	340,679		$	319,792

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Infrastructure Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		131			1,627
Shares Issued due to a tax-free reorganization		—			316
Shares Issued on Distributions Reinvested		—			144
Shares Redeemed		(1,257	)		(911	)
Net Increase (Decrease) in Class I Shares Outstanding		(1,126	)		1,176
Class A:
Shares Subscribed		57			293
Shares Issued due to a tax-free reorganization		—			22,027
Shares Issued on Distributions Reinvested		—			1,031
Shares Redeemed		(1,383	)		(3,710	)
Net Increase (Decrease) in Class A Shares Outstanding		(1,326	)		19,641
Class L:
Shares Subscribed		—			15
Shares Issued due to a tax-free reorganization		—			409
Shares Issued on Distributions Reinvested		—			19
Shares Redeemed		(28	)		(74	)
Net Increase (Decrease) in Class L Shares Outstanding		(28	)		369
Class C:
Shares Subscribed		1			57	*
Shares Issued on Distributions Reinvested		—			2	*
Shares Redeemed		(21	)		(18	)*
Net Increase (Decrease) in Class C Shares Outstanding		(20	)		41
Class IS:
Shares Subscribed		135			168
Shares Issued on Distributions Reinvested		—			7
Shares Redeemed		(31	)		(3	)
Net Increase in Class IS Shares Outstanding		104			172

@  Amount is less than $500.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Infrastructure Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.59		$	15.41		$	14.26		$	12.91		$	11.50		$	10.40
Income (Loss) from Investment Operations:
Net Investment Income†		0.19			0.40			0.28			0.26			0.27			0.23
Net Realized and Unrealized Gain (Loss)		2.04			(2.54	)		1.87			2.00			1.82			1.42
Total from Investment Operations		2.23			(2.14	)		2.15			2.26			2.09			1.65
Distributions from and/or in Excess of:
Net Investment Income		—			(0.35	)		(0.22	)		(0.25	)		(0.26	)		(0.22	)
Net Realized Gain		—			(0.32	)		(0.78	)		(0.66	)		(0.42	)		(0.33	)
Paid-in-Capital		—			(0.01	)		—			—			—			—
Total Distributions		—			(0.68	)		(1.00	)		(0.91	)		(0.68	)		(0.55	)
Net Asset Value, End of Period	$	14.82		$	12.59		$	15.41		$	14.26		$	12.91		$	11.50
Total Return++		17.71	%#		(13.90	)%		15.38	%		17.91	%		18.21	%		15.95	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	39,681		$	47,878		$	40,477		$	26,428		$	15,707		$	12,589
Ratio of Expenses to Average Net Assets (1)		0.85	%+*		0.88	%+^		1.08	%+		1.12	%+		1.15	%+		1.15	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.85	%+*		2.70	%+		1.82	%+		1.87	%+		2.18	%+		2.09	%+
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		19	%#		48	%		40	%		30	%		33	%		51	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.05	%*		1.10	%		1.42	%		2.04	%		2.39	%		2.93	%
Net Investment Income to Average Net Assets		2.65	%*		2.48	%		1.48	%		0.95	%		0.94	%		0.31	%

†  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 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, 2016

Financial Highlights

Global Infrastructure Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.56		$	15.38		$	14.25		$	12.90		$	11.50		$	10.40
Income (Loss) from Investment Operations:
Net Investment Income†		0.18			0.39			0.24			0.26			0.24			0.21
Net Realized and Unrealized Gain (Loss)		2.03			(2.56	)		1.86			1.97			1.80			1.41
Total from Investment Operations		2.21			(2.17	)		2.10			2.23			2.04			1.62
Distributions from and/or in Excess of:
Net Investment Income		—			(0.32	)		(0.19	)		(0.22	)		(0.22	)		(0.19	)
Net Realized Gain		—			(0.32	)		(0.78	)		(0.66	)		(0.42	)		(0.33	)
Paid-in-Capital		—			(0.01	)		—			—			—			—
Total Distributions		—			(0.65	)		(0.97	)		(0.88	)		(0.64	)		(0.52	)
Net Asset Value, End of Period	$	14.77		$	12.56		$	15.38		$	14.25		$	12.90		$	11.50
Total Return++		17.60	%#		(14.08	)%		14.94	%		17.69	%		17.85	%		15.67	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	290,512		$	263,702		$	20,815		$	3,706		$	129		$	115
Ratio of Expenses to Average Net Assets (1)		1.11	%+*		1.12	%^^		1.42	%+		1.37	%+^		1.40	%+		1.40	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.77	%+*		2.67	%+		1.53	%+		1.81	%+		1.93	%+		1.84	%+
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		19	%#		48	%		40	%		30	%		33	%		51	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.38	%*		1.35	%		1.76	%		2.43	%		2.64	%		3.18	%
Net Investment Income to Average Net Assets		2.50	%*		2.44	%		1.19	%		0.75	%		0.69	%		0.06	%

†  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 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, 2016

Financial Highlights

Global Infrastructure Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.52		$	15.34		$	14.22		$	12.90		$	11.50		$	10.40
Income (Loss) from Investment Operations:
Net Investment Income†		0.14			0.30			0.14			0.16			0.18			0.15
Net Realized and Unrealized Gain (Loss)		2.02			(2.55	)		1.87			1.98			1.80			1.42
Total from Investment Operations		2.16			(2.25	)		2.01			2.14			1.98			1.57
Distributions from and/or in Excess of:
Net Investment Income		—			(0.24	)		(0.11	)		(0.16	)		(0.16	)		(0.14	)
Net Realized Gain		—			(0.32	)		(0.78	)		(0.66	)		(0.42	)		(0.33	)
Paid-in-Capital		—			(0.01	)		—			—			—			—
Total Distributions		—			(0.57	)		(0.89	)		(0.82	)		(0.58	)		(0.47	)
Net Asset Value, End of Period	$	14.68		$	12.52		$	15.34		$	14.22		$	12.90		$	11.50
Total Return++		17.25	%#		(14.64	)%		14.35	%		16.98	%		17.31	%		15.12	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6,068		$	5,529		$	1,115		$	573		$	129		$	115
Ratio of Expenses to Average Net Assets (1)		1.67	%+*		1.69	%+^^		2.00	%+		1.93	%+^		1.90	%+		1.90	%+
Ratio of Net Investment Income to Average Net Assets (1)		2.20	%+*		2.06	%+		0.91	%+		1.16	%+		1.43	%+		1.34	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		19	%#		48	%		40	%		30	%		33	%		51	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.96	%*		1.95	%		2.41	%		2.86	%		3.14	%		3.68	%
Net Investment Income (Loss) to Average Net Assets		1.91	%*		1.80	%		0.50	%		0.23	%		0.19	%		(0.44	)%

†  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 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, 2016

Financial Highlights

Global Infrastructure Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	12.47		$	15.87
Income (Loss) from Investment Operations:
Net Investment Income†		0.11			0.17
Net Realized and Unrealized Gain (Loss)		2.03			(2.97	)
Total from Investment Operations		2.14			(2.80	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.27	)
Net Realized Gain		—			(0.32	)
Paid-in-Capital		—			(0.01	)
Total Distributions		—			(0.60	)
Net Asset Value, End of Period	$	14.61		$	12.47
Total Return++		17.16	%#		(17.62	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	318		$	516
Ratio of Expenses to Average Net Assets (1)		1.97	%+*		1.97	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.72	%+*		1.81	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		19	%#		48	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.73	%*		2.34	%*
Net Investment Income to Average Net Assets		0.96	%*		1.44	%*

^  Commencement of Offering.

†  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, 2016

Financial Highlights

Global Infrastructure Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	12.58		$	15.41		$	14.26		$	13.73
Income (Loss) from Investment Operations:
Net Investment Income†		0.21			0.53			0.28			0.09
Net Realized and Unrealized Gain (Loss)		2.03			(2.68	)		1.87			1.20
Total from Investment Operations		2.24			(2.15	)		2.15			1.29
Distributions from and/or in Excess of:
Net Investment Income		—			(0.35	)		(0.22	)		(0.25	)
Net Realized Gain		—			(0.32	)		(0.78	)		(0.51	)
Paid-in-Capital		—			(0.01	)		—			—
Total Distributions		—			(0.68	)		(1.00	)		(0.76	)
Net Asset Value, End of Period	$	14.82		$	12.58		$	15.41		$	14.26
Total Return++		17.81	%#		(13.96	)%		15.38	%		9.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,100		$	2,167		$	11		$	10
Ratio of Expenses to Average Net Assets (1)		0.84	%+*		0.84	%+^^^		1.08	%+		1.07	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		3.23	%+*		3.91	%+		1.79	%+		2.13	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		19	%#		48	%		40	%		30	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.09	%*		1.41	%		18.56	%		7.27	%*
Net Investment Income (Loss) to Average Net Assets		2.98	%*		3.34	%		(15.69	)%		(4.07	)%*

^  Commencement of Offering.

†  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 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, 2016

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-nine 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. The Portfolio seeks to provide both capital appreciation and income.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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.

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 December 31, 2015, are as follows:

Net investment income(1)	$	11,286,000
Net realized gain and unrealized gain/loss(2)	$	(52,825,000	)
Net increase (decrease) in net assets resulting from operations	$	41,539,000

(1) Approximately $8,128,000 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 $(65,628,000) 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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	—	$	6,359	$	—	$	6,359
Communications		45,819		5,196		—		51,015
Diversified		764		20,206		—		20,970
Electricity Transmission & Distribution		21,511		15,346		—		36,857
Oil & Gas Storage & Transportation		119,003		4,632		—		123,635
PPA Contracted Renewables		13,725		13,479		—		27,204
Railroads		2,901		—		—		2,901
Toll Roads		554		33,440		—		33,994
Water		3,033		20,275		—		23,308
Total Common Stocks		207,310		118,933		—		326,243
Short-Term Investments
Investment Companies		26,686		—		—		26,686
Repurchase Agreements		—		3,175		—		3,175
Total Short-Term Investments		26,686		3,175		—		29,861
Total Assets	$	233,996	$	122,108	$	—	$	356,104

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, 2016, securities with a total value of approximately $554,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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)
$	47,833	(a)	$	—	$	(47,833	)(b)(c)	$	0

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

(b) The Portfolio received cash collateral of approximately $16,375,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $33,038,000 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.

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

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	16,375	$	—	$	—	$	—	$	16,375
Total Borrowings	$	16,375	$	—	$	—	$	—	$	16,375
Gross amount of recognized liabilities for securities lending transactions									$	16,375

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 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 average 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 0.87% for Class I shares, 1.11% for Class A shares, 1.68% for Class L shares, 1.97% for Class C 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 as 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, 2016, approximately $298,000 of advisory fees were waived and approximately $123,000 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 Sub-Advisers 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $59,721,000 and $91,643,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by approximately $7,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value December 31, 2016 (000)
$	28,162	$	64,644	$	66,120	$	10	$	26,686

During the six months ended June 30, 2016, the Portfolio incurred approximately $8,000 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to

procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 2015 and 2014 was as follows:

2015 Distributions Paid From:						2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	7,533	$	8,605	$	122	$	941	$	2,768

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, capital gain distributions from real estate investment trust, a dividend redesignation and merger adjustments, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)			Distributions in Excess of Net Realized Gain (000)			Paid-in- Capital (000)
$	(291	)	$	(1,679	)	$	1,970

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	17	$	4,713

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption

requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 61.7%.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 and total expense ratio were lower than its peer group averages, but 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 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFISGISAN
1557969 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Advantage Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	7
Statements of Changes in Net Assets	8
Financial Highlights	10
Notes to Financial Statements	14
Investment Advisory Agreement Approval	22
Privacy Notice	24
Director and Officer Information	27

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	970.10	$	1,019.44	$	5.34	$	5.47		1.09	%
Global Advantage Portfolio Class A		1,000.00		968.30		1,017.80		6.95		7.12		1.42
Global Advantage Portfolio Class L		1,000.00		965.30		1,015.22		9.48		9.72		1.94
Global Advantage Portfolio Class C		1,000.00		963.50		1,013.97		10.69		10.97		2.19

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Advantage Portfolio

	Shares		Value (000)
Common Stocks (92.6%)
Belgium (2.6%)
Anheuser-Busch InBev N.V. ADR		1,404	$	185
Brazil (1.6%)
MercadoLibre, Inc.		823		116
China (7.4%)
Alibaba Group Holding Ltd. ADR (a)		1,339		107
JD.com, Inc. ADR (a)		8,767		186
Tencent Holdings Ltd. (b)		10,200		232
				525
France (11.2%)
Christian Dior SE		3,143		509
Hermes International		579		218
L'Oreal SA		362		70
				797
Germany (1.4%)
ThyssenKrupp AG		5,094		102
Japan (2.8%)
Calbee, Inc.		4,700		195
Spain (2.6%)
Industria de Diseno Textil SA		5,437		181
Switzerland (5.1%)
Nestle SA ADR		4,658		360
United Kingdom (6.8%)
Intertek Group PLC		2,121		99
Manchester United PLC, Class A		5,900		94
Reckitt Benckiser Group PLC		2,098		211
Whitbread PLC		1,742		81
				485
United States (51.1%)
3M Co.		772		135
Alphabet, Inc., Class C (a)		354		245
Amazon.com, Inc. (a)		814		583
Apple, Inc.		2,611		250
Berkshire Hathaway, Inc., Class B (a)		1,136		164
Facebook, Inc., Class A (a)		4,364		499
LinkedIn Corp., Class A (a)		830		157
Mastercard, Inc., Class A		2,121		187
Mead Johnson Nutrition Co.		2,273		206
S&P Global, Inc.		2,284		245
Salesforce.com, Inc. (a)		2,276		181
TJX Cos., Inc. (The)		2,075		160
Twitter, Inc. (a)		5,629		95
United Technologies Corp.		1,911		196
Visa, Inc., Class A		1,767		131
Zoetis, Inc.		4,086		194
				3,628
Total Common Stocks (Cost $6,077)				6,574

	Notional Amount (000)		Value (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $3)		740	$	1
	Shares
Short-Term Investment (6.9%)
Investment Company (6.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $488)		487,548		488
Total Investments (99.5%) (Cost $6,568) (c)(d)				7,063
Other Assets in Excess of Liabilities (0.5%)				39
Net Assets (100.0%)			$	7,102

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  The approximate fair value and percentage of net assets, $1,898,000 and 26.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $761,000 and the aggregate gross unrealized depreciation is approximately $266,000 resulting in net unrealized appreciation of approximately $495,000.

ADR  American Depositary Receipt.

CNY —  Chinese Yuan Renminbi

USD —  United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Other*		34.8	%
Internet Software & Services		20.5
Internet & Catalog Retail		10.9
Food Products		10.8
Textiles, Apparel & Luxury Goods		10.3
Short-Term Investment		6.9
Diversified Financial Services		5.8
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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $6,080)	$	6,575
Investment in Security of Affiliated Issuer, at Value (Cost $488)		488
Total Investments in Securities, at Value (Cost $6,568)		7,063
Foreign Currency, at Value (Cost —@)		—	@
Due from Adviser		29
Receivable for Portfolio Shares Sold		15
Dividends Receivable		3
Receivable from Affiliate		—	@
Other Assets		45
Total Assets		7,155
Liabilities:
Payable for Professional Fees		29
Payable for Custodian Fees		13
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 L		—	@
Payable for Administration Fees		—	@
Other Liabilities		10
Total Liabilities		53
Net Assets	$	7,102
Net Assets Consist Of:
Paid-in-Capital	$	6,629
Accumulated Net Investment Loss		(7	)
Accumulated Net Realized Loss		(15	)
Unrealized Appreciation (Depreciation) on:
Investments		495
Foreign Currency Translations		(—	@)
Net Assets	$	7,102

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Advantage Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	2,364
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		197,265
Net Asset Value, Offering and Redemption Price Per Share	$	11.99
CLASS A:
Net Assets	$	4,216
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		354,328
Net Asset Value, Redemption Price Per Share	$	11.90
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.66
Maximum Offering Price Per Share	$	12.56
CLASS L:
Net Assets	$	308
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		26,383
Net Asset Value, Offering and Redemption Price Per Share	$	11.67
CLASS C:
Net Assets	$	214
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		18,427
Net Asset Value, Offering and Redemption Price Per Share	$	11.60

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $4 of Foreign Taxes Withheld)	$	39
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		40
Expenses:
Professional Fees		50
Advisory Fees (Note B)		25
Registration Fees		22
Custodian Fees (Note F)		10
Shareholder Services Fees — Class A (Note D)		5
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		1
Shareholder Reporting 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)		1
Administration Fees (Note C)		3
Pricing Fees		3
Directors' Fees and Expenses		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		9
Total Expenses		139
Expenses Reimbursed by Adviser (Note B)		(68	)
Waiver of Advisory Fees (Note B)		(25	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		43
Net Investment Loss		(3	)
Realized Gain (Loss):
Investments Sold		(69	)
Foreign Currency Transactions		—	@
Net Realized Loss		(69	)
Change in Unrealized Appreciation (Depreciation):
Investments		(43	)
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		(43	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(112	)
Net Decrease in Net Assets Resulting from Operations	$	(115	)

@  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, 2016

Global Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	(3	)	$	1
Net Realized Gain (Loss)		(69	)		323
Net Change in Unrealized Appreciation (Depreciation)		(43	)		(27	)
Net Increase (Decrease) in Net Assets Resulting from Operations		(115	)		297
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(7	)
Net Realized Gain		—			(148	)
Class A:
Net Realized Gain		—			(172	)
Class L:
Net Realized Gain		—			(27	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(3	)
Total Distributions		—			(357	)
Capital Share Transactions:(1)
Class I:
Subscribed		647			497
Distributions Reinvested		—			131
Redeemed		(29	)		(2,065	)
Class A:
Subscribed		1,025			2,665
Distributions Reinvested		—			155
Redeemed		(160	)		(116	)
Class L:
Subscribed		—			128
Distributions Reinvested		—			18
Redeemed		(59	)		(86	)
Class C:
Subscribed		153			62	*
Distributions Reinvested		—			2	*
Redeemed		—			(—	@)*
Net Increase in Net Assets Resulting from Capital Share Transactions		1,577			1,391
Total Increase in Net Assets		1,462			1,331
Net Assets:
Beginning of Period		5,640			4,309
End of Period (Including Accumulated Net Investment Loss of $(7) and $(4))	$	7,102		$	5,640

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		55			37
Shares Issued on Distributions Reinvested		—			10
Shares Redeemed		(2	)		(152	)
Net Increase (Decrease) in Class I Shares Outstanding		53			(105	)
Class A:
Shares Subscribed		90			212
Shares Issued on Distributions Reinvested		—			12
Shares Redeemed		(13	)		(9	)
Net Increase in Class A Shares Outstanding		77			215
Class L:
Shares Subscribed		—			10
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		(5	)		(6	)
Net Increase (Decrease) in Class L Shares Outstanding		(5	)		5
Class C:
Shares Subscribed		14			5	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		—			(—	@@)*
Net Increase in Class C Shares Outstanding		14			5

@  Amount is less than $500.

@@  Amount is less than 500 shares.

*  For the period April 30, 2015 through December 31, 2015.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Advantage Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.36		$	12.74		$	13.57		$	11.37		$	9.97		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income†		0.01			0.05			0.05			0.04			0.16			0.06
Net Realized and Unrealized Gain (Loss)		(0.38	)		0.46			0.04			3.27			2.12			(0.03	)
Total from Investment Operations		(0.37	)		0.51			0.09			3.31			2.28			0.03
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.01	)		(0.08	)		(0.12	)		(0.07	)
Net Realized Gain		—			(0.86	)		(0.91	)		(1.03	)		(0.76	)		—
Total Distributions		—			(0.89	)		(0.92	)		(1.11	)		(0.88	)		(0.07	)
Net Asset Value, End of Period	$	11.99		$	12.36		$	12.74		$	13.57		$	11.37		$	9.97
Total Return++		(2.99	)%#		3.85	%		0.83	%		29.71	%		22.83	%		0.34	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,364		$	1,785		$	3,181		$	2,868		$	1,129		$	1,603
Ratio of Expenses to Average Net Assets (1)		1.09	%+*		1.11	%+^^		1.30	%+		1.29	%+		1.30	%+		1.30	%+
Ratio of Net Investment Income to Average Net Assets (1)		0.15	%+*		0.37	%+		0.40	%+		0.29	%+		1.39	%+		0.57	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		47	%#		90	%		46	%		57	%		63	%		42	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.13	%*		5.38	%		5.31	%		8.07	%		7.28	%		7.31	%
Net Investment Loss to Average Net Assets		(2.89	)%*		(3.90	)%		(3.61	)%		(6.49	)%		(4.59	)%		(5.44	)%

†  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 ratio of 1.10% for Class I Shares. Prior to January 23, 2015, the maximum ratio was 1.30% for Class I Shares.

§  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, 2016

Financial Highlights

Global Advantage Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.29		$	12.70		$	13.57		$	11.36		$	9.97		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.01	)		(0.04	)		0.01			(0.04	)		0.13			0.03
Net Realized and Unrealized Gain (Loss)		(0.38	)		0.49			0.04			3.31			2.11			(0.02	)
Total from Investment Operations		(0.39	)		0.45			0.05			3.27			2.24			0.01
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.01	)		(0.03	)		(0.09	)		(0.05	)
Net Realized Gain		—			(0.86	)		(0.91	)		(1.03	)		(0.76	)		—
Total Distributions		—			(0.86	)		(0.92	)		(1.06	)		(0.85	)		(0.05	)
Net Asset Value, End of Period	$	11.90		$	12.29		$	12.70		$	13.57		$	11.36		$	9.97
Total Return++		(3.17	)%#		3.40	%		0.46	%		29.48	%		22.44	%		0.07	%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	4,216		$	3,414		$	790		$	681		$	114		$	100
Ratio of Expenses to Average Net Assets (1)		1.42	%+*		1.45	%+^^^		1.65	%+		1.60	%+^^		1.55	%+		1.55	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.15	)%+*		(0.34	)%+		0.05	%+		(0.35	)%+		1.14	%+		0.32	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.00	%§		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		47	%#		90	%		46	%		57	%		63	%		42	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.36	%*		5.92	%		5.79	%		8.43	%		7.53	%		7.56	%
Net Investment Loss to Average Net Assets		(3.09	)%*		(4.81	)%		(4.09	)%		(7.18	)%		(4.84	)%		(5.69	)%

†  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 ratios 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 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, 2016

Financial Highlights

Global Advantage Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	12.09		$	12.56		$	13.50		$	11.35		$	9.96		$	10.01
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.04	)		(0.08	)		(0.06	)		(0.09	)		0.07			(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.38	)		0.47			0.04			3.28			2.11			(0.02	)
Total from Investment Operations		(0.42	)		0.39			(0.02	)		3.19			2.18			(0.04	)
Distributions from and/or in Excess of:
Net Investment Income		—			—			(0.01	)		(0.01	)		(0.03	)		(0.01	)
Net Realized Gain		—			(0.86	)		(0.91	)		(1.03	)		(0.76	)		—
Total Distributions		—			(0.86	)		(0.92	)		(1.04	)		(0.79	)		(0.01	)
Net Asset Value, End of Period	$	11.67		$	12.09		$	12.56		$	13.50		$	11.35		$	9.96
Total Return++		(3.47	)%#		2.96	%		(0.07	)%		28.78	%		21.89	%		(0.44	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	308		$	382		$	338		$	254		$	113		$	100
Ratio of Expenses to Average Net Assets (1)		1.94	%+*		1.96	%+^^^		2.15	%+		2.09	%+^^		2.05	%+		2.05	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.72	)%+*		(0.60	)%+		(0.45	)%+		(0.71	)%+		0.64	%+		(0.18	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		47	%#		90	%		46	%		57	%		63	%		42	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.34	%*		6.58	%		6.55	%		9.07	%		8.03	%		8.06	%
Net Investment Loss to Average Net Assets		(4.12	)%*		(5.22	)%		(4.85	)%		(7.69	)%		(5.34	)%		(6.19	)%

†  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 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	12.04		$	13.30
Loss from Investment Operations:
Net Investment Loss†		(0.05	)		(0.11	)
Net Realized and Unrealized Loss		(0.39	)		(0.26	)
Total from Investment Operations		(0.44	)		(0.37	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)
Net Realized Gain		—			(0.86	)
Total Distributions		—			(0.89	)
Net Asset Value, End of Period	$	11.60		$	12.04
Total Return++		(3.65	)%#		(2.94	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	214		$	59
Ratios of Expenses to Average Net Assets (1)		2.19	%+*		2.20	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.93	)%+*		(1.33	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§*
Portfolio Turnover Rate		47	%#		90	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		6.75	%*		12.84	%*
Net Investment Loss to Average Net Assets		(5.49	)%*		(11.97	)%*

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An

unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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,

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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.

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	196	$	—	$	—	$	196
Beverages		185		—		—		185
Diversified Financial Services		409		—		—		409
Food Products		566		195		—		761
Hotels, Restaurants & Leisure		—		81		—		81
Household Products		—		211		—		211
Industrial Conglomerates		135		—		—		135
Information Technology Services		318		—		—		318
Internet & Catalog Retail		769		—		—		769
Internet Software & Services		1,219		232		—		1,451
Media		94		—		—		94
Metals & Mining		—		102		—		102
Personal Products		—		70		—		70
Pharmaceuticals		194		—		—		194
Professional Services		—		99		—		99
Software		181		—		—		181
Specialty Retail		160		181		—		341
Tech Hardware, Storage & Peripherals		250		—		—		250
Textiles, Apparel & Luxury Goods		—		727		—		727
Total Common Stocks		4,676		1,898		—		6,574
Call Option Purchased		—		1		—		1
Short-Term Investment
Investment Company		488		—		—		488
Total Assets	$	5,164	$	1,899	$	—	$	7,063

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Call Option Purchased)	Currency Risk	$	1	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (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 (Options Purchased)		$(11)(c)

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

At June 30, 2016, 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)
Option Purchased	$	1	(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, 2016.

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	$	1	$	—	$	—	$	1

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	772,000

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 investment income, if any, are declared and paid 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
	0.80	%		0.75	%

For the six months ended June 30, 2016, 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 1.10% for Class I shares, 1.45% for Class A shares, 1.95% for Class L shares and 2.20% 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 as 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, 2016, approximately $25,000 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 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $4,151,000 and $2,838,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	222	$	2,693	$	2,427	$	1	$	488

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	7	$	350	$	58	$	248

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, a net operating loss and nondeductible expenses, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Net Investment Loss (000)			Accumulated Net Realized Gain (000)		Paid-in- Capital (000)
$	(6	)	$	6	$	—	@

@ Amount is less than $500.

At December 31, 2015, 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)
$	—	$	76

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	3	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 75.7%.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGASAN
1557944 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Discovery Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	15
Investment Advisory Agreement Approval	26
Privacy Notice	28
Director and Officer Information	31

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,115.80	$	1,018.20	$	7.05	$	6.72		1.34	%
Global Discovery Portfolio Class A		1,000.00		1,113.90		1,016.46		8.88		8.47		1.69
Global Discovery Portfolio Class L		1,000.00		1,111.10		1,013.97		11.50		10.97		2.19
Global Discovery Portfolio Class C		1,000.00		1,109.90		1,012.73		12.80		12.21		2.44

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Discovery Portfolio

	Shares		Value (000)
Common Stocks (93.3%)
Brazil (4.2%)
GAEC Educacao SA		41,980	$	188
JHSF Participacoes SA (a)		279,310		94
Porto Seguro SA		30,251		252
				534
Canada (0.8%)
Second Cup Ltd. (The) (a)		49,496		103
China (0.4%)
Jumei International Holding Ltd. ADR (a)		12,066		50
France (14.5%)
Christian Dior SE		8,979		1,454
Edenred		13,561		280
Eurazeo SA		2,048		122
				1,856
Germany (1.5%)
windeln.de AG (a)(b)		4,852		21
Zalando SE (a)(b)		6,476		171
				192
Italy (0.9%)
Tamburi Investment Partners SpA		31,573		118
Netherlands (3.4%)
Koninklijke Philips N.V.		17,482		436
Spain (1.7%)
Mapfre SA (c)		95,686		212
United Kingdom (7.0%)
BBA Aviation PLC		248,808		737
Daily Mail & General Trust PLC		11,643		93
Melrose Industries PLC		10,577		60
				890
United States (58.9%)
Allison Transmission Holdings, Inc.		8,319		235
Bojangles', Inc. (a)		3,356		57
BWX Technologies, Inc.		27,388		980
Cosan Ltd., Class A		38,389		250
Dropbox, Inc. (a)(d)(e)(f) (acquisition cost — $25; acquired 5/1/12)		2,743		33
eBay, Inc. (a)		16,954		397
El Pollo Loco Holdings, Inc. (a)(c)		20,519		267
Fiesta Restaurant Group, Inc. (a)		10,008		218
Fox Factory Holding Corp. (a)		7,375		128
Garmin Ltd.		4,994		212
GrubHub, Inc. (a)(c)		4,347		135
Habit Restaurants, Inc. (The) (a)		3,121		51
Harley-Davidson, Inc.		5,242		237
Intuitive Surgical, Inc. (a)		343		227
Joy Global, Inc.		40,873		864
Manitowoc Foodservice, Inc. (a)		76,237		1,343
Papa Murphy's Holdings, Inc. (a)		7,034		47
PayPal Holdings, Inc. (a)		11,626		424
RenaissanceRe Holdings Ltd.		898		105

	Shares			Value (000)
Terex Corp.		40,904		$	831
Time Warner, Inc.		6,727			495
					7,536
Total Common Stocks (Cost $11,441)					11,927
Preferred Stocks (4.1%)
India (1.3%)
Flipkart Online Services Pvt Ltd. Series D (a)(d)(e)(f) (acquisition cost — $44; acquired 10/4/13)		1,910			161
United States (2.8%)
Airbnb, Inc. Series D (a)(d)(e)(f) (acquisition cost — $78; acquired 4/16/14)		1,917			174
Blue Bottle Coffee, Inc. Series B (a)(d)(e)(f) (acquisition cost — $56; acquirred 1/24/14)		3,945			70
DOMO, Inc. (a)(d)(e)(f) (acquisition cost — $37; acquired 1/31/14 — 2/7/14)		9,082			46
Lookout, Inc. Series F (a)(d)(e)(f) (acquisition cost — $73; acquired 6/17/14)		6,374			31
Palantir Technologies, Inc. Series G (a)(d)(e)(f) (acquisition cost — $9; acquired 7/19/12)		2,935			21
Palantir Technologies, Inc. Series H (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572			11
Palantir Technologies, Inc. Series H1 (a)(d)(e)(f) (acquisition cost — $6; acquired 10/25/13)		1,572			11
					364
Total Preferred Stocks (Cost $309)					525
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			3
Participation Note (0.0%)
Italy (0.0%)
Tamburi Investment Partners SpA, Equity Linked Notes, expires 6/30/20 (a) (Cost $4)		10,390			4
	Notional Amount (000)
Call Options Purchased (0.3%)
United States (0.3%)
United Technologies Corp. January 2017 @$110, UBS Securities, LLC (g)		—	@		26
United Technologies Corp. January 2018 @$120, UBS Securities, LLC (g)		—	@		16
Total Call Options Purchased (Cost $95)					42
	Shares
Short-Term Investments (6.6%)
Securities held as Collateral on Loaned Securities (4.5%)
Investment Company (3.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		466,720			467

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Discovery Portfolio

	Face Amount (000)		Value (000)
Repurchase Agreements (0.9%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $108; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $110)	$	108	$	108
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $4; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $4)		4		4
				112
Total Securities held as Collateral on Loaned Securities (Cost $579)				579
	Shares
Investment Company (2.1%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $264)		263,773		264
Total Short-Term Investments (Cost $843)				843
Total Investments (104.3%) (Cost $12,695) Including $568 of Securities Loaned (h)(i)				13,344
Liabilities in Excess of Other Assets (–4.3%)				(555	)
Net Assets (100.0%)			$	12,789

(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, 2016.

(d)  Security has been deemed illiquid at June 30, 2016.

(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, 2016 amounts to approximately $561,000 and represents 4.4% of net assets.

(f)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $561,000, representing 4.4% 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.

(g)  Cleared option.

(h)  The approximate fair value and percentage of net assets, $3,704,000 and 29.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(i)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,493,000 and the aggregate gross unrealized depreciation is approximately $844,000 resulting in net unrealized appreciation of approximately $649,000.

@  Amount is less than 500.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		42.7	%
Machinery		26.1
Textiles, Apparel & Luxury Goods		11.4
Aerospace & Defense		7.7
Hotels, Restaurants & Leisure		6.3
Transportation Infrastructure		5.8
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $11,964)	$	12,613
Investment in Security of Affiliated Issuer, at Value (Cost $731)		731
Total Investments in Securities, at Value (Cost $12,695)		13,344
Foreign Currency, at Value (Cost —@)		—	@
Cash		1
Due from Adviser		11
Receivable for Portfolio Shares Sold		10
Tax Reclaim Receivable		3
Dividends Receivable		2
Receivable from Affiliate		—	@
Other Assets		46
Total Assets		13,417
Liabilities:
Collateral on Securities Loaned, at Value		579
Payable for Professional Fees		26
Payable for Custodian Fees		11
Payable for Portfolio Shares Redeemed		4
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 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 Sub Transfer Agency Fees — Class A		—	@
Other Liabilities		6
Total Liabilities		628
Net Assets	$	12,789
Net Assets Consist Of:
Paid-in-Capital	$	12,510
Undistributed Net Investment Income		13
Accumulated Net Realized Loss		(383	)
Unrealized Appreciation (Depreciation) on:
Investments		649
Foreign Currency Translations		(—	@)
Net Assets	$	12,789

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Discovery Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	6,741
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		602,644
Net Asset Value, Offering and Redemption Price Per Share	$	11.19
CLASS A:
Net Assets	$	5,193
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		465,835
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	$	287
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		25,896
Net Asset Value, Offering and Redemption Price Per Share	$	11.10
CLASS C:
Net Assets	$	568
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		51,622
Net Asset Value, Offering and Redemption Price Per Share	$	11.01
(1) Including: Securities on Loan, at Value:	$	568

@  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, 2016 (unaudited)

Global Discovery Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $6 of Foreign Taxes Withheld)	$	103
Income from Securities Loaned — Net		2
Dividends from Security of Affiliated Issuer (Note G)		1
Total Investment Income		106
Expenses:
Professional Fees		53
Advisory Fees (Note B)		48
Registration Fees		22
Custodian Fees (Note F)		9
Shareholder Services Fees — Class A (Note D)		6
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		2
Shareholder Reporting Fees		5
Administration Fees (Note C)		4
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)		1
Pricing Fees		3
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		2
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Directors' Fees and Expenses		1
Other Expenses		4
Total Expenses		164
Waiver of Advisory Fees (Note B)		(48	)
Expenses Reimbursed by Adviser (Note B)		(30	)
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)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		83
Net Investment Income		23
Realized Gain (Loss):
Investments Sold		(200	)
Foreign Currency Transactions		3
Net Realized Loss		(197	)
Change in Unrealized Appreciation (Depreciation):
Investments		1,132
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		1,132
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		935
Net Increase in Net Assets Resulting from Operations	$	958

@  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, 2016

Global Discovery Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	23		$	51
Net Realized Gain (Loss)		(197	)		198
Net Change in Unrealized Appreciation (Depreciation)		1,132			(498	)
Net Increase (Decrease) in Net Assets Resulting from Operations		958			(249	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(55	)
Class A:
Net Investment Income		—			(66	)
Class L:
Net Investment Income		—			(2	)
Class C:
Net Investment Income		—			(5	)*
Total Distributions		—			(128	)
Capital Share Transactions:(1)
Class I:
Subscribed		3,216			2,778
Distributions Reinvested		—			45
Redeemed		(862	)		(5,353	)
Class A:
Subscribed		2,466			3,385
Distributions Reinvested		—			63
Redeemed		(3,007	)		(729	)
Class L:
Subscribed		—			108
Distributions Reinvested		—			1
Redeemed		—			(61	)
Class C:
Subscribed		74			467	*
Distributions Reinvested		—			5	*
Redeemed		—			(—	@)*
Net Increase in Net Assets Resulting from Capital Share Transactions		1,887			709
Total Increase in Net Assets		2,845			332
Net Assets:
Beginning of Period		9,944			9,612
End of Period (Including Accumulated Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $13 and $(10), respectively)	$	12,789		$	9,944

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Discovery Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		296			260
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		(79	)		(484	)
Net Increase (Decrease) in Class I Shares Outstanding		217			(219	)
Class A:
Shares Subscribed		230			321
Shares Issued on Distributions Reinvested		—			6
Shares Redeemed		(301	)		(69	)
Net Increase (Decrease) in Class A Shares Outstanding		(71	)		258
Class L:
Shares Subscribed		—			11
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		—			(6	)
Net Increase in Class L Shares Outstanding		—			5
Class C:
Shares Subscribed		7			44	*
Shares Issued on Distributions Reinvested		—			1	*
Shares Redeemed		—			(—	@@)*
Net Increase in Class C Shares Outstanding		7			45

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Discovery Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	10.02		$	10.62		$	13.70		$	11.11		$	9.06		$	9.97
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.04			0.10			0.48			(0.01	)		0.25			0.13
Net Realized and Unrealized Gain (Loss)		1.13			(0.55	)		(0.77	)		4.43			2.62			(0.92	)
Total from Investment Operations		1.17			(0.45	)		(0.29	)		4.42			2.87			(0.79	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.15	)		(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		—			(0.15	)		(2.79	)		(1.83	)		(0.82	)		(0.12	)
Net Asset Value, End of Period	$	11.19		$	10.02		$	10.62		$	13.70		$	11.11		$	9.06
Total Return++		11.58	%#		(4.27	)%		(1.96	)%		40.72	%		31.64	%		(7.72	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6,741		$	3,867		$	6,421		$	8,493		$	3,432		$	2,446
Ratio of Expenses to Average Net Assets (1)		1.34	%+*		1.34	%+		1.34	%+		1.34	%+		1.35	%+		1.35	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.79	%+*		0.88	%+		3.70	%+		(0.07	)%+		2.41	%+		1.39	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		33	%#		118	%		84	%		100	%		96	%		83	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.86	%*		3.09	%		2.65	%		3.65	%		4.33	%		5.52	%
Net Investment Income (Loss) to Average Net Assets		(0.73	)%*		(0.87	)%		2.39	%		(2.38	)%		(0.57	)%		(2.78	)%

†  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, 2016

Financial Highlights

Global Discovery Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	10.01		$	10.62		$	13.69		$	11.11		$	9.07		$	9.97
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			0.02			0.44			(0.09	)		0.22			0.12
Net Realized and Unrealized Gain (Loss)		1.13			(0.51	)		(0.76	)		4.47			2.62			(0.92	)
Total from Investment Operations		1.14			(0.49	)		(0.32	)		4.38			2.84			(0.80	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)		(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		—			(0.12	)		(2.75	)		(1.80	)		(0.80	)		(0.10	)
Net Asset Value, End of Period	$	11.15		$	10.01		$	10.62		$	13.69		$	11.11		$	9.07
Total Return++		11.39	%#		(4.59	)%		(2.25	)%		40.33	%		31.40	%		(7.98	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,193		$	5,375		$	2,965		$	1,455		$	137		$	91
Ratio of Expenses to Average Net Assets (1)		1.69	%+*		1.69	%+		1.69	%+		1.65	%+^^		1.60	%+		1.60	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.11	%+*		0.16	%+		3.35	%+		(0.66	)%+		2.16	%+		1.14	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		33	%#		118	%		84	%		100	%		96	%		83	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.18	%*		3.52	%		3.02	%		3.87	%		4.58	%		5.77	%
Net Investment Income (Loss) to Average Net Assets		(1.38	)%*		(1.67	)%		2.02	%		(2.88	)%		(0.82	)%		(3.03	)%

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value, 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Discovery Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	9.99		$	10.59		$	13.64		$	11.11		$	9.07		$	9.97
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.02	)		(0.03	)		0.37			(0.14	)		0.17			0.06
Net Realized and Unrealized Gain (Loss)		1.13			(0.51	)		(0.76	)		4.45			2.61			(0.91	)
Total from Investment Operations		1.11			(0.54	)		(0.39	)		4.31			2.78			(0.85	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		(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		—			(0.06	)		(2.66	)		(1.78	)		(0.74	)		(0.05	)
Net Asset Value, End of Period	$	11.10		$	9.99		$	10.59		$	13.64		$	11.11		$	9.07
Total Return++		11.11	%#		(5.05	)%		(2.81	)%		39.68	%		30.62	%		(8.41	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	287		$	259		$	226		$	269		$	111		$	91
Ratio of Expenses to Average Net Assets (1)		2.19	%+*		2.19	%+		2.19	%+		2.13	%+^^		2.10	%+		2.10	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.34	)%+*		(0.26	)%+		2.85	%+		(1.05	)%+		1.66	%+		0.64	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%		0.01	%		0.01	%		0.00	%§		0.00	%§
Portfolio Turnover Rate		33	%#		118	%		84	%		100	%		96	%		83	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.22	%*		4.55	%		4.08	%		4.62	%		5.08	%		6.27	%
Net Investment Income (Loss) to Average Net Assets		(2.37	)%*		(2.62	)%		0.96	%		(3.54	)%		(1.32	)%		(3.53	)%

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Discovery Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.92		$	11.07
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.08	)
Net Realized and Unrealized Gain (Loss)		1.12			(0.95	)
Total from Investment Operations		1.09			(1.03	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)
Net Asset Value, End of Period	$	11.01		$	9.92
Total Return++		10.99	%#		(9.28	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	568		$	443
Ratios of Expenses to Average Net Assets (1)		2.44	%+*		2.45	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.52	)%+*		(1.21	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§*
Portfolio Turnover Rate		33	%#		118	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.23	%*		5.66	%*
Net Investment Loss to Average Net Assets		(2.31	)%*		(4.42	)%*

^  Commencement of Offering.

†  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, 2016

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-nine 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.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. On April 30, 2015, the Portfolio 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which

bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	980	$	—	$	—	$	980
Auto Components		128		—		—		128
Automobiles		237		—		—		237
Capital Markets		—		118		—		118
Commercial Services & Supplies		—		280		—		280
Diversified Consumer Services		188		—		—		188
Diversified Financial Services		—		122		—		122
Health Care Equipment & Supplies		227		—		—		227
Hotels, Restaurants & Leisure		743		—		—		743
Household Durables		212		—		—		212
Industrial Conglomerates		—		436		—		436
Information Technology Services		424		—		—		424
Insurance		357		212		—		569
Internet & Catalog Retail		50		192		—		242
Internet Software & Services		532		—		33		565
Machinery		3,273		60		—		3,333
Media		495		93		—		588
Oil, Gas & Consumable Fuels		250		—		—		250
Real Estate Management & Development		94		—		—		94
Textiles, Apparel & Luxury Goods		—		1,454		—		1,454
Transportation Infrastructure		—		737		—		737
Total Common Stocks		8,190		3,704		33		11,927
Preferred Stocks		—		—		525		525
Convertible Preferred Stock		—		—		3		3
Participation Note		4		—		—		4
Call Options Purchased		42		—		—		42
Short-Term Investments
Investment Company		731		—		—		731
Repurchase Agreements		—		112		—		112
Total Short-Term Investments		731		112		—		843
Total Assets	$	8,967	$	3,816	$	561	$	13,344

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, 2016, securities with a total value of approximately $282,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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	$	39		$	578		$	4
Purchases		—			—			—
Sales		—			—			—
Amortization of discount		—			—			—
Transfers in		—			—			—
Transfers out		—			—			—
Corporate actions		—			—			—
Change in unrealized appreciation (depreciation)		(6	)		(53	)		(1	)
Realized gains (losses)		—			—			—
Ending Balance	$	33		$	525		$	3
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	(6	)	$	(53	)	$	(1	)

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, 2016. Various valuation techniques were used in the valuation of certain investments and weighted based on the level of significance.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Hotels, Restaurants & Leisure
Preferred Stock	$	70	Discounted Cash Flow	Weighted Average Cost of Capital		20.0	%		22.0	%		21.0	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		2.1	x		4.2	x		3.2	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet & Catalog Retail
Preferred Stocks	$	174	Discounted Cash Flow	Weighted Average Cost of Capital		16.0	%		18.0	%		17.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.8	x		14.5	x		12.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	161	Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.6	%	Decrease
				Perpetual Growth Rate		3.5	%		4.5	%		4.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		1.8	x		3.6	x		2.7	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Internet Software & Services
Common Stock	$	33	Discounted Cash Flow	Weighted Average Cost of Capital		18.0	%		20.0	%		19.0	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
Convertible Preferred Stock	$	3	Market Comparable Companies	Enterprise Value/ Revenue		5.9	x		16.2	x		9.6	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
Software
Preferred Stocks	$	46	Discounted Cash Flow	Weighted Average Cost of Capital		18.0	%		20.0	%		19.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		8.0	x		12.2	x		11.0	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	31	Discounted Cash Flow	Weighted Average Cost of Capital		19.0	%		21.0	%		20.0	%	Decrease
				Perpetual Growth Rate		3.0	%		4.0	%		3.5	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		7.9	x		11.1	x		9.2	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease
	$	43	Market Transaction Method	Pending Precedent Transaction	$	7.40		$	7.40		$	7.40		Increase
			Discounted Cash Flow	Weighted Average Cost of Capital		16.5	%		18.5	%		17.5	%	Decrease
				Perpetual Growth Rate		2.5	%		3.5	%		3.0	%	Increase
			Market Comparable Companies	Enterprise Value/ Revenue		7.8	x		14.8	x		14.5	x	Increase
				Discount for Lack of Marketability		20.0	%		20.0	%		20.0	%	Decrease

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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,

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Options Purchased	Investments, at Value (Options Purchased)	Equity Risk	$	42	(a)

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

The following table sets forth by primary risk exposure the Portfolio's change in unrealized appreciation (depreciation) by type of derivative contract for the six months ended June 30, 2016 in accordance with ASC 815.

Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Equity Risk	Investments (Options Purchased)	$	(84	)(b)

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

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	19,000

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, 2016.

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)
$	568	(c)	$	—	$	(568	)(d)(e)	$	0

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

(d) The Portfolio received cash collateral of approximately $579,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments.

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

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	579	$	—	$	—	$	—	$	579
Total Borrowings	$	579	$	—	$	0	$	—	$	579
Gross amount of recognized liabilities for securities lending transactions									$	579

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.  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.

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 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, 2016, 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 as 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, 2016, approximately $48,000 of advisory fees were waived and approximately $33,000 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 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 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, 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $5,389,000 and $3,592,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced by less than $500 relating to the Portfolio's investment in the Liquidity Funds.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	403	$	6,982	$	6,654	$	1	$	731

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-In- Capital (000)
$	128	$	—	$	941	$	1,081	$	225

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, 2015:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in-Capital (000)
$	149	$	(149	)	$	—

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $88,000 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	1	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 68.3%.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that while the Portfolio's management fee was lower than its peer group average, its total expense ratio was higher than 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.

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGDSAN
1557953 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

International Advantage Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	7
Statements of Changes in Net Assets	8
Financial Highlights	10
Notes to Financial Statements	14
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,000.80	$	1,019.94	$	4.92	$	4.97		0.99	%
International Advantage Portfolio Class A		1,000.00		999.20		1,018.35		6.51		6.57		1.31
International Advantage Portfolio Class L		1,000.00		996.60		1,015.71		9.13		9.22		1.84
International Advantage Portfolio Class C		1,000.00		994.90		1,014.47		10.37		10.47		2.09

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

International Advantage Portfolio

	Shares		Value (000)
Common Stocks (91.7%)
Australia (3.5%)
Aurizon Holding Ltd.		64,127	$	232
CSL Ltd.		4,780		402
				634
Belgium (3.3%)
Anheuser-Busch InBev N.V.		4,482		589
Canada (4.2%)
Brookfield Asset Management, Inc., Class A		9,900		327
Brookfield Infrastructure Partners LP		9,498		430
				757
China (15.0%)
Foshan Haitian Flavouring & Food Co., Ltd., Class A		83,500		383
Jiangsu Hengrui Medicine Co., Ltd., Class A		58,280		352
Kweichow Moutai Co., Ltd., Class A		5,650		249
TAL Education Group ADR (a)		16,665		1,034
Tencent Holdings Ltd. (b)		28,700		654
				2,672
Denmark (5.3%)
DSV A/S		22,368		940
France (12.7%)
Christian Dior SE		3,391		549
Danone SA		5,663		399
Hermes International		2,582		973
Pernod Ricard SA		3,191		356
				2,277
Hong Kong (3.1%)
AIA Group Ltd.		92,600		558
Japan (4.6%)
Calbee, Inc.		19,600		814
Korea, Republic of (1.3%)
Loen Entertainment, Inc. (a)		3,546		226
Netherlands (3.9%)
Priceline Group, Inc. (The) (a)		556		694
Norway (2.7%)
Telenor ASA		11,069		183
TGS Nopec Geophysical Co., ASA		18,436		301
				484
Switzerland (5.1%)
Kuehne & Nagel International AG (Registered)		2,656		372
Nestle SA (Registered)		6,913		533
				905
United Kingdom (12.8%)
ARM Holdings PLC		31,057		471
Burberry Group PLC		26,569		415
Diageo PLC		13,620		381
Hargreaves Lansdown PLC		20,549		342
Reckitt Benckiser Group PLC		6,812		685
				2,294

	Shares		Value (000)
United States (14.2%)
Brookfield Business Partners LP (a)		185	$	4
Cognizant Technology Solutions Corp., Class A (a)		12,276		703
EPAM Systems, Inc. (a)		12,292		790
Globant SA (a)		10,943		431
Luxoft Holding, Inc. (a)		11,562		601
				2,529
Total Common Stocks (Cost $15,679)				16,373
Participation Notes (0.9%)
China (0.9%)
Foshan Haitian Flavouring & Food Company Ltd., Class A, Equity Linked Notes, expires 10/11/24 (a)		9,060		42
Kweichow Moutai Co., Ltd., Class A, Equity Linked Notes, expires 3/4/21 (a)		2,614		115
Total Participation Notes (Cost $100)				157
	Notional Amount (000)
Call Option Purchased (0.0%)
Foreign Currency Option (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland (Cost $8)		1,684		3
	Shares
Short-Term Investment (6.4%)
Investment Company (6.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $1,138)		1,137,837		1,138
Total Investments (99.0%) (Cost $16,925) (c)(d)				17,671
Other Assets in Excess of Liabilities (1.0%)				184
Net Assets (100.0%)			$	17,855

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  The approximate fair value and percentage of net assets, $11,359,000 and 63.6%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,049,000 and the aggregate gross unrealized depreciation is approximately $303,000 resulting in net unrealized appreciation of approximately $746,000.

ADR  American Depositary Receipt.

CNY  Chinese Yuan Renminbi

USD  United States Dollar

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

International Advantage Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		36.4	%
Food Products		12.3
Information Technology Services		11.8
Textiles, Apparel & Luxury Goods		11.0
Beverages		9.6
Road & Rail		6.6
Short-Term Investments		6.4
Diversified Consumer 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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Advantage Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $15,787)	$	16,533
Investment in Security of Affiliated Issuer, at Value (Cost $1,138)		1,138
Total Investments in Securities, at Value (Cost $16,925)		17,671
Foreign Currency, at Value (Cost $2)		1
Cash		5
Receivable for Portfolio Shares Sold		133
Due from Adviser		27
Tax Reclaim Receivable		13
Receivable from Affiliate		—	@
Other Assets		46
Total Assets		17,896
Liabilities:
Payable for Professional Fees		25
Payable for Custodian Fees		6
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 Portfolio Shares Redeemed		2
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		—	@
Other Liabilities		6
Total Liabilities		41
Net Assets	$	17,855
Net Assets Consist Of:
Paid-in-Capital	$	17,119
Undistributed Net Investment Income		34
Net Realized Loss		(43	)
Unrealized Appreciation (Depreciation) on:
Investments		746
Foreign Currency Translations		(1	)
Net Assets	$	17,855
CLASS I:
Net Assets	$	9,743
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		823,817
Net Asset Value, Offering and Redemption Price Per Share	$	11.83
CLASS A:
Net Assets	$	7,319
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		620,493
Net Asset Value, Redemption Price Per Share	$	11.80
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.65
Maximum Offering Price Per Share	$	12.45
CLASS L:
Net Assets	$	210
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		18,039
Net Asset Value, Offering and Redemption Price Per Share	$	11.67
CLASS C:
Net Assets	$	583
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		50,173
Net Asset Value, Offering and Redemption Price Per Share	$	11.61

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

International Advantage Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $13 of Foreign Taxes Withheld)	$	101
Income from Securities Loaned — Net		2
Dividends from Securities of Affiliated Issuer (Note G)		1
Total Investment Income		104
Expenses:
Advisory Fees (Note B)		47
Professional Fees		46
Custodian Fees (Note F)		23
Registration Fees		22
Shareholder Services Fees — Class A (Note D)		7
Distribution and Shareholder Services Fees — Class L (Note D)		1
Distribution and Shareholder Services Fees — Class C (Note D)		2
Shareholder Reporting Fees		5
Administration Fees (Note C)		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)		1
Pricing Fees		3
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		1
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Directors' Fees and Expenses		1
Other Expenses		9
Total Expenses		176
Expenses Reimbursed by Adviser (Note B)		(55	)
Waiver of Advisory Fees (Note B)		(47	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		70
Net Investment Income		34
Realized Loss:
Investments Sold		(9	)
Foreign Currency Transactions		(2	)
Net Realized Loss		(11	)
Change in Unrealized Appreciation (Depreciation):
Investments		416
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		416
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		405
Net Increase in Net Assets Resulting from Operations	$	439

@  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, 2016

International Advantage Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	34		$	26
Net Realized Gain (Loss)		(11	)		594
Net Change in Unrealized Appreciation (Depreciation)		416			(85	)
Net Increase in Net Assets Resulting from Operations		439			535
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(24	)
Net Realized Gain		—			(340	)
Class A:
Net Investment Income		—			(11	)
Net Realized Gain		—			(343	)
Class L:
Net Investment Income		—			(1	)
Net Realized Gain		—			(26	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(29	)
Total Distributions		—			(774	)
Capital Share Transactions:(1)
Class I:
Subscribed		7,376			1,649
Distributions Reinvested		—			307
Redeemed		(275	)		(3,117	)
Class A:
Subscribed		4,775			2,595
Distributions Reinvested		—			318
Redeemed		(576	)		(508	)
Class L:
Subscribed		—			91
Distributions Reinvested		—			9
Redeemed		—			(25	)
Class C:
Subscribed		361			253	*
Distributions Reinvested		—			28	*
Redeemed		(30	)		—
Net Increase in Net Assets Resulting from Capital Share Transactions		11,631			1,600
Redemption Fees		—	@		—
Total Increase in Net Assets		12,070			1,361
Net Assets:
Beginning of Period		5,785			4,424
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $34 and $(—@), respectively)	$	17,855		$	5,785

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

International Advantage Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1) Capital Share Transactions:
Class I:
Shares Subscribed		648			126
Shares Issued on Distributions Reinvested		—			25
Shares Redeemed		(24	)		(225	)
Net Increase (Decrease) in Class I Shares Outstanding		624			(74	)
Class A:
Shares Subscribed		420			193
Shares Issued on Distributions Reinvested		—			26
Shares Redeemed		(51	)		(39	)
Net Increase in Class A Shares Outstanding		369			180
Class L:
Shares Subscribed		—			7
Shares Issued on Distributions Reinvested		—			1
Shares Redeemed		—			(2	)
Net Increase in Class L Shares Outstanding		—			6
Class C:
Shares Subscribed		32			19	*
Shares Issued on Distributions Reinvested		—			2	*
Shares Redeemed		(3	)		—
Net Increase in Class C Shares Outstanding		29			21

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  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, 2016

Financial Highlights

International Advantage Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	11.80		$	12.36		$	12.36		$	11.60		$	9.65		$	9.99
Income (Loss) from Investment Operations:
Net Investment Income†		0.05			0.10			0.13			0.13			0.12			0.12
Net Realized and Unrealized Gain (Loss)		(0.02	)		1.18			0.20			1.32			1.93			(0.26	)
Total from Investment Operations		0.03			1.28			0.33			1.45			2.05			(0.14	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.07	)		(0.12	)		(0.10	)		(0.11	)
Net Realized Gain		—			(1.74	)		(0.26	)		(0.57	)		—			(0.09	)
Total Distributions		—			(1.84	)		(0.33	)		(0.69	)		(0.10	)		(0.20	)
Redemption Fees		0.00	‡		—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	11.83		$	11.80		$	12.36		$	12.36		$	11.60		$	9.65
Total Return++		0.08	%#		10.23	%		2.58	%		12.72	%		21.27	%		(1.31	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9,743		$	2,361		$	3,387		$	2,637		$	1,421		$	1,255
Ratio of Expenses to Average Net Assets (1)		0.99	%+*		1.16	%+^		1.24	%+		1.24	%+		1.24	%+		1.24	%+
Ratio of Net Investment Income to Average Net Assets (1)		0.81	%+*		0.76	%+		1.05	%+		1.04	%+		1.08	%+		1.17	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.00	%§		0.01	%		0.01	%
Portfolio Turnover Rate		16	%#		96	%		30	%		49	%		40	%		27	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.77	%*		4.82	%		5.47	%		6.30	%		8.89	%		7.08	%+
Net Investment Loss to Average Net Assets		(0.97	)%*		(2.90	)%		(3.18	)%		(4.02	)%		(6.57	)%		(4.67	)%+

†  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."

^  Effective July 1, 2015, 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 July 1, 2015, the maximum ratio was 1.25% for Class I shares.

§  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, 2016

Financial Highlights

International Advantage Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	11.79		$	12.37		$	12.38		$	11.60		$	9.65		$	9.99
Income (Loss) from Investment Operations:
Net Investment Income†		0.02			0.01			0.09			0.04			0.09			0.09
Net Realized and Unrealized Gain (Loss)		(0.01	)		1.23			0.19			1.38			1.94			(0.25	)
Total from Investment Operations		0.01			1.24			0.28			1.42			2.03			(0.16	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)		(0.03	)		(0.07	)		(0.08	)		(0.09	)
Net Realized Gain		—			(1.74	)		(0.26	)		(0.57	)		—			(0.09	)
Total Distributions		—			(1.82	)		(0.29	)		(0.64	)		(0.08	)		(0.18	)
Redemption Fees		0.00	‡		—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	11.80		$	11.79		$	12.37		$	12.38		$	11.60		$	9.65
Total Return++		(0.08	)%#		9.92	%		2.21	%		12.43	%		20.99	%		(1.57	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	7,319		$	2,966		$	889		$	248		$	116		$	96
Ratio of Expenses to Average Net Assets (1)		1.31	%+*		1.46	%+^^		1.59	%+		1.55	%+^		1.49	%+		1.49	%+
Ratio of Net Investment Income to Average Net Assets (1)		0.42	%+*		0.09	%+		0.70	%+		0.29	%+		0.83	%+		0.92	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.00	%§		0.01	%		0.01	%
Portfolio Turnover Rate		16	%#		96	%		30	%		49	%		40	%		27	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.05	%*		5.77	%		6.03	%		6.89	%		9.14	%		7.33	%+
Net Investment Loss to Average Net Assets		(1.32	)%*		(4.22	)%		(3.74	)%		(5.05	)%		(6.82	)%		(4.92	)%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value 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 July 1, 2015, 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 July 1, 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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Advantage Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	11.69		$	12.31		$	12.36		$	11.60		$	9.65		$	9.99
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.02	)		(0.04	)		0.02			0.02			0.04			0.04
Net Realized and Unrealized Gain (Loss)		(0.00	)‡		1.20			0.20			1.34			1.93			(0.25	)
Total from Investment Operations		(0.02	)		1.16			0.22			1.36			1.97			(0.21	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.04	)		(0.01	)		(0.03	)		(0.02	)		(0.04	)
Net Realized Gain		—			(1.74	)		(0.26	)		(0.57	)		—			(0.09	)
Total Distributions		—			(1.78	)		(0.27	)		(0.60	)		(0.02	)		(0.13	)
Redemption Fees		0.00	‡		—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	11.67		$	11.69		$	12.31		$	12.36		$	11.60		$	9.65
Total Return++		(0.34	)%#		9.34	%		1.69	%		11.88	%		20.43	%		(2.09	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	210		$	211		$	148		$	123		$	116		$	97
Ratio of Expenses to Average Net Assets (1)		1.84	%+*		1.97	%+^^		2.09	%+		2.03	%+^		1.99	%+		1.99	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.28	)%+*		(0.31	)%+		0.20	%+		0.18	%+		0.33	%+		0.42	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.01	%		0.00	%§		0.01	%		0.01	%
Portfolio Turnover Rate		16	%#		96	%		30	%		49	%		40	%		27	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.36	%*		6.87	%		7.42	%		7.43	%		9.64	%		7.83	%+
Net Investment Loss to Average Net Assets		(2.80	)%*		(5.21	)%		(5.13	)%		(5.22	)%		(7.32	)%		(5.42	)%+

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.005 per share.

++  Calculated based on the net asset value 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.

^^  Effective July 1, 2015, 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 July 1, 2015, 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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

International Advantage Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	11.66		$	13.80
Loss from Investment Operations:
Net Investment Loss†		(0.02	)		(0.08	)
Net Realized and Unrealized Loss		(0.03	)		(0.26	)
Total from Investment Operations		(0.05	)		(0.34	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)
Net Realized Gain		—			(1.74	)
Total Distributions		—			(1.80	)
Redemption Fees		0.00	‡		—
Net Asset Value, End of Period	$	11.61		$	11.66
Total Return++		(0.51	)%#		(2.63	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	583		$	247
Ratios of Expenses to Average Net Assets (1)		2.09	%+*		2.11	%+^^*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.38	)%+*		(0.94	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§
Portfolio Turnover Rate		16	%#		96	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.31	%*		9.11	%*
Net Investment Loss to Average Net Assets		(2.60	)%*		(7.94	)%*

^  Commencement of Offering.

†  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 July 1, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 2.10% for Class C shares. Prior to July 1, 2015, the maximum ratio was 2.35% for Class C 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, 2016

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-nine 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 offers four classes of shares — Class I, Class A, Class L and Class C. 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity

security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—	$	1,575	$	—	$	1,575
Biotechnology		—		402		—		402
Capital Markets		—		342		—		342
Construction & Engineering		4		—		—		4
Diversified Consumer Services		1,034		—		—		1,034
Diversified Telecommunication Services		—		183		—		183
Electric Utilities		430		—		—		430
Energy Equipment & Services		—		301		—		301
Food Products		—		2,129		—		2,129
Household Products		—		685		—		685
Information Technology Services		2,094		—		—		2,094
Insurance		—		558		—		558
Internet & Catalog Retail		694		—		—		694
Internet Software & Services		—		654		—		654
Marine		—		372		—		372
Media		—		226		—		226
Pharmaceuticals		—		352		—		352
Real Estate Management & Development		327		—		—		327
Road & Rail		—		1,172		—		1,172
Semiconductors & Semiconductor Equipment		—		471		—		471
Software		431		—		—		431
Textiles, Apparel & Luxury Goods		—		1,937		—		1,937
Total Common Stocks		5,014		11,359		—		16,373
Participation Notes		—		157		—		157
Call Option Purchased		—		3		—		3
Short-Term Investment
Investment Company		1,138		—		—		1,138
Total Assets	$	6,152	$	11,519	$	—	$	17,671

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Option Purchased	Investments, at Value (Option Purchased)	Currency Risk	$	3	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)	$	(3	)(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 (Options Purchased)	$	(16	)(c)

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

At June 30, 2016, 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)
Option Purchased	$	3	(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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	3	$	—	$	—	$	3

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	1,257,000

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, 2016, 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 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
	0.80	%		0.75	%

For the six months ended June 30, 2016, 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 1.00% for Class I shares, 1.35% for Class A shares, 1.85% for Class L shares and 2.10% 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 as 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, 2016, approximately $47,000 of advisory fees were waived and approximately $58,000 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $12,154,000 and $1,741,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	325	$	8,885	$	8,072	$	1	$	1,138

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that there are no significant uncertain tax positions that would require recognition in

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	229	$	545	$	36	$	76

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, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)			Distributions in Excess of Net Realized Gain (000)		Paid-in- Capital (000)
$	(9	)	$	9	$	—

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

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, 2015, the Portfolio

deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	1	$	15

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 62.9%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 than 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIIASAN
1558887 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Asian Equity Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	15
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,011.50	$	1,017.70	$	7.20	$	7.22		1.44	%
Asian Equity Portfolio Class A		1,000.00		1,008.70		1,015.96		8.94		8.97		1.79
Asian Equity Portfolio Class L		1,000.00		1,007.40		1,013.48		11.43		11.46		2.29
Asian Equity Portfolio Class C		1,000.00		1,005.90		1,012.18		12.72		12.76		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Asian Equity Portfolio

	Shares		Value (000)
Common Stocks (85.0%)
China (23.7%)
Alibaba Group Holding Ltd. ADR (a)		400	$	32
China Construction Bank Corp. H Shares (b)		79,000		52
China Machinery Engineering Corp. H Shares (b)		5,000		3
China Mengniu Dairy Co., Ltd. (b)		5,000		9
China Mobile Ltd. (b)		3,000		35
China Overseas Land & Investment Ltd. (b)		6,000		19
China Pacific Insurance Group Co., Ltd. H Shares (b)		6,400		22
China Unicom Hong Kong Ltd. (b)		8,000		8
CRCC High-Tech Equipment Corp., Ltd. H Shares (b)		14,500		6
CSPC Pharmaceutical Group Ltd. (b)		8,000		7
JD.com, Inc. ADR (a)		347		7
New Oriental Education & Technology Group, Inc. ADR		113		5
Shanghai Jin Jiang International Hotels Group Co., Ltd. H Shares (b)		18,000		6
Shenzhen International Holdings Ltd. (b)		2,500		4
Shenzhou International Group Holdings Ltd. (b)		2,000		10
TAL Education Group ADR (a)		123		8
Tencent Holdings Ltd. (b)		3,700		84
				317
Hong Kong (9.6%)
AIA Group Ltd.		2,200		13
BOC Hong Kong Holdings Ltd.		8,000		24
Cheung Kong Property Holdings Ltd.		2,628		17
CK Hutchison Holdings Ltd.		3,128		34
HKT Trust & HKT Ltd.		11,520		17
Hong Kong Exchanges and Clearing Ltd.		300		7
Samsonite International SA		6,000		17
				129
India (3.3%)
HDFC Bank Ltd. ADR		397		27
Larsen & Toubro Ltd. GDR		823		18
				45
Indonesia (4.8%)
Bank Mandiri Persero Tbk PT		500		—	@
Bank Negara Indonesia Persero Tbk PT		30,600		12
Jasa Marga Persero Tbk PT		30,300		12
Link Net Tbk PT		40,400		12
Matahari Department Store Tbk PT		8,500		13
Semen Indonesia Persero Tbk PT		900		1
Surya Citra Media Tbk PT		55,500		14
				64
Korea, Republic of (20.4%)
Amorepacific Corp.		53		20
CJ CheilJedang Corp.		20		7
CJ Corp.		37		6
Cosmax, Inc.		40		6
Coway Co., Ltd.		176		16
Hotel Shilla Co., Ltd.		96		6
Hugel, Inc. (a)		15		4

	Shares		Value (000)
Hyundai Development Co-Engineering & Construction		264	$	9
Hyundai Wia Corp.		70		5
Innocean Worldwide, Inc.		97		7
Kia Motors Corp.		328		12
Korea Aerospace Industries Ltd.		218		14
Korea Electric Power Corp.		258		14
LG Chem Ltd.		58		13
Mando Corp.		25		5
NAVER Corp.		29		18
Samsung Electronics Co., Ltd.		51		63
Samsung Electronics Co., Ltd. (Preference)		23		24
Samsung Fire & Marine Insurance Co., Ltd.		38		9
SK Holdings Co., Ltd.		85		15
				273
Philippines (3.5%)
Ayala Corp.		640		12
DMCI Holdings, Inc.		35,000		9
International Container Terminal Services, Inc.		8,990		12
Metropolitan Bank & Trust Co.		7,321		14
				47
Singapore (3.0%)
Keppel Infrastructure Trust (Units) (c)		29,000		11
Raffles Medical Group Ltd.		13,886		16
Singapore Post Ltd.		13,000		14
				41
Taiwan (14.2%)
Advanced Semiconductor Engineering, Inc.		9,000		10
Catcher Technology Co., Ltd.		2,000		15
Delta Electronics, Inc.		3,262		16
E.Sun Financial Holding Co. Ltd.		13,000		8
Eclat Textile Co., Ltd.		2,373		23
Formosa Plastics Corp.		2,000		5
Fubon Financial Holding Co., Ltd.		2,000		2
Hon Hai Precision Industry Co., Ltd.		6,250		16
PChome Online, Inc.		2,000		22
Pegatron Corp.		4,000		9
President Chain Store Corp.		1,000		8
Taiwan Semiconductor Manufacturing Co., Ltd.		7,000		35
Uni-President Enterprises Corp.		7,462		15
Yeong Guan Energy Technology Group Co. Ltd.		1,000		6
				190
Thailand (1.8%)
Kasikornbank PCL NVDR		2,300		11
Minor International PCL (Foreign)		10,700		12
Sino-Thai Engineering & Construction PCL (Foreign)		500		1
				24
United States (0.7%)
Nien Made Enterprise Co., Ltd. (a)		1,000		9
Total Common Stocks (Cost $1,058)				1,139

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Asian Equity Portfolio

	Shares		Value (000)
Investment Company (5.4%)
India (5.4%)
iShares MSCI India ETF (Cost $81)		2,631	$	73
Participation Notes (4.1%)
India (4.1%)
Ashok Leyland Ltd., Equity Linked Notes, expires 5/13/19 (a)		17,095		25
Bharat Petroleum Corp., Ltd., Equity Linked Notes, expires 3/13/19 (a)		985		16
Marico Ltd., Equity Linked Notes, expires 6/10/20 (a)		2,705		10
Zee Entertainment Enterprises Ltd., Equity Linked Notes, expires 9/3/19 (a)		626		4
Total Participation Notes (Cost $44)				55
Short-Term Investment (4.0%)
Investment Company (4.0%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $53)		52,662		53
Total Investments (98.5%) (Cost $1,236) (d)(e)				1,320
Other Assets in Excess of Liabilities (1.5%)				20
Net Assets (100.0%)			$	1,340

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

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

(d)  The approximate fair value and percentage of net assets, $1,042,000 and 77.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(e)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $126,000 and the aggregate gross unrealized depreciation is approximately $42,000 resulting in net unrealized appreciation of approximately $84,000.

ADR  American Depositary Receipt.

ETF  Exchange Traded Fund.

GDR  Global Depositary Receipt.

NVDR  Non-Voting Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other*		59.0	%
Internet Software & Services		11.8
Banks		11.2
Investment Companies		9.6
Tech Hardware, Storage & Peripherals		8.4
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Asian Equity Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $1,183)	$	1,267
Investment in Security of Affiliated Issuer, at Value (Cost $53)		53
Total Investments in Securities, at Value (Cost $1,236)		1,320
Foreign Currency, at Value (Cost —@)		—	@
Due from Adviser		51
Receivable for Investments Sold		6
Dividends Receivable		6
Receivable from Affiliate		—	@
Other Assets		41
Total Assets		1,424
Liabilities:
Payable for Custodian Fees		40
Payable for Professional Fees		35
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 Investments Purchased		1
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
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 Administration Fees		—	@
Other Liabilities		8
Total Liabilities		84
Net Assets	$	1,340
Net Assets Consist Of:
Paid-in-Capital	$	1,471
Undistributed Net Investment Income		4
Net Realized Loss		(219	)
Unrealized Appreciation (Depreciation) on:
Investments		84
Foreign Currency Translations		—	@
Net Assets	$	1,340

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Asian Equity Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	318
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		45,148
Net Asset Value, Offering and Redemption Price Per Share	$	7.04
CLASS A:
Net Assets	$	945
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		135,488
Net Asset Value, Redemption Price Per Share	$	6.97
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.39
Maximum Offering Price Per Share	$	7.36
CLASS L:
Net Assets	$	71
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,459
Net Asset Value, Offering and Redemption Price Per Share	$	6.83
CLASS C:
Net Assets	$	6
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	$	6.81

@  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, 2016 (unaudited)

Asian Equity Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	16
Dividends from Security of Affiliated Issuers (Note G)		—	@
Total Investment Income		16
Expenses:
Professional Fees		43
Custodian Fees (Note F)		41
Registration Fees		24
Advisory Fees (Note B)		6
Shareholder Reporting Fees		5
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)		1
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		1
Directors' Fees and Expenses		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Other Expenses		9
Total Expenses		140
Expenses Reimbursed by Adviser (Note B)		(119	)
Waiver of Advisory Fees (Note B)		(6	)
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)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		11
Net Investment Income		5
Realized Loss:
Investments Sold		(89	)
Foreign Currency Transactions		(—	@)
Net Realized Loss		(89	)
Change in Unrealized Appreciation (Depreciation):
Investments		91
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		91
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		2
Net Increase in Net Assets Resulting from Operations	$	7

@  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, 2016

Asian Equity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	5		$	44
Net Realized Gain (Loss)		(89	)		347
Net Change in Unrealized Appreciation (Depreciation)		91			(393	)
Net Increase (Decrease) in Net Assets Resulting from Operations		7			(2	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(3	)
Net Realized Gain		—			(184	)
Class A:
Net Investment Income		—			(1	)
Net Realized Gain		—			(306	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(29	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(2	)
Total Distributions		—			(525	)
Capital Share Transactions:(1)
Class I:
Subscribed		—			5,615
Distributions Reinvested		—			61
Redeemed		—			(13,668	)
Class A:
Subscribed		13			175
Distributions Reinvested		—			253
Redeemed		(90	)		(981	)
Class L:
Subscribed		9			5
Distributions Reinvested		—			3
Redeemed		(11	)		(12	)
Class C:
Subscribed		—			10	*
Net Decrease in Net Assets Resulting from Capital Share Transactions		(79	)		(8,539	)
Total Decrease in Net Assets		(72	)		(9,066	)
Net Assets:
Beginning of Period		1,412			10,478
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $4 and $(1), respectively)	$	1,340		$	1,412

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Asian Equity Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		—			522
Shares Issued on Distributions Reinvested		—			5
Shares Redeemed		—			(1,289	)
Net Decrease in Class I Shares Outstanding		—			(762	)
Class A:
Shares Subscribed		2			18
Shares Issued on Distributions Reinvested		—			36
Shares Redeemed		(14	)		(103	)
Net Decrease in Class A Shares Outstanding		(12	)		(49	)
Class L:
Shares Subscribed		1			1
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(1	)		(1	)
Net Increase (Decrease) in Class L Shares Outstanding		(—	@@)		—	@@
Class C:
Shares Subscribed		—			1	*

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

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Asian Equity Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	6.97		$	10.33		$	10.33		$	10.40		$	8.47		$	10.19
Income (Loss) from Investment Operations:
Net Investment Income†		0.03			0.08			0.09			0.05			0.04			0.00	‡
Net Realized and Unrealized Gain (Loss)		0.04			(0.77	)		1.44			(0.05	)		2.00			(1.72	)
Total from Investment Operations		0.07			(0.69	)		1.53			(0.00	)‡		2.04			(1.72	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		(0.10	)		(0.07	)		(0.11	)		—
Net Realized Gain		—			(2.67	)		(1.43	)		—			—			—
Total Distributions		—			(2.67	)		(1.53	)		(0.07	)		(0.11	)		—
Redemption Fees		—			—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	7.04		$	6.97		$	10.33		$	10.33		$	10.40		$	8.47
Total Return++		1.15	%#		(7.06	)%		15.15	%		(0.05	)%		24.08	%		(16.88	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	318		$	314		$	8,340		$	4,753		$	3,996		$	1,201
Ratio of Expenses to Average Net Assets (1)		1.44	%+*		1.45	%+		1.45	%+		1.45	%+		1.45	%+		1.45	%+
Ratio of Net Investment Income to Average Net Assets (1)		1.02	%+*		0.73	%+		0.81	%+		0.52	%+		0.39	%+		0.01	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		28	%#		113	%		86	%		114	%		80	%		38	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		21.46	%*		5.34	%		4.68	%		4.28	%		5.79	%		11.86	%
Net Investment Loss to Average Net Assets		(19.00	)%*		(3.16	)%		(2.42	)%		(2.31	)%		(3.95	)%		(10.40	)%

†  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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Asian Equity Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	6.91		$	10.31		$	10.31		$	10.37		$	8.45		$	10.19
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.02			0.03			0.05			0.01			0.01			(0.02	)
Net Realized and Unrealized Gain (Loss)		0.04			(0.76	)		1.44			(0.03	)		2.00			(1.72	)
Total from Investment Operations		0.06			(0.73	)		1.49			(0.02	)		2.01			(1.74	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		(0.06	)		(0.04	)		(0.09	)		—
Net Realized Gain		—			(2.67	)		(1.43	)		—			—			—
Total Distributions		—			(2.67	)		(1.49	)		(0.04	)		(0.09	)		—
Redemption Fees		—			—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	6.97		$	6.91		$	10.31		$	10.31		$	10.37		$	8.45
Total Return++		0.87	%#		(7.36	)%		14.71	%		(0.15	)%		23.76	%		(17.08	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	945		$	1,019		$	2,024		$	1,302		$	1,201		$	84
Ratio of Expenses to Average Net Assets (1)		1.79	%+*		1.80	%+		1.80	%+		1.73	%+^^		1.70	%+		1.70	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.65	%+*		0.27	%+		0.46	%+		0.09	%+		0.14	%+		(0.24	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		28	%#		113	%		86	%		114	%		80	%		38	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		21.24	%*		6.35	%		5.05	%		4.68	%		6.04	%		12.11	%
Net Investment Loss to Average Net Assets		(18.80	)%*		(4.28	)%		(2.79	)%		(2.86	)%		(4.20	)%		(10.65	)%

†  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, 2016

Financial Highlights

Asian Equity Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	6.78		$	10.22		$	10.23		$	10.31		$	8.40		$	10.19
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.04	)		(0.00	)‡		(0.04	)		(0.03	)		(0.07	)
Net Realized and Unrealized Gain (Loss)		0.04			(0.73	)		1.42			(0.03	)		1.98			(1.72	)
Total from Investment Operations		0.05			(0.77	)		1.42			(0.07	)		1.95			(1.79	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡		0.00	‡		(0.01	)		(0.04	)		—
Net Realized Gain		—			(2.67	)		(1.43	)		—			—			—
Total Distributions		—			(2.67	)		(1.43	)		(0.01	)		(0.04	)		—
Redemption Fees		—			—			0.00	‡		—			—			—
Net Asset Value, End of Period	$	6.83		$	6.78		$	10.22		$	10.23		$	10.31		$	8.40
Total Return++		0.74	%#		(7.82	)%		13.97	%		(0.56	)%		23.18	%		(17.57	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	71		$	73		$	114		$	102		$	103		$	84
Ratio of Expenses to Average Net Assets (1)		2.29	%+*		2.30	%+		2.30	%+		2.22	%+^^		2.20	%+		2.20	%+
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.16	%+*		(0.38	)%+		(0.04	)%+		(0.35	)%+		(0.36	)%+		(0.74	)%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§		0.00	%§		0.00	%§		0.00	%§		0.00	%§
Portfolio Turnover Rate		28	%#		113	%		86	%		114	%		80	%		38	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		24.20	%*		8.52	%		6.75	%		5.59	%		6.54	%		12.61	%
Net Investment Loss to Average Net Assets		(21.75	)%*		(6.60	)%		(4.49	)%		(3.72	)%		(4.70	)%		(11.15	)%

†  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, 2016

Financial Highlights

Asian Equity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	6.77		$	11.28
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.00	)‡		(0.01	)
Net Realized and Unrealized Gain (Loss)		0.04			(1.83	)
Total from Investment Operations		0.04			(1.84	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.00	)‡
Net Realized Gain		—			(2.67	)
Total Distributions		—			(2.67	)
Net Asset Value, End of Period	$	6.81		$	6.77
Total Return++		0.59	%#		(16.57	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	6		$	6
Ratios of Expenses to Average Net Assets (1)		2.55	%+*		2.55	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.10	)%+*		(0.20	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		28	%#		113	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		56.78	%*		28.89	%*
Net Investment Loss to Average Net Assets		(54.33	)%*		(26.54	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks long-term capital appreciation.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which

bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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") or Morgan Stanley Investment Management Company ("MSIM Company"), a whole owned subsidiary of Morgan Stanley, 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—	$	14	$	—	$	14
Air Freight & Logistics		—		14		—		14
Auto Components		—		10		—		10
Automobiles		—		12		—		12
Banks		27		121		—		148
Biotechnology		—		4		—		4
Chemicals		—		18		—		18
Construction & Engineering		18		13		—		31
Construction Materials		—		1		—		1
Diversified Consumer Services		13		—		—		13
Diversified Financial Services		—		21		—		21
Diversified Telecommunication Services		—		37		—		37
Electric Utilities		—		14		—		14
Electronic Equipment, Instruments & Components		—		32		—		32
Food & Staples Retailing		—		8		—		8
Food Products		—		31		—		31
Health Care Providers & Services		—		16		—		16
Hotels, Restaurants & Leisure		—		18		—		18
Household Durables		—		25		—		25
Industrial Conglomerates		—		64		—		64
Insurance		—		44		—		44
Internet & Catalog Retail		7		—		—		7
Internet Software & Services		32		124		—		156
Machinery		—		6		—		6
Media		—		21		—		21
Metals & Mining		—		6		—		6
Multi-Utilities		—		11		—		11
Multi-line Retail		—		13		—		13
Personal Products		—		26		—		26
Pharmaceuticals		—		7		—		7
Real Estate Management & Development		—		36		—		36
Semiconductors & Semiconductor Equipment		—		45		—		45
Specialty Retail		—		6		—		6
Tech Hardware, Storage & Peripherals		—		111		—		111
Textiles, Apparel & Luxury Goods		—		50		—		50
Transportation Infrastructure		—		28		—		28
Wireless Telecommunication Services		—		35		—		35
Total Common Stocks		97		1,042		—		1,139

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	$	73	$	—	$	—	$	73
Participation Notes		—		55		—		55
Short-Term Investment
Investment Company		53		—		—		53
Total Assets	$	223	$	1,097	$	—	$	1,320

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, 2016, securities with a total value of approximately $6,000 transferred from Level 1 to Level 2. Securities that were valued using unadjusted quoted prices at December 31, 2015 were valued using other significant observable inputs at June 30, 2016.

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

	Common Stock (000)
Beginning Balance	$	42
Purchases		—
Sales		(28	)
Amortization of discount		—
Transfers in		—
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		23
Realized gains (losses)		(37	)
Ending Balance	$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	—

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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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-Adviser 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.

As of June 30, 2016, the Portfolio did not have any open foreign currency forward exchange contracts.

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.  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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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
	0.95	%		0.90	%

For the six months ended June 30, 2016, 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 as 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, 2016, approximately $6,000 of advisory fees were waived and approximately $123,000 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 Trustees. 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 Sub-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.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $355,000 and $427,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	9	$	354	$	310	$	—	@	$	53

@ Amount is less than $500.

During the six months ended June 30, 2016, the Portfolio incurred approximately less than $500 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 is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	4	$	521	$	656	$	360

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, 2015:

Distributions in Excess of Net Investment Income (000)			Distributions in Excess of Net Realized Gain (000)		Paid-in-Capital (000)
$	(34	)	$	40	$	(6	)

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	—	$	96

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 57.8%.

K. Subsequent Event: The Board of Directors of the Fund approved a Plan of Liquidation with respect to the Portfolio. Pursuant to the Plan of Liquidation, substantially all of the assets of the Portfolio will be liquidated, known liabilities of the Portfolio will be satisfied, the remaining proceeds will be distributed to the Portfolio's shareholders, and all of the issued and outstanding shares of the Portfolio will be redeemed (the "Liquidation"). The Liquidation is expected to occur on or about July 29, 2016.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that while the Portfolio's actual management fee was lower than its peer group average, the Portfolio's contractual management fee and total expense ratio were higher than 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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio if Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIAESAN
1558910 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Insight Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	15
Investment Advisory Agreement Approval	22
Privacy Notice	24
Director and Officer Information	27

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Insight Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,108.80	$	1,019.69	$	5.45	$	5.22		1.04	%
Insight Portfolio Class A		1,000.00		1,107.00		1,017.95		7.28		6.97		1.39
Insight Portfolio Class L		1,000.00		1,105.30		1,015.47		9.89		9.47		1.89
Insight Portfolio Class C		1,000.00		1,103.60		1,014.22		11.19		10.72		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Insight Portfolio

	Shares		Value (000)
Common Stocks (90.5%)
Aerospace & Defense (12.4%)
BWX Technologies, Inc.		11,132	$	398
United Technologies Corp.		4,645		476
				874
Auto Components (1.0%)
Fox Factory Holding Corp. (a)		4,074		71
Automobiles (4.6%)
Harley-Davidson, Inc.		7,113		322
Beverages (0.1%)
Big Rock Brewery, Inc. (Canada) (a)		1,730		8
Chemicals (2.7%)
Mosaic Co. (The)		7,226		189
Commercial Services & Supplies (2.3%)
Copart, Inc. (a)		3,391		166
Diversified Financial Services (4.5%)
Berkshire Hathaway, Inc., Class B (a)		952		138
Leucadia National Corp.		10,225		177
				315
Health Care Equipment & Supplies (4.6%)
Intuitive Surgical, Inc. (a)		494		327
Health Care Technology (0.2%)
Castlight Health, Inc., Class B (a)		3,273		13
Hotels, Restaurants & Leisure (2.5%)
Bojangles', Inc. (a)		2,661		45
El Pollo Loco Holdings, Inc. (a)(b)		4,056		53
Fiesta Restaurant Group, Inc. (a)		1,568		34
Habit Restaurants, Inc. (The) (a)		1,252		21
Papa Murphy's Holdings, Inc. (a)		1,881		12
Wingstop, Inc. (a)		350		10
				175
Household Durables (3.9%)
Garmin Ltd.		6,448		273
Industrial Conglomerates (3.7%)
Koninklijke Philips N.V. (Netherlands)		10,370		259
Information Technology Services (3.8%)
PayPal Holdings, Inc. (a)		7,362		269
Insurance (7.7%)
Progressive Corp. (The)		7,932		266
RenaissanceRe Holdings Ltd.		2,332		274
				540
Internet Software & Services (5.8%)
eBay, Inc. (a)		12,776		299
GrubHub, Inc. (a)(b)		2,359		73
Twitter, Inc. (a)		2,236		38
				410
Leisure Products (0.9%)
Vista Outdoor, Inc. (a)		1,400		67

	Shares		Value (000)
Machinery (17.3%)
Allison Transmission Holdings, Inc.		4,640	$	131
Joy Global, Inc.		16,675		353
Manitowoc Co., Inc. (The)		7,782		42
Manitowoc Foodservice, Inc. (a)		23,346		411
Terex Corp.		13,764		280
				1,217
Media (5.2%)
News Corp., Class A		7,740		88
Time Warner, Inc.		3,799		279
				367
Metals & Mining (0.8%)
Dominion Diamond Corp. (Canada)		6,170		54
Specialty Retail (0.1%)
Container Store Group, Inc. (The) (a)		1,788		10
Trading Companies & Distributors (3.6%)
Fastenal Co.		5,647		251
Transportation Infrastructure (2.8%)
BBA Aviation PLC (United Kingdom)		65,633		194
Total Common Stocks (Cost $6,161)				6,371
	No. of Warrants
Warrant (0.0%)
Real Estate Management & Development (0.0%)
Tejon Ranch Co., expires 8/31/16 (a) (Cost $1)		119		—	@
	Shares
Short-Term Investments (10.5%)
Securities held as Collateral on Loaned Securities (1.6%)
Investment Company (1.3%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		93,066		93
	Face Amount (000)
Repurchase Agreements (0.3%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $22; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $22)	$	22		22
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $1; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $1)		1		1
				23
Total Securities held as Collateral on Loaned Securities (Cost $116)				116

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Insight Portfolio

	Shares		Value (000)
Investment Company (8.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $624)		623,970	$	624
Total Short-Term Investments (Cost $740)				740
Total Investments (101.0%) (Cost $6,902) Including $115 of Securities Loaned (c)(d)				7,111
Liabilities in Excess of Other Assets (-1.1%)				(74	)
Net Assets (100.0%)			$	7,037

(a)  Non-income producing security.

(b)  All or a portion of this security was on loan at June 30, 2016.

(c)  The approximate fair value and percentage of net assets, $194,000 and 2.8%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $463,000 and the aggregate gross unrealized depreciation is approximately $254,000 resulting in net unrealized appreciation of approximately $209,000.

@  Value is less than $500.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		42.4	%
Machinery		17.4
Aerospace & Defense		12.5
Short-Term Investment		8.9
Insurance		7.7
Internet Software & Services		5.9
Media		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, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Insight Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $6,185)	$	6,394
Investment in Security of Affiliated Issuer, at Value (Cost $717)		717
Total Investments in Securities, at Value (Cost $6,902)		7,111
Cash		1
Due from Adviser		29
Receivable for Portfolio Shares Sold		4
Dividends Receivable		—	@
Receivable from Affiliate		—	@
Other Assets		45
Total Assets		7,190
Liabilities:
Collateral on Securities Loaned, at Value		116
Payable for Professional Fees		22
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 Administration Fees		—	@
Other Liabilities		6
Total Liabilities		153
Net Assets	$	7,037
Net Assets Consist Of:
Paid-in-Capital	$	6,803
Accumulated Undistributed Net Investment Income		17
Accumulated Net Realized Gain		8
Unrealized Appreciation (Depreciation) on:
Investments		209
Net Assets	$	7,037

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Insight Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	5,711
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		459,265
Net Asset Value, Offering and Redemption Price Per Share	$	12.44
CLASS A:
Net Assets	$	838
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		67,508
Net Asset Value, Redemption Price Per Share	$	12.41
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.69
Maximum Offering Price Per Share	$	13.10
CLASS L:
Net Assets	$	97
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		7,945
Net Asset Value, Offering and Redemption Price Per Share	$	12.18
CLASS C:
Net Assets	$	391
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		32,212
Net Asset Value, Offering and Redemption Price Per Share	$	12.14
(1) Including: Securities on Loan, at Value:	$	115

@  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, 2016 (unaudited)

Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $—@ of foreign Taxes Withheld)	$	36
Income from Securities Loaned — Net		1
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		37
Expenses:
Professional Fees		42
Registration Fees		23
Advisory Fees (Note B)		16
Shareholder Reporting Fees		6
Custodian Fees (Note F)		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)		1
Shareholder Services Fees — Class A (Note D)		1
Distribution and Shareholder Services Fees — Class L (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		1
Administration Fees (Note C)		2
Directors' Fees and Expenses		1
Pricing Fees		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		4
Total Expenses		106
Expenses Reimbursed by Adviser (Note B)		(63	)
Waiver of Advisory Fees (Note B)		(16	)
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)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		23
Net Investment Income		14
Realized Gain:
Investments Sold		5
Foreign Currency Transactions		—	@
Net Realized Gain		5
Change in Unrealized Appreciation (Depreciation):
Investments		387
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		392
Net Increase in Net Assets Resulting from Operations	$	406

@  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, 2016

Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	14		$	17
Net Realized Gain		5			203
Net Change in Unrealized Appreciation (Depreciation)		387			(376	)
Net Increase (Decrease) in Net Assets Resulting from Operations		406			(156	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(15	)
Net Realized Gain		—			(256	)
Class A:
Net Investment Income		—			(2	)
Net Realized Gain		—			(53	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(16	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(7	)
Total Distributions		—			(349	)
Capital Share Transactions:(1)
Class I:
Subscribed		3,477			188
Distributions Reinvested		—			270
Redeemed		(81	)		(53	)
Class A:
Subscribed		541			320
Distributions Reinvested		—			52
Redeemed		(154	)		(121	)
Class L:
Subscribed		15			129
Distributions Reinvested		—			15
Redeemed		(17	)		(80	)
Class C:
Subscribed		322			72	*
Distributions Reinvested		—			6	*
Redeemed		—			(10	)*
Net Increase in Net Assets Resulting from Capital Share Transactions		4,103			788
Total Increase in Net Assets		4,509			283
Net Assets:
Beginning of Period		2,528			2,245
End of Period (Including Accumulated Undistributed Net Investment Income of $17 and $3)	$	7,037		$	2,528

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Insight Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		289			14
Shares Issued on Distributions Reinvested		—			23
Shares Redeemed		(7	)		(4	)
Net Increase in Class I Shares Outstanding		282			33
Class A:
Shares Subscribed		45			24
Shares Issued on Distributions Reinvested		—			4
Shares Redeemed		(13	)		(9	)
Net Increase in Class A Shares Outstanding		32			19
Class L:
Shares Subscribed		1			10
Shares Issued on Distributions Reinvested		—			2
Shares Redeemed		(1	)		(7	)
Net Increase (decrease) in Class L Shares Outstanding		(—	@)		5
Class C:
Shares Subscribed		27			6	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		—			(1	)*
Net Increase in Class C Shares Outstanding		27			5

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Insight Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.21		$	13.65		$	15.40		$	11.86		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			0.10			0.06			0.18			0.17			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.18			(0.82	)		0.87			4.52			2.59			0.06
Total from Investment Operations		1.23			(0.72	)		0.93			4.70			2.76			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)		(0.04	)		(0.16	)		(0.14	)		—
Net Realized Gain		—			(1.62	)		(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(1.72	)		(2.68	)		(1.16	)		(0.96	)		—
Net Asset Value, End of Period	$	12.44		$	11.21		$	13.65		$	15.40		$	11.86		$	10.06
Total Return++		10.88	%#		(5.58	)%		6.66	%		40.20	%		27.47	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,711		$	1,981		$	1,968		$	1,859		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.04	%+*		1.04	%+		1.04	%+		1.04	%+		1.04	%+		1.05	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.79	%+*		0.78	%+		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	%		0.01	%		N/A
Portfolio Turnover Rate		9	%#		55	%		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.96	%*		7.50	%		7.69	%		10.83	%		11.61	%		380.17	%*
Net Investment Loss to Average Net Assets		(3.13	)%*		(5.68	)%		(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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Insight Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.21		$	13.66		$	15.43		$	11.86		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			0.05			0.01			0.07			0.14			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.17			(0.82	)		0.87			4.58			2.59			0.06
Total from Investment Operations		1.20			(0.77	)		0.88			4.65			2.73			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)		(0.01	)		(0.08	)		(0.11	)		—
Net Realized Gain		—			(1.62	)		(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(1.68	)		(2.65	)		(1.08	)		(0.93	)		—
Net Asset Value, End of Period	$	12.41		$	11.21		$	13.66		$	15.43		$	11.86		$	10.06
Total Return++		10.70	%#		(5.97	)%		6.41	%		39.73	%		27.21	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	838		$	399		$	230		$	209		$	1,144		$	815
Ratio of Expenses to Average Net Assets (1)		1.39	%+*		1.39	%+		1.39	%+		1.30	%+^^		1.29	%+		1.30	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.47	%+*		0.42	%+		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	%		0.01	%		N/A
Portfolio Turnover Rate		9	%#		55	%		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.57	%*		8.32	%		8.91	%		13.79	%		11.86	%		380.42	%*
Net Investment Loss to Average Net Assets		(3.71	)%*		(6.51	)%		(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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Insight Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	11.02		$	13.50		$	15.35		$	11.85		$	10.06		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.00	)‡		(0.01	)		(0.06	)		0.08			0.08			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		1.16			(0.82	)		0.86			4.49			2.58			0.06
Total from Investment Operations		1.16			(0.83	)		0.80			4.57			2.66			0.06
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)		(0.01	)		(0.07	)		(0.05	)		—
Net Realized Gain		—			(1.62	)		(2.64	)		(1.00	)		(0.82	)		—
Total Distributions		—			(1.65	)		(2.65	)		(1.07	)		(0.87	)		—
Net Asset Value, End of Period	$	12.18		$	11.02		$	13.50		$	15.35		$	11.85		$	10.06
Total Return++		10.53	%#		(6.49	)%		5.83	%		39.13	%		26.52	%		0.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	97		$	90		$	47		$	115		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.89	%+*		1.89	%+		1.89	%+		1.84	%+^^		1.79	%+		1.80	%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.08	)%+*		(0.09	)%+		(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	%		0.01	%		N/A
Portfolio Turnover Rate		9	%#		55	%		82	%		51	%		62	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		7.66	%*		10.04	%		10.64	%		12.31	%		12.36	%		380.92	%*
Net Investment Loss to Average Net Assets		(5.85	)%*		(8.24	)%		(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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	11.00		$	13.47
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.01	)		(0.08	)
Net Realized and Unrealized Gain (Loss)		1.15			(0.74	)
Total from Investment Operations		1.14			(0.82	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.03	)
Net Realized Gain		—			(1.62	)
Total Distributions		—			(1.65	)
Net Asset Value, End of Period	$	12.14		$	11.00
Total Return++		10.36	%#		(6.42	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	391		$	58
Ratios of Expenses to Average Net Assets (1)		2.14	%+*		2.14	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.23	)%+*		(0.91	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		9	%#		55	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		6.90	%*		12.97	%*
Net Investment Loss to Average Net Assets		(4.99	)%*		(11.74	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained

from one or more reputable brokers or dealers. 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	874	$	—	$	—	$	874
Auto Components		71		—		—		71
Automobiles		322		—		—		322
Beverages		8		—		—		8
Chemicals		189		—		—		189
Commercial Services & Supplies		166		—		—		166
Diversified Financial Services		315		—		—		315

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Equipment & Supplies	$	327		$	—	$	—	$	327
Health Care Technology		13			—		—		13
Hotels, Restaurants & Leisure		175			—		—		175
Household Durables		273			—		—		273
Industrial Conglomerates		259			—		—		259
Information Technology Services		269			—		—		269
Insurance		540			—		—		540
Internet Software & Services		410			—		—		410
Leisure Products		67			—		—		67
Machinery		1,217			—		—		1,217
Media		367			—		—		367
Metals & Mining		54			—		—		54
Specialty Retail		10			—		—		10
Trading Companies & Distributors		251			—		—		251
Transportation Infrastructure		—			194		—		194
Total Common Stocks		6,177			194		—		6,371
Warrant		—	@		—		—		—	@
Short-Term Investments
Investment Company		717			—		—		717
Repurchase Agreements		—			23		—		23
Total Short-Term Investments		717			23		—		740
Total Assets	$	6,894		$	217	$	—	$	7,111

@  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

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, 2016.

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)
$	115	(a)	$	—	$	(115	)(b)(c)	$	0

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

(b) The Portfolio received cash collateral of approximately $116,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of less than $500 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.

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

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of ollateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	116	$	—	$	—	$	—	$	116
Total Borrowings	$	116	$	—	$	—	$	—	$	116
Gross amount of recognized liabilities for securities lending transactions									$	116

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 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 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, 2016, 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 as 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, 2016, approximately $16,000 of advisory fees were waived and approximately $67,000 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term invest-

ments, were approximately $3,868,000 and $360,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	54	$	3,944	$	3,281	$	—	@	$	717

@ Amount is less than $500.

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	127	$	223	$	82	$	301

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, 2015:

Accumulated Undistributed Net Investment Income (000)			Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	(—	@)	$	—	@	$	—

@ Amount is less than $500.

At December 31, 2015, 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	$	5

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, 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 67.5%.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 and three-year periods but better than its peer group average for 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 Broadridge. 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 than its peer group averages, 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 acceptable; (ii) management fee was competitive with its peer group average; and (iii) total expense ratio was 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIINSGTSAN
1557911 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Insight Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	15
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,087.40	$	1,018.15	$	7.01	$	6.77		1.35	%
Global Insight Portfolio Class A		1,000.00		1,085.10		1,016.41		8.81		8.52		1.70
Global Insight Portfolio Class L		1,000.00		1,081.90		1,013.92		11.39		11.02		2.20
Global Insight Portfolio Class C		1,000.00		1,081.20		1,012.68		12.68		12.26		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Insight Portfolio

	Shares		Value (000)
Common Stocks (82.4%)
Australia (0.7%)
Kathmandu Holdings Ltd.		17,748	$	19
Brazil (3.7%)
GAEC Educacao SA		10,003		45
JHSF Participacoes SA (a)		30,084		10
Porto Seguro SA		5,509		46
				101
Canada (1.0%)
Dominion Diamond Corp.		3,038		27
China (0.3%)
Jumei International Holding Ltd. ADR (a)		1,913		8
France (10.9%)
Christian Dior SE		1,191		193
Edenred		2,274		47
Eurazeo SA		941		56
				296
Germany (4.5%)
ThyssenKrupp AG		3,601		72
windeln.de AG (a)(b)		683		3
Zalando SE (a)(b)		1,732		46
				121
Hong Kong (1.0%)
L'Occitane International SA		13,000		26
Italy (1.6%)
Brunello Cucinelli SpA		1,158		21
Tamburi Investment Partners SpA		6,098		23
				44
Netherlands (3.3%)
Koninklijke Philips N.V.		3,608		90
Spain (2.6%)
Baron de Ley (a)		240		27
Mapfre SA (c)		19,516		43
				70
Switzerland (3.3%)
Nestle SA (Registered)		1,158		89
United Kingdom (10.3%)
BBA Aviation PLC		59,125		175
Daily Mail & General Trust PLC		3,653		29
IP Group PLC (a)		3,935		7
Just Eat PLC (a)		3,128		18
Melrose Industries PLC		2,168		12
Whitbread PLC		823		39
				280
United States (39.2%)
BWX Technologies, Inc.		2,625		94
Castlight Health, Inc., Class B (a)		1,105		4
Cosan Ltd., Class A		6,478		42
eBay, Inc. (a)		2,980		70

	Shares			Value (000)
Garmin Ltd.		2,363		$	100
Intuitive Surgical, Inc. (a)		155			103
Joy Global, Inc.		4,341			92
Manitowoc Foodservice, Inc. (a)		5,870			103
Mosaic Co. (The)		1,055			28
PayPal Holdings, Inc. (a)		1,654			60
RenaissanceRe Holdings Ltd.		588			69
Terex Corp.		3,983			81
Time Warner, Inc.		1,265			93
United Technologies Corp.		1,196			123
					1,062
Total Common Stocks (Cost $2,212)					2,233
Participation Note (0.0%)
Italy (0.0%)
Tamburi Investment Partners SpA, Equity Linked Notes, expires 6/30/20 (a) (Cost $1)		2,697			1
Short-Term Investments (4.6%)
Securities held as Collateral on Loaned Securities (1.2%)
Investment Company (1.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G)		27,139			27
	Face Amount (000)
Repurchase Agreements (0.2%)
Barclays Capital, Inc., (0.42%, dated 6/30/16, due 7/1/16; proceeds $7; fully collateralized by a U.S. Government obligation; 2.00% due 8/15/25; valued at $7)	$	7			7
Merrill Lynch & Co., Inc., (0.44%, dated 6/30/16, due 7/1/16; proceeds $—@; fully collateralized by a U.S. Government agency security; 4.50% due 4/20/44; valued at $—@)		—	@		—	@
					7
Total Securities held as Collateral on Loaned Securities (Cost $34)					34
	Shares
Investment Company (3.4%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $91)		91,488			91
Total Short-Term Investments (Cost $125)					125
Total Investments (87.0%) (Cost $2,338) Including $32 of Securities Loaned (d)(e)					2,359
Other Assets in Excess of Liabilities (13.0%)					352
Net Assets (100.0%)				$	2,711

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Global Insight Portfolio

(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, 2016.

(d)  The approximate fair value and percentage of net assets, $1,035,000 and 38.2%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(e)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $226,000 and the aggregate gross unrealized depreciation is approximately $205,000 resulting in net unrealized appreciation of approximately $21,000.

@  Value is less than $500.

ADR  American Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		49.5	%
Machinery		12.4
Aerospace & Defense		9.3
Textiles, Apparel & Luxury Goods		9.2
Transportation Infrastructure		7.5
Insurance		6.8
Media		5.3
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $2,220)	$	2,241
Investment in Security of Affiliated Issuer, at Value (Cost $118)		118
Total Investments in Securities, at Value (Cost $2,338)		2,359
Foreign Currency, at Value (Cost —@)		—	@
Cash		4
Receivable for Portfolio Shares Sold		330
Due from Adviser		44
Dividends Receivable		1
Tax Reclaim Receivable		1
Receivable from Affiliate		—	@
Other Assets		49
Total Assets		2,788
Liabilities:
Collateral on Securities Loaned, at Value		34
Payable for Professional Fees		21
Payable for Custodian Fees		12
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 Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		10
Total Liabilities		77
Net Assets	$	2,711
Net Assets Consist Of:
Paid-in-Capital	$	2,742
Distributions in Excess of Net Investment Income		(11	)
Accumulated Net Realized Loss		(41	)
Unrealized Appreciation (Depreciation) on:
Investments		21
Foreign Currency Translations		(—	@)
Net Assets	$	2,711

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Insight Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	1,858
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		169,760
Net Asset Value, Offering and Redemption Price Per Share	$	10.95
CLASS A:
Net Assets	$	780
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		71,160
Net Asset Value, Redemption Price Per Share	$	10.96
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.61
Maximum Offering Price Per Share	$	11.57
CLASS L:
Net Assets	$	56
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,127
Net Asset Value, Offering and Redemption Price Per Share	$	10.84
CLASS C:
Net Assets	$	17
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,619
Net Asset Value, Offering and Redemption Price Per Share	$	10.79
(1) Including: Securities on Loan, at Value:	$	32

@  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, 2016 (unaudited)

Global Insight Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	25
Dividends from Securities of Affiliated Issuer (Note G)		—	@
Income from Securities Loaned — Net		—	@
Total Investment Income		25
Expenses:
Professional Fees		50
Registration Fees		23
Advisory Fees (Note B)		11
Custodian Fees (Note F)		7
Shareholder Reporting 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)		1
Pricing Fees		3
Administration Fees (Note C)		1
Directors' Fees and Expenses		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		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		7
Total Expenses		112
Expenses Reimbursed by Adviser (Note B)		(82	)
Waiver of Advisory Fees (Note B)		(11	)
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)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		15
Net Investment Income		10
Realized Gain (Loss):
Investments Sold		(20	)
Foreign Currency Transactions		—	@
Net Realized Loss		(20	)
Change in Unrealized Appreciation (Depreciation):
Investments		192
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		192
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		172
Net Increase in Net Assets Resulting from Operations	$	182

@  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, 2016

Global Insight Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	10		$	10
Net Realized Gain (Loss)		(20	)		93
Net Change in Unrealized Appreciation (Depreciation)		192			(219	)
Net Increase (Decrease) in Net Assets Resulting from Operations		182			(116	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(27	)
Net Realized Gain		—			(107	)
Class A:
Net Investment Income		—			(4	)
Net Realized Gain		—			(23	)
Class L:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(2	)
Class C:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(1	)
Total Distributions		—			(164	)
Capital Share Transactions:(1)
Class I:
Subscribed		149			170
Distributions Reinvested		—			131
Redeemed		—			(13	)
Class A:
Subscribed		460			187
Distributions Reinvested		—			27
Redeemed		(45	)		(24	)
Class L:
Subscribed		—			63
Distributions Reinvested		—			1
Redeemed		(32	)		—
Class C:
Subscribed		—			19	*
Distributions Reinvested		—			1	*
Net Increase in Net Assets Resulting from Capital Share Transactions		532			562
Total Increase in Net Assets		714			282
Net Assets:
Beginning of Period		1,997			1,715
End of Period (Including Distributions in Excess of Net Investment Income of $(11) and $(21))	$	2,711		$	1,997

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Insight Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed	$	15		$	14
Shares Issued on Distributions Reinvested		—			13
Shares Redeemed		—			(1	)
Net Increase in Class I Shares Outstanding		15			26
Class A:
Shares Subscribed		42			15
Shares Issued on Distributions Reinvested		—			3
Shares Redeemed		(4	)		(2	)
Net Increase in Class A Shares Outstanding		38			16
Class L:
Shares Subscribed		—			6
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(3	)		—
Net Increase (Decrease) in Class L Shares Outstanding		(3	)		6
Class C:
Shares Subscribed		—			2	*
Shares Issued on Distributions Reinvested		—			—	@@*
Net Increase in Class C Shares Outstanding		—			2

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Insight Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	10.07		$	11.55		$	13.42		$	11.99		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			0.07			0.20			0.30			0.31			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.83			(0.62	)		(0.56	)		3.32			2.53			0.07
Total from Investment Operations		0.88			(0.55	)		(0.36	)		3.62			2.84			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.11	)		(0.45	)		(0.49	)		—
Net Realized Gain		—			(0.75	)		(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(0.93	)		(1.51	)		(2.19	)		(0.92	)		—
Net Asset Value, End of Period	$	10.95		$	10.07		$	11.55		$	13.42		$	11.99		$	10.07
Total Return++		8.74	%#		(5.02	)%		(2.65	)%		30.89	%		28.31	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,858		$	1,560		$	1,490		$	1,397		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		1.35	%+*		1.35	%+		1.35	%+		1.35	%+		1.35	%+		1.35	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.04	%+*		0.58	%+		1.49	%+		2.17	%+		2.74	%+		(1.27	)%+*
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		19	%#		62	%		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		10.26	%*		10.84	%		10.82	%		14.22	%		16.10	%		381.10	%*
Net Investment Loss to Average Net Assets		(7.87	)%*		(8.91	)%		(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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Insight Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	10.10		$	11.58		$	13.45		$	11.99		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			0.02			0.15			0.01			0.28			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.83			(0.61	)		(0.55	)		3.56			2.53			0.07
Total from Investment Operations		0.86			(0.59	)		(0.40	)		3.57			2.81			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)		(0.07	)		(0.37	)		(0.46	)		—
Net Realized Gain		—			(0.75	)		(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(0.89	)		(1.47	)		(2.11	)		(0.89	)		—
Net Asset Value, End of Period	$	10.96		$	10.10		$	11.58		$	13.45		$	11.99		$	10.07
Total Return++		8.51	%#		(5.32	)%		(2.97	)%		30.52	%		28.04	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	780		$	335		$	199		$	189		$	1,151		$	816
Ratio of Expenses to Average Net Assets (1)		1.70	%+*		1.70	%+		1.70	%+		1.60	%+^^		1.60	%+		1.60	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.67	%+*		0.17	%+		1.14	%+		0.07	%+		2.49	%+		(1.52	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%		0.00	%§		N/A
Portfolio Turnover Rate		19	%#		62	%		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets	$	11.05	%*		11.74	%		12.14	%		13.62	%		16.35	%		381.35	%*
Net Investment Loss to Average Net Assets		(8.68	)%*		(9.87	)%		(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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Insight Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,												Period from December 28, 2011^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			December 31, 2011
Net Asset Value, Beginning of Period	$	10.01		$	11.49		$	13.39		$	11.98		$	10.07		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.00	‡		(0.03	)		0.08			0.12			0.23			(0.00	)‡
Net Realized and Unrealized Gain (Loss)		0.83			(0.61	)		(0.54	)		3.37			2.51			0.07
Total from Investment Operations		0.83			(0.64	)		(0.46	)		3.49			2.74			0.07
Distributions from and/or in Excess of:
Net Investment Income		—			(0.09	)		(0.04	)		(0.34	)		(0.40	)		—
Net Realized Gain		—			(0.75	)		(1.40	)		(1.74	)		(0.43	)		—
Total Distributions		—			(0.84	)		(1.44	)		(2.08	)		(0.83	)		—
Net Asset Value, End of Period	$	10.84		$	10.01		$	11.49		$	13.39		$	11.98		$	10.07
Total Return++		8.19	%#		(5.87	)%		(3.43	)%		29.82	%		27.36	%		0.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	56		$	86		$	26		$	13		$	12		$	10
Ratio of Expenses to Average Net Assets (1)		2.20	%+*		2.20	%+		2.20	%+		2.13	%+^^		2.10	%+		2.10	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.02	%+*		(0.26	)%+		0.64	%+		0.93	%+		1.99	%+		(2.01	)%+*
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		19	%#		62	%		67	%		59	%		41	%		0	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		13.82	%*		17.24	%		20.95	%		17.73	%		16.85	%		381.85	%*
Net Investment Loss to Average Net Assets		(11.60	)%*		(15.30	)%		(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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Insight Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.99		$	12.10
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.00	)‡		(0.07	)
Net Realized and Unrealized Gain (Loss)		0.80			(1.19	)
Total from Investment Operations		0.80			(1.26	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.10	)
Net Realized Gain		—			(0.75	)
Total Distributions		—			(0.85	)
Net Asset Value, End of Period	$	10.79		$	9.99
Total Return++		8.12	%#		(10.67	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	17		$	16
Ratios of Expenses to Average Net Assets (1)		2.45	%+*		2.45	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.08	)%+*		(0.94	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		19	%#		62	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		22.57	%*		23.24	%*
Net Investment Loss to Average Net Assets		(20.20	)%*		(21.73	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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.

The Portfolio offers four classes of shares — Class I, Class A, Class L and Class C. 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and

asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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.

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 Codifica-

tion^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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	217	$	—	$	—	$	217
Beverages		—		27		—		27
Capital Markets		—		30		—		30
Chemicals		28		—		—		28
Commercial Services & Supplies		—		47		—		47
Diversified Consumer Services		45		—		—		45
Diversified Financial Services		—		56		—		56
Food Products		—		89		—		89
Health Care Equipment & Supplies		103		—		—		103
Health Care Technology		4		—		—		4
Hotels, Restaurants & Leisure		—		39		—		39
Household Durables		100		—		—		100
Industrial Conglomerates		—		90		—		90
Information Technology Services		60		—		—		60
Insurance		115		43		—		158
Internet & Catalog Retail		8		49		—		57
Internet Software & Services		70		18		—		88
Machinery		276		12		—		288
Media		93		29		—		122
Metals & Mining		27		72		—		99
Oil, Gas & Consumable Fuels		42		—		—		42
Real Estate Management & Development		10		—		—		10
Specialty Retail		—		45		—		45
Textiles, Apparel & Luxury Goods		—		214		—		214
Transportation Infrastructure		—		175		—		175
Total Common Stocks		1,198		1,035		—		2,233
Participation Note		1		—		—		1
Short-Term Investments
Investment Company		118		—		—		118
Repurchase Agreements		—		7		—		7
Total Short-Term Investments		118		7		—		125
Total Assets	$	1,317	$	1,042	$	—	$	2,359

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, 2016, securities with a total value of approximately $55,000 transferred from Level 2 to Level 1.

Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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, 2016.

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)
$	32	(a)	$	—	$	(32	)(b)(c)	$	0

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

(b) The Portfolio received cash collateral of approximately $34,000, which was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	34	$	—	$	—	$	—	$	34
Total Borrowings	$	34	$	—	$	—	$	—	$	34
Gross amount of recognized liabilities for securities lending transactions									$	34

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.  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 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 $1 billion			Over $1 billion
	1.00	%		0.95	%

For the six months ended June 30, 2016, 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 as 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, 2016, approximately $11,000 of advisory fees were waived and approximately $86,000 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $588,000 and $389,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, advisory fees paid were reduced

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016 is as follows:

Value December 31, 2011 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2012 (000)
$	8	$	646	$	536	$	—	@	$	118

@ Amount is less than $500.

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	110	$	54	$	93	$	109

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, 2015:

Distributions in Excess of Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in Capital (000)
$	18	$	(17	)	$	(1	)

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	2	$	20

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 60.9%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 December 2011, the month of the Portfolio's inception, 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 Broadridge. 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 higher than but close to its peer group averages. 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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGISAN
1558906 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Fixed Income Opportunities Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
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
Investment Advisory Agreement Approval	30
Privacy Notice	32
Director and Officer Information	35

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 Fixed Income Opportunities 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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Fixed Income Opportunities Portfolio Class I	$	1,000.00	$	1,114.20	$	1,020.74	$	4.36	$	4.17		0.83	%
Emerging Markets Fixed Income Opportunities Portfolio Class A		1,000.00		1,113.30		1,018.95		6.25		5.97		1.19
Emerging Markets Fixed Income Opportunities Portfolio Class L		1,000.00		1,111.70		1,017.65		7.61		7.27		1.45
Emerging Markets Fixed Income Opportunities Portfolio Class C		1,000.00		1,109.20		1,015.17		10.23		9.77		1.95
Emerging Markets Fixed Income Opportunities Portfolio Class IS		1,000.00		1,115.40		1,020.79		4.31		4.12		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Fixed Income Securities (92.7%)
Argentina (8.8%)
Corporate Bonds (3.6%)
IRSA Propiedades Comerciales SA,
8.75%, 3/23/23 (a)	$	350	$	373
YPF SA,
8.88%, 12/19/18		460		497
				870
Sovereign (5.2%)
Argentina Bonar Bonds,
33.24%, 10/9/17 (b)	ARS	1,440		98
Argentine Republic Government International Bond,
6.88%, 4/22/21 (a)	$	260		278
7.50%, 4/22/26 (a)		150		163
Province of Salta Argentina,
9.13%, 7/7/24 (a)		150		150
Provincia de Buenos Aires,
5.75%, 6/15/19 (a)		150		152
Provincia de Cordoba,
7.13%, 6/10/21 (a)		150		151
Republic of Argentina,
7.13%, 7/6/36 (a)		240		240
				1,232
				2,102
Brazil (6.8%)
Corporate Bonds (2.2%)
Cosan Luxembourg SA,
7.00%, 1/20/27 (a)		240		239
Petrobras Global Finance BV,
8.38%, 5/23/21		280		290
				529
Sovereign (4.6%)
Brazil Letras do Tesouro Nacional,
0.00%, 1/1/19	BRL	3,747		872
Brazil Notas do Tesouro Nacional, Series F,
10.00%, 1/1/21		800		233
				1,105
				1,634
Chile (1.7%)
Corporate Bonds (1.7%)
Cencosud SA,
4.88%, 1/20/23	$	200		207
Empresa Electrica Angamos SA,
4.88%, 5/25/29 (a)		200		197
				404
Colombia (5.5%)
Corporate Bond (1.7%)
Millicom International Cellular SA,
6.63%, 10/15/21		400		412

	Face Amount (000)		Value (000)
Sovereign (3.8%)
Colombia Government International Bond,
4.38%, 3/21/23	COP	254,000	$	75
5.00%, 6/15/45	$	266		277
11.75%, 2/25/20		116		153
Colombian TES,
10.00%, 7/24/24	COP	797,300		318
11.00%, 7/24/20		210,000		83
				906
				1,318
Dominican Republic (3.8%)
Corporate Bond (0.9%)
AES Andres BV/Dominican Power Partners/ Empresa Generadora de Electricidad It, (Units)
7.95%, 5/11/26 (a)(c)	$	200		209
Sovereign (2.9%)
Dominican Republic International Bond,
6.85%, 1/27/45 (a)		460		478
6.88%, 1/29/26 (a)		100		111
7.45%, 4/30/44 (a)		100		110
				699
				908
Guatemala (0.9%)
Sovereign (0.9%)
Guatemala Government Bond,
4.50%, 5/3/26 (a)		200		204
Hungary (1.7%)
Sovereign (1.7%)
Hungary Government Bond,
3.00%, 6/26/24	HUF	116,670		413
India (2.0%)
Corporate Bond (2.0%)
Greenko Dutch BV,
8.00%, 8/1/19	$	450		483
Indonesia (9.2%)
Corporate Bonds (6.0%)
Jababeka International BV,
7.50%, 9/24/19		460		485
MPM Global Pte Ltd.,
6.75%, 9/19/19		450		467
Pakuwon Prima Pte Ltd.,
7.13%, 7/2/19		450		478
				1,430
Sovereign (3.2%)
Indonesia Treasury Bond,
9.00%, 3/15/29	IDR	9,120,000		764
				2,194

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Ivory Coast (1.9%)
Sovereign (1.9%)
Ivory Coast Government International Bond,
5.38%, 7/23/24 (a)	$	200	$	189
5.75%, 12/31/32		271		253
				442
Jamaica (1.6%)
Corporate Bond (1.6%)
Digicel Group Ltd.,
8.25%, 9/30/20		460		386
Kazakhstan (2.0%)
Corporate Bond (2.0%)
Zhaikmunai LLP,
7.13%, 11/13/19		550		484
Malaysia (2.5%)
Sovereign (2.5%)
Malaysia Government Bond,
3.39%, 3/15/17	MYR	208		52
3.66%, 10/15/20		675		170
3.96%, 9/15/25		910		228
4.16%, 7/15/21		215		55
4.18%, 7/15/24		124		32
4.50%, 4/15/30		245		63
				600
Mexico (5.0%)
Sovereign (5.0%)
Mexican Bonos,
10.00%, 12/5/24	MXN	7,000		492
Series M
8.00%, 6/11/20		5,600		336
Petroleos Mexicanos,
3.50%, 1/30/23	$	79		74
6.88%, 8/4/26 (a)		260		291
				1,193
Namibia (1.0%)
Sovereign (1.0%)
Namibia International Bonds,
5.25%, 10/29/25 (a)		232		237
Nigeria (2.5%)
Corporate Bond (1.7%)
Zenith Bank PLC,
6.25%, 4/22/19		440		416
Sovereign (0.8%)
Nigeria Government International Bond,
6.38%, 7/12/23		200		193
				609
Panama (0.9%)
Corporate Bond (0.9%)
Aeropuerto Internacional de Tocumen SA,
5.63%, 5/18/36 (a)		200		201

	Face Amount (000)		Value (000)
Peru (0.5%)
Sovereign (0.5%)
Peruvian Government International Bond, (Units)
6.95%, 8/12/31 (c)	PEN	380	$	124
Philippines (4.6%)
Corporate Bonds (4.6%)
Petron Corp.,
7.50%, 8/6/18 (b)(d)	$	480		513
Royal Capital B.V.,
5.50%, 5/5/21 (b)(d)		570		584
				1,097
Poland (2.7%)
Sovereign (2.7%)
Poland Government Bond,
3.25%, 7/25/25	PLN	1,064		279
4.00%, 10/25/23		915		254
5.75%, 10/25/21 - 9/23/22		400		119
				652
Romania (2.8%)
Sovereign (2.8%)
Romania Government Bond,
4.75%, 2/24/25	RON	2,455		665
5.85%, 4/26/23		50		14
				679
Russia (5.6%)
Corporate Bond (1.1%)
GTH Finance BV,
7.25%, 4/26/23 (a)	$	260		272
Sovereign (4.5%)
Russian Federal Bond — OFZ,
6.20%, 1/31/18	RUB	5,172		77
6.80%, 12/11/19		18,200		270
7.00%, 8/16/23		3,397		50
7.60%, 7/20/22		16,800		254
Russian Foreign Bond — Eurobond,
4.50%, 4/4/22	$	400		428
				1,079
				1,351
South Africa (6.5%)
Sovereign (6.5%)
Eskom Holdings SOC Ltd.,
7.13%, 2/11/25		500		497
South Africa Government Bond,
6.75%, 3/31/21	ZAR	1,170		75
8.00%, 1/31/30		15,071		929
10.50%, 12/21/26		600		45
				1,546

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

	Face Amount (000)		Value (000)
Thailand (2.1%)
Sovereign (2.1%)
Thailand Government Bond,
3.63%, 6/16/23	THB	10,100	$	321
4.88%, 6/22/29		4,500		167
				488
Turkey (2.1%)
Sovereign (2.1%)
Turkey Government Bond,
7.10%, 3/8/23	TRY	755		239
9.00%, 3/8/17		439		153
10.40%, 3/20/24		290		109
				501
Ukraine (2.0%)
Sovereign (2.0%)
Ukraine Government International Bond,
7.75%, 9/1/26	$	500		476
United Arab Emirates (2.0%)
Corporate Bond (2.0%)
MAF Global Securities Ltd.,
7.13%, 10/29/18 (b)(d)		450		469
Venezuela (3.3%)
Sovereign (3.3%)
Petroleos de Venezuela SA,
6.00%, 11/15/26		2,222		780
Zambia (0.7%)
Sovereign (0.7%)
Zambia Government International Bond,
8.50%, 4/14/24		200		175
Total Fixed Income Securities (Cost $21,585)				22,150
	No. of Warrants
Warrant (0.0%)
Venezuela (0.0%)
Venezuela Government International Bond, Oil-Linked Payment Obligation, expires 4/15/20 (b)(e) (Cost $—)		495		1

	Shares		Value (000)
Short-Term Investments (3.2%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $465)		465,002	$	465
	Face Amount (000)
Argentina (1.3%)
Sovereign (1.3%)
Letras del Banco Central de la Republica Argentina,
28.25%, 1/11/17	ARS	410		24
29.50%, 1/11/17		410		24
30.25%, 12/28/16		3,000		177
30.50%, 12/28/16		1,400		83
Total Sovereign (Cost $320)				308
Total Short-Term Investments (Cost $785)				773
Total Investments (95.9%) (Cost $22,370) (f)(g)				22,924
Other Assets in Excess of Liabilities (4.1%)				974
Net Assets (100.0%)			$	23,898

(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, 2016.

(c)  Consists of one or more classes of securities traded together as a unit.

(d)  Perpetual — One or more securities do not have a predetermined maturity date. Rates for these securities are fixed for a period of time, after which they revert to a floating rate. Interest rates in effect are as of June 30, 2016.

(e)  Security has been deemed illiquid at June 30, 2016.

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

(g)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,016,000 and the aggregate gross unrealized depreciation is approximately $462,000 resulting in net unrealized appreciation of approximately $554,000.

OFZ  Obilgatsyi Federal'novo Zaima (Russian Federal Loan Obligation)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2016:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
JPMorgan Chase Bank NA	BRL	780	$	220	7/5/16	$	(23	)
JPMorgan Chase Bank NA	BRL	275	$	79	7/5/16		(7	)
JPMorgan Chase Bank NA	BRL	200	$	62	7/5/16		—	@
JPMorgan Chase Bank NA	BRL	346	$	108	7/5/16		—	@
JPMorgan Chase Bank NA	BRL	440	$	137	7/5/16		—	@
JPMorgan Chase Bank NA	BRL	694	$	216	7/5/16		—	@
JPMorgan Chase Bank NA	BRL	625	$	171	7/5/16		(24	)
JPMorgan Chase Bank NA	MYR	820	$	201	7/5/16		(2	)
JPMorgan Chase Bank NA	MYR	601	$	150	7/5/16		1
JPMorgan Chase Bank NA	MYR	510	$	125	7/5/16		(2	)
JPMorgan Chase Bank NA	MYR	970	$	237	7/5/16		(4	)
JPMorgan Chase Bank NA	MYR	440	$	107	7/5/16		(3	)
JPMorgan Chase Bank NA	RUB	6,350	$	98	7/5/16		(1	)
JPMorgan Chase Bank NA	RUB	4,800	$	73	7/5/16		(2	)
JPMorgan Chase Bank NA	RUB	16,500	$	252	7/5/16		(6	)
JPMorgan Chase Bank NA	$	59	BRL	200	7/5/16		4
JPMorgan Chase Bank NA	$	131	BRL	440	7/5/16		6
JPMorgan Chase Bank NA	$	106	BRL	346	7/5/16		1
JPMorgan Chase Bank NA	$	86	BRL	275	7/5/16		(—	@)
JPMorgan Chase Bank NA	$	243	BRL	780	7/5/16		(—	@)
JPMorgan Chase Bank NA	$	195	BRL	625	7/5/16		(—	@)
JPMorgan Chase Bank NA	$	190	BRL	694	7/5/16		26
JPMorgan Chase Bank NA	$	107	MYR	446	7/5/16		3
JPMorgan Chase Bank NA	$	113	MYR	460	7/5/16		1
JPMorgan Chase Bank NA	$	366	MYR	1,500	7/5/16		6
JPMorgan Chase Bank NA	$	117	MYR	476	7/5/16		1
JPMorgan Chase Bank NA	$	113	MYR	460	7/5/16		2
JPMorgan Chase Bank NA	$	129	RUB	8,806	7/5/16		8
JPMorgan Chase Bank NA	$	34	RUB	2,150	7/5/16		—	@
JPMorgan Chase Bank NA	$	64	RUB	4,200	7/5/16		1
JPMorgan Chase Bank NA	$	196	RUB	12,494	7/5/16		(—	@)
JPMorgan Chase Bank NA	EUR	108	$	119	7/8/16		(—	@)
JPMorgan Chase Bank NA	EUR	210	$	233	7/8/16		(—	@)
JPMorgan Chase Bank NA	$	119	EUR	104	7/8/16		(3	)
JPMorgan Chase Bank NA	$	133	EUR	120	7/8/16		(—	@)
JPMorgan Chase Bank NA	CLP	33,600	$	49	7/11/16		(2	)
JPMorgan Chase Bank NA	CLP	80,600	$	118	7/11/16		(4	)
JPMorgan Chase Bank NA	CLP	80,200	$	116	7/11/16		(5	)
JPMorgan Chase Bank NA	MXN	6,557	$	361	7/11/16		3
JPMorgan Chase Bank NA	MXN	3,250	$	178	7/11/16		(—	@)
JPMorgan Chase Bank NA	MXN	2,200	$	116	7/11/16		(4	)
JPMorgan Chase Bank NA	MXN	1,550	$	82	7/11/16		(3	)
JPMorgan Chase Bank NA	MXN	982	$	52	7/11/16		(2	)
JPMorgan Chase Bank NA	MXN	1,118	$	58	7/11/16		(3	)
JPMorgan Chase Bank NA	MXN	2,300	$	122	7/11/16		(4	)
JPMorgan Chase Bank NA	PEN	334	$	101	7/11/16		(1	)
JPMorgan Chase Bank NA	PEN	390	$	116	7/11/16		(2	)
JPMorgan Chase Bank NA	PEN	390	$	117	7/11/16		(2	)
JPMorgan Chase Bank NA	$	57	CLP	39,000	7/11/16		2
JPMorgan Chase Bank NA	$	118	CLP	80,800	7/11/16		4
JPMorgan Chase Bank NA	$	116	CLP	80,200	7/11/16		5
JPMorgan Chase Bank NA	$	263	MXN	5,000	7/11/16		10
JPMorgan Chase Bank NA	$	181	MXN	3,400	7/11/16		5
JPMorgan Chase Bank NA	$	197	MXN	3,730	7/11/16		7
JPMorgan Chase Bank NA	$	28	MXN	531	7/11/16		1
JPMorgan Chase Bank NA	$	115	MXN	2,100	7/11/16		—	@
JPMorgan Chase Bank NA	$	66	MXN	1,250	7/11/16		2
JPMorgan Chase Bank NA	$	118	MXN	2,200	7/11/16		3

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

Foreign Currency Forward Exchange Contracts (cont'd):

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
JPMorgan Chase Bank NA	$	219	MXN	4,000	7/11/16		(—	@)
JPMorgan Chase Bank NA	$	108	MXN	2,000	7/11/16		1
JPMorgan Chase Bank NA	$	206	PEN	685	7/11/16		2
State Street Bank and Trust Co.	$	158	PEN	520	7/11/16		(—	@)
JPMorgan Chase Bank NA	IDR	3,100,000	$	230	7/18/16		(4	)
JPMorgan Chase Bank NA	IDR	1,565,000	$	116	7/18/16		(2	)
JPMorgan Chase Bank NA	IDR	4,700,000	$	348	7/18/16		(7	)
JPMorgan Chase Bank NA	IDR	1,250,000	$	94	7/18/16		(1	)
JPMorgan Chase Bank NA	TRY	690	$	236	7/18/16		(3	)
JPMorgan Chase Bank NA	$	229	IDR	3,081,000	7/18/16		3
JPMorgan Chase Bank NA	$	127	IDR	1,700,000	7/18/16		1
JPMorgan Chase Bank NA	$	233	IDR	3,120,000	7/18/16		2
JPMorgan Chase Bank NA	$	113	IDR	1,500,000	7/18/16		—	@
JPMorgan Chase Bank NA	$	98	IDR	1,320,000	7/18/16		2
JPMorgan Chase Bank NA	$	246	IDR	3,250,000	7/18/16		(—	@)
JPMorgan Chase Bank NA	$	266	TRY	784	7/18/16		6
JPMorgan Chase Bank NA	$	130	TRY	379	7/18/16		1
JPMorgan Chase Bank NA	$	69	TRY	200	7/18/16		1
JPMorgan Chase Bank NA	PHP	5,500	$	117	7/21/16		—	@
JPMorgan Chase Bank NA	$	36	PHP	1,650	7/21/16		(—	@)
JPMorgan Chase Bank NA	$	234	PHP	11,000	7/21/16		—	@
JPMorgan Chase Bank NA	HUF	34,000	$	117	7/22/16		(3	)
JPMorgan Chase Bank NA	HUF	45,500	$	159	7/22/16		(1	)
JPMorgan Chase Bank NA	INR	7,900	$	116	7/22/16		(1	)
JPMorgan Chase Bank NA	INR	12,800	$	187	7/22/16		(2	)
JPMorgan Chase Bank NA	PLN	46	$	12	7/22/16		—	@
JPMorgan Chase Bank NA	RON	1,797	$	447	7/22/16		6
JPMorgan Chase Bank NA	THB	5,800	$	164	7/22/16		(1	)
JPMorgan Chase Bank NA	$	293	HUF	82,009	7/22/16		(5	)
JPMorgan Chase Bank NA	$	59	INR	4,000	7/22/16		(—	@)
JPMorgan Chase Bank NA	$	245	INR	16,700	7/22/16		2
JPMorgan Chase Bank NA	$	68	THB	2,400	7/22/16		—	@
JPMorgan Chase Bank NA	$	122	THB	4,300	7/22/16		—	@
JPMorgan Chase Bank NA	ZAR	1,663	$	112	7/22/16		(—	@)
JPMorgan Chase Bank NA	ZAR	2,100	$	141	7/22/16		(1	)
JPMorgan Chase Bank NA	$	109	COP	319,000	7/27/16		(1	)
JPMorgan Chase Bank NA	$	92	COP	280,000	7/27/16		3
JPMorgan Chase Bank NA	RUB	12,494	$	194	7/29/16		—	@
JPMorgan Chase Bank NA	$	120	KRW	140,000	7/29/16		2
JPMorgan Chase Bank NA	$	150	MYR	601	7/29/16		(1	)
JPMorgan Chase Bank NA	$	112	RUB	7,200	7/29/16		—	@
JPMorgan Chase Bank NA	BRL	346	$	106	8/2/16		(1	)
JPMorgan Chase Bank NA	BRL	545	$	169	8/2/16		1
Citibank NA	ARS	960	$	58	12/30/16		—	@
Citibank NA	ARS	1,060	$	63	12/30/16		(1	)
Citibank NA	ARS	1,070	$	64	12/30/16		(1	)
Citibank NA	ARS	780	$	48	1/18/17		1
Citibank NA	ARS	230	$	14	1/18/17		—	@
Citibank NA	ARS	1,100	$	62	6/13/17		1
Citibank NA	ARS	2,100	$	115	6/13/17		(2	)
						$	(10	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Fixed Income Opportunities Portfolio

Futures Contract:

The Portfolio had the following futures contract open at June 30, 2016:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Depreciation (000)
Short:
German Euro BOBL (Germany)		1	$	(148	)	Sep-16	$	(1	)

@  —  Value is less than $500.

ARS  —  Argentine Peso

BRL  —  Brazilian Real

CLP  —  Chilean Peso

COP  —  Colombian Peso

EUR  —  Euro

HUF  —  Hungarian Forint

IDR  —  Indonesian Rupiah

INR  —  Indian Rupee

KRW  —  South Korean Won

MXN  —  Mexican Peso

MYR  —  Malaysian Ringgit

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

Portfolio Composition

Classification	Percentage of Total Investments
Sovereign		63.2	%
Corporate Bonds		33.4
Other*		3.4
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 $148,000 with unrealized depreciation of approximately $1,000. Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $10,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $21,905)	$	22,459
Investment in Security of Affiliated Issuers, at Value (Cost $465)		465
Total Investments in Securities, at Value (Cost $22,370)		22,924
Foreign Currency, at Value (Cost $58)		58
Cash		3
Receivable for Investments Sold		1,206
Interest Receivable		395
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		137
Due from Adviser		11
Receivable for Variation Margin on Futures Contracts		1
Receivable from Affiliates		—	@
Other Assets		70
Total Assets		24,805
Liabilities:
Payable for Investments Purchased		646
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		147
Payable for Professional Fees		53
Payable for Custodian Fees		20
Deferred Capital Gain Country Tax		15
Payable for Directors' Fees and Expenses		7
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 Administration Fees		2
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		1
Other Liabilities		16
Total Liabilities		907
Net Assets	$	23,898
Net Assets Consist of:
Paid-in-Capital	$	28,709
Undistributed Net Investment Income		436
Accumulated Net Realized Loss		(5,779	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $11 of Deferred Capital Gain Country Tax)		543
Futures Contracts		(1	)
Foreign Currency Forward Exchange Contracts		(10	)
Foreign Currency Translations		—	@
Net Assets	$	23,898

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	20,926
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,224,877
Net Asset Value, Offering and Redemption Price Per Share	$	9.41
CLASS A:
Net Assets	$	1,190
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		126,706
Net Asset Value, Redemption Price Per Share	$	9.39
Maximum Sales Load		4.25	%
Maximum Sales Charge	$	0.42
Maximum Offering Price Per Share	$	9.81
CLASS L:
Net Assets	$	816
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		87,011
Net Asset Value, Offering and Redemption Price Per Share	$	9.37
CLASS C:
Net Assets	$	224
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		23,947
Net Asset Value, Offering and Redemption Price Per Share	$	9.36
CLASS IS:
Net Assets	$	742
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		78,874
Net Asset Value, Offering and Redemption Price Per Share	$	9.41

@  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, 2016 (unaudited)

Emerging Markets Fixed Income Opportunities Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Interest from Securities of Unaffiliated Issuers (Net of $9 of Foreign Taxes Withheld)	$	899
Dividends from Securities of Affiliated Issuer (Note G)		1
Dividends from Securities of Unaffiliated Issuers		—	@
Total Investment Income		900
Expenses:
Advisory Fees (Note B)		85
Professional Fees		41
Registration Fees		30
Custodian Fees (Note F)		26
Shareholder Reporting Fees		9
Administration Fees (Note C)		9
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)		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
Distribution and Shareholder Services Fees — Class C (Note D)		1
Directors' Fees and Expenses		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		8
Total Expenses		223
Waiver of Advisory Fees (Note B)		(85	)
Expenses Reimbursed by Adviser (Note B)		(38	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(—	@)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		98
Net Investment Income		802
Realized Gain (Loss):
Investments Sold (Net of $1 of Capital Gain Country Tax)		(353	)
Foreign Currency Forward Exchange Contracts		(42	)
Foreign Currency Transactions		9
Futures Contracts		(21	)
Net Realized Loss		(407	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $11)		2,104
Foreign Currency Forward Exchange Contracts		(21	)
Foreign Currency Translations		5
Futures Contracts		(1	)
Net Change in Unrealized Appreciation (Depreciation)		2,087
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		1,680
Net Increase in Net Assets Resulting from Operations	$	2,482

@  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, 2016

Emerging Markets Fixed Income Opportunities Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	802		$	1,600
Net Realized Loss		(407	)		(2,148	)
Net Change in Unrealized Appreciation (Depreciation)		2,087			(223	)
Net Increase (Decrease) in Net Assets Resulting from Operations		2,482			(771	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		(224	)		(1,138	)
Class A:
Net Investment Income		(12	)		(45	)
Class L:
Net Investment Income		(7	)		(28	)
Class C:
Net Investment Income		(2	)		(5	)
Class IS:
Net Investment Income		(8	)		(430	)
Total Distributions		(253	)		(1,646	)
Capital Share Transactions:(1)
Class I:
Subscribed		158			834
Issued due to a tax-free reorganization		—			2,383
Distributions Reinvested		27			97
Redeemed		(436	)		(1,155	)
Class A:
Subscribed		77			36
Issued due to a tax-free reorganization		—			937
Distributions Reinvested		10			35
Redeemed		(108	)		(152	)
Class L:
Issued due to a tax-free reorganization		—			722
Distributions Reinvested		7			23
Redeemed		(—	@)		(85	)
Class C:
Subscribed		—			210	*
Distributions Reinvested		2			4	*
Class IS:
Subscribed		—			18,208
Issued due to a tax-free reorganization		—			8
Distributions Reinvested		—			403
Redeemed		—			(17,050	)
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions		(263	)		5,458
Redemption Fees		—	@		—	@
Total Increase in Net Assets		1,966			3,041
Net Assets:
Beginning of Period		21,932			18,891
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $436 and $(113), respectively)	$	23,898		$	21,932

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Emerging Markets Fixed Income Opportunities Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		18			94
Shares Issued due to a tax-free reorganization		—			272
Shares Issued on Distributions Reinvested		3			12
Shares Redeemed		(49	)		(131	)
Net Increase (Decrease) in Class I Shares Outstanding		(28	)		247
Class A:
Shares Subscribed		8			4
Shares Issued due to a tax-free reorganization		—			107
Shares Issued on Distributions Reinvested		1			4
Shares Redeemed		(12	)		(17	)
Net Increase (Decrease) in Class A Shares Outstanding		(3	)		98
Class L:
Shares Issued due to a tax-free reorganization		—			83
Shares Issued on Distributions Reinvested		1			3
Shares Redeemed		(—	@@)		(10	)
Net Increase in Class L Shares Outstanding		1			76
Class C:
Shares Subscribed		—			23	*
Shares Issued on Distributions Reinvested		—	@@		1	*
Net Increase (Decrease) in Class C Shares Outstanding		—	@@		24
Class IS:
Shares Subscribed		—			1,934
Shares Issued due to a tax-free reorganization		—			1
Shares Issued on Distributions Reinvested		—			43
Shares Redeemed		—			(1,900	)
Net Increase in Class IS Shares Outstanding		—			78

*  For the period April 30, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	8.53		$	9.22		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.32			0.52			0.51			0.53			0.30
Net Realized and Unrealized Gain (Loss)		0.66			(0.68	)		(0.19	)		(1.50	)		1.18
Total from Investment Operations		0.98			(0.16	)		0.32			(0.97	)		1.48
Distributions from and/or in Excess of:
Net Investment Income		(0.10	)		(0.53	)		(0.50	)		(0.48	)		(0.30	)
Net Realized Gain		—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.10	)		(0.53	)		(0.50	)		(0.74	)		(0.37	)
Redemption Fees		0.00	‡		0.00	‡		—			0.00	‡		—
Net Asset Value, End of Period	$	9.41		$	8.53		$	9.22		$	9.40		$	11.11
Total Return++		11.42	%#		(1.83	)%		3.38	%		(8.79	)%		14.83	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	20,926		$	19,219		$	18,492		$	19,400		$	22,597
Ratio of Expenses to Average Net Assets (1)		0.83	%+*		0.83	%+		0.83	%+		0.84	%+		0.84	%+*
Ratio of Net Investment Income to Average Net Assets (1)		7.21	%+*		5.74	%+		5.23	%+		5.14	%+		4.63	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		68	%#		111	%		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.92	%*		1.82	%		1.91	%		2.15	%		2.02	%*
Net Investment Income to Average Net Assets		6.12	%*		4.75	%		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, 2016

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	8.52		$	9.21		$	9.40		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.30			0.50			0.47			0.49			0.29
Net Realized and Unrealized Gain (Loss)		0.66			(0.69	)		(0.19	)		(1.49	)		1.17
Total from Investment Operations		0.96			(0.19	)		0.28			(1.00	)		1.46
Distributions from and/or in Excess of:
Net Investment Income		(0.09	)		(0.50	)		(0.47	)		(0.45	)		(0.28	)
Net Realized Gain		—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.09	)		(0.50	)		(0.47	)		(0.71	)		(0.35	)
Redemption Fees		0.00	‡		0.00	‡		—			0.00	‡		—
Net Asset Value, End of Period	$	9.39		$	8.52		$	9.21		$	9.40		$	11.11
Total Return++		11.33	%#		(2.14	)%		2.90	%		(9.05	)%		14.66	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,190		$	1,103		$	291		$	196		$	111
Ratio of Expenses to Average Net Assets (1)		1.19	%+*		1.20	%+		1.20	%+		1.14	%+^^		1.09	%+*
Ratio of Net Investment Income to Average Net Assets (1)		6.85	%+*		5.61	%+		4.88	%+		4.88	%+		4.38	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		68	%#		111	%		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.28	%*		2.49	%		2.85	%		2.76	%		2.27	%*
Net Investment Income to Average Net Assets		5.76	%*		4.32	%		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, 2016

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from May 24, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	8.51		$	9.22		$	9.39		$	11.11		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.29			0.49			0.45			0.47			0.25
Net Realized and Unrealized Gain (Loss)		0.66			(0.72	)		(0.18	)		(1.51	)		1.18
Total from Investment Operations		0.95			(0.23	)		0.27			(1.04	)		1.43
Distributions from and/or in Excess of:
Net Investment Income		(0.09	)		(0.48	)		(0.44	)		(0.42	)		(0.25	)
Net Realized Gain		—			—			—			(0.26	)		(0.07	)
Total Distributions		(0.09	)		(0.48	)		(0.44	)		(0.68	)		(0.32	)
Redemption Fees		0.00	‡		0.00	‡		—			0.00	‡		—
Net Asset Value, End of Period	$	9.37		$	8.51		$	9.22		$	9.39		$	11.11
Total Return++		11.17	%#		(2.53	)%		2.85	%		(9.41	)%		14.33	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	816		$	735		$	98		$	100		$	111
Ratio of Expenses to Average Net Assets (1)		1.45	%+*		1.45	%+		1.45	%+		1.41	%+^^		1.59	%+*
Ratio of Net Investment Income to Average Net Assets (1)		6.59	%+*		5.44	%+		4.62	%+		4.57	%+		3.88	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		68	%#		111	%		95	%		94	%		29	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.65	%*		2.94	%		4.10	%		3.07	%		2.77	%*
Net Investment Income to Average Net Assets		5.39	%*		3.95	%		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, 2016

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	8.52		$	9.52
Income (Loss) from Investment Operations:
Net Investment Income†		0.26			0.32
Net Realized and Unrealized Gain (Loss)		0.66			(0.97	)
Total from Investment Operations		0.92			(0.65	)
Distributions from and/or in Excess of:
Net Investment Income		(0.08	)		(0.35	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	9.36		$	8.52
Total Return++		10.92	%#		(6.95	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	224		$	202
Ratio of Expenses to Average Net Assets (1)		1.95	%+*		1.95	%+*
Ratio of Net Investment Income to Average Net Assets (1)		5.81	%+*		5.34	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		68	%#		111	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.82	%*		6.28	%*
Net Investment Income to Average Net Assets		3.94	%*		1.01	%*

^  Commencement of Offering.

†  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."

§  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, 2016

Financial Highlights

Emerging Markets Fixed Income Opportunities Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	8.53		$	9.22		$	9.40		$	9.65
Income (Loss) from Investment Operations:
Net Investment Income†		0.32			0.50			0.51			0.15
Net Realized and Unrealized Gain (Loss)		0.66			(0.66	)		(0.19	)		0.04
Total from Investment Operations		0.98			(0.16	)		0.32			0.19
Distributions from and/or in Excess of:
Net Investment Income		(0.10	)		(0.53	)		(0.50	)		(0.24	)
Net Realized Gain		—			—			—			(0.20	)
Total Distributions		(0.10	)		(0.53	)		(0.50	)		(0.44	)
Redemption Fees		0.00	‡		0.00	‡		—			0.00	‡
Net Asset Value, End of Period	$	9.41		$	8.53		$	9.22		$	9.40
Total Return++		11.54	%#		(1.83	)%		3.39	%		1.92	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	742		$	673		$	10		$	10
Ratio of Expenses to Average Net Assets (1)		0.82	%+*		0.82	%+		0.82	%+		0.81	%+^^*
Ratio of Net Investment Income to Average Net Assets (1)		7.17	%+*		5.45	%+		5.25	%+		5.36	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		68	%#		111	%		95	%		94	%#
(1) Supplemental Information on the Ratios to Average Net Assets:

Ratios Before Expense Limitation

Expenses to Average Net Assets	2.17	%*	1.86	%	21.21	%	7.70	%*
Net Investment Income (Loss) to Average Net Assets	5.82	%*	4.41	%	(15.14	)%	(1.53	)%*

^  Commencement of Offering.

†  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, 2016

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-nine 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 Fixed Income Opportunities Portfolio. The Portfolio seeks high total return.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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.

On September 28, 2015, the Portfolio acquired the net assets of the Emerging Markets Domestic Debt Portfolio ("Emerging Markets Domestic Debt Portfolio"), an open-end investment company. Based on the respective valuations as of the close of business on September 25, 2015, pursuant to a Plan of Reorganization approved by the shareholders of Emerging Markets Domestic Debt Portfolio on September 21, 2015 ("Reorganization"). The purpose of the transaction was to combine two portfolios managed by Morgan Stanley Investment Management Inc. with comparable investment objectives and strategies. The acquisition was accomplished by a tax-free exchange of 271,765 Class I shares of the Portfolio at a net asset value of $8.77 for 282,261 Class I shares of Emerging Markets Domestic Debt Portfolio; 106,956 Class A shares of the Portfolio at a net asset value of $8.76 for 108,632 Class A shares of Emerging Markets Domestic Debt Portfolio; 82,521 Class L shares of the Portfolio at a net asset value of $8.75 for 85,876 Class L shares of Emerging Markets Domestic Debt Portfolio; 874 Class IS shares of the Portfolio at a net asset value of $8.77 for 907 Class IS shares of Emerging Markets Domestic Debt Portfolio. The net assets of Emerging Markets Domestic Debt Portfolio before the Reorganization were approximately $4,050,000, including unrealized depreciation of approximately $589,000 at September 25, 2015. The investment portfolio of Emerging Markets Domestic Debt Portfolio, with a fair value of approximately $3,079,000 and identified cost of approximately $3,690,000 on September 25, 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 Emerging Markets Domestic Debt Portfolio 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 $18,402,000. Immediately after the Reorganization, the net assets of the Portfolio were approximately $22,452,000.

Upon closing of the Reorganization, shareholders of Emerging Markets Domestic Debt Portfolio received shares of the Portfolio as follows:

Emerging Markets Domestic Debt Portfolio	Emerging Markets Fixed Income Opportunities Portfolio
Class I	Class I
Class A	Class A
Class L	Class L
Class IS	Class IS

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 December 31, 2015, are as follows:

Net investment income(1)	$	2,023,000
Net realized gain and unrealized gain/loss(2)	$	(4,861,000	)
Net increase (decrease) in net assets resulting from operations	$	(2,838,000	)

(1) Approximately $1,600,000 as reported, plus approximately $373,000 Emerging Markets Domestic Debt Portfolio prior to the Reorganization, plus approximately $50,000 of estimated pro-forma eliminated expenses.

(2) Approximately $(2,371,000) as reported, plus approximately $(2,490,000) Emerging Markets Domestic Debt Portfolio 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 Emerging Markets Domestic Debt Portfolio that have been included in the Portfolio's Statement of Operations since September 28, 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 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (3) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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) 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 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	—		$	7,662		$	—	$	7,662
Sovereign		—			14,488			—		14,488
Total Fixed Income Securities		—			22,150			—		22,150
Warrant		—			1			—		1
Short-Term Investments
Investment Company		465			—			—		465
Sovereign		—			308			—		308
Total Short-Term Investments		465			308			—		773
Foreign Currency Forward Exchange Contracts		—			137			—		137
Total Assets		465			22,596			—		23,061
Liabilities:
Foreign Currency Forward Exchange Contracts		—			(147	)		—		(147	)
Futures Contract		(1	)		—			—		(1	)
Total Liabilities		(1	)		(147	)		—		(148	)
Total	$	464		$	22,449		$	—	$	22,913

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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

of June 30, 2016, 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 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

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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, 2016.

	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	$	137
	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	$	(147	)
Futures Contract	Variation Margin on Futures Contract	Interest Rate Risk		(1	)(a)
Total			$	(148	)

(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(42	)
Interest Rate Risk	Futures Contracts		(21	)
Total		$	(63	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Foreign Currency Forward Exchange Contracts	$	(21	)
Interest Rate Risk	Futures Contracts		(1	)
Total		$	(22	)

At June 30, 2016, 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	$	137	$	(147	)

(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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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)
Citibank NA	$	2		$	(2	)	$	—	$	0
JPMorgan Chase Bank NA		135			(135	)		—		0
Total	$	137		$	(137	)	$	—	$	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)
Citibank NA	$	4		$	(2	)	$	—	$	2
JPMorgan Chase Bank NA		143			(135	)		—		8
State Street Bank and Trust Co.		—	@		—			—		—	@
Total	$	147		$	(137	)	$	—	$	10

@ Value is less than $500.

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	10,361,000
Futures Contracts:
Average monthly original value	$	823,000

6.  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.

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.

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	%

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

For the six months ended June 30, 2016, 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, 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 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. For the six months ended June 30, 2016, approximately $85,000 of advisory fees were waived and approximately $40,000 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $14,658,000 and $15,430,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016,

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	315	$	9,317	$	9,167	$	1	$	465

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	1,646	$	—	$	1,031	$	—

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, redemptions-in-kind, tax adjustments on debt securities sold by the Portfolio and merger adjustments, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	(90	)	$	(2,240	)	$	2,330

28

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At December 31, 2015, 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 December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $1,965,000 and long-term capital losses of approximately $3,365,000 that do not have an expiration date. These amounts include capital losses acquired from MSIF Emerging Markets Domestic Debt 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, 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.

For the year ended December 31, 2015, the Portfolio realized gains from in-kind redemptions of approximately $1,147,000. The gains are not taxable income to the Portfolio.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 77.6%.

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 and for the period since the end of May 2012, the month of the Portfolio's inception, 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 Broadridge. 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 than but close to its peer group average and 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 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.

30

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

35

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMEDSAN
1557899 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Multi-Asset Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	12
Statement of Operations	14
Statements of Changes in Net Assets	15
Financial Highlights	17
Notes to Financial Statements	22
Investment Advisory Agreement Approval	35
Privacy Notice	37
Director and Officer Information	40

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	943.00	$	1,019.64	$	5.07	$	5.27		1.05	%
Multi-Asset Portfolio Class A		1,000.00		941.50		1,017.90		6.76		7.02		1.40
Multi-Asset Portfolio Class L		1,000.00		939.60		1,015.61		8.97		9.32		1.86
Multi-Asset Portfolio Class C		1,000.00		937.60		1,014.17		10.36		10.77		2.15
Multi-Asset Portfolio Class IS		1,000.00		943.00		1,019.79		4.93		5.12		1.02

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Multi-Asset Portfolio

	Shares		Value (000)
Common Stocks (17.8%)
Australia (0.0%)
Goodman Group REIT		33	$	—	@
Stockland REIT		66		—	@
				—	@
China (0.0%)
Hanergy Thin Film Power Group Ltd. (a)(b)(c)(d)		178,000		3
Denmark (0.3%)
DSV A/S		6,613		278
ISS A/S		9,192		344
				622
France (3.3%)
Accor SA		18,302		709
Aeroports de Paris (ADP)		811		90
Atos SE		6,240		521
Bouygues SA		17,088		494
Cap Gemini SA		10,630		928
Cie de Saint-Gobain		35,389		1,355
Groupe Eurotunnel SE		16,462		175
Metropole Television SA		2,855		47
Peugeot SA (a)		75,233		916
Rexel SA		15,578		197
Television Francaise 1		9,405		101
Vinci SA		25,846		1,841
				7,374
Germany (0.9%)
Deutsche Boerse AG		10,398		851
Deutsche Lufthansa AG (Registered)		59,820		699
Fraport AG Frankfurt Airport Services Worldwide		2,131		114
ProSiebenSat.1 Media SE (Registered)		9,014		394
Stroeer SE & Co. KGaA		1,592		73
				2,131
Hong Kong (0.0%)
G-Resources Group Ltd.		62,326		1
Ireland (0.4%)
CRH PLC		17,120		494
Ryanair Holdings PLC		40,237		505
				999
Italy (1.0%)
Atlantia SpA		34,884		870
Mediaset SpA		195,230		687
Mediobanca SpA		106,024		616
				2,173
Netherlands (0.2%)
Randstad Holding N.V.		12,595		507
Portugal (0.0%)
Banco Espirito Santo SA (Registered) (a)(c)(d)		570,338		—
Spain (0.1%)
Mediaset Espana Comunicacion SA		30,316		340
Switzerland (0.4%)
Adecco Group AG (Registered)		15,782		795

	Shares		Value (000)
United Kingdom (0.8%)
easyJet PLC		30,258	$	437
International Consolidated Airlines Group SA		251,246		1,258
				1,695
United States (10.4%)
Alexandria Real Estate Equities, Inc. REIT		1,700		176
Allergan PLC (a)		3,600		832
American Capital Agency Corp. REIT		8,200		163
American Tower Corp. REIT		10,200		1,159
Annaly Capital Management, Inc. REIT		22,100		245
Boston Properties, Inc. REIT		3,700		488
Bristol-Myers Squibb Co.		15,400		1,133
Brixmor Property Group, Inc. REIT		5,000		132
CBRE Group, Inc., Class A (a)		7,300		193
Crown Castle International Corp. REIT		8,000		811
Digital Realty Trust, Inc. REIT		3,600		392
Duke Realty Corp. REIT		8,300		221
Eli Lilly & Co.		8,700		685
Endo International PLC (a)		1,900		30
Equinix, Inc. REIT		1,700		659
Extra Space Storage, Inc. REIT		3,000		278
Federal Realty Investment Trust REIT		1,700		281
General Growth Properties, Inc. REIT		13,900		414
HCP, Inc. REIT		11,300		400
Host Hotels & Resorts, Inc. REIT		18,200		295
Iron Mountain, Inc. REIT		6,200		247
Johnson & Johnson		25,000		3,032
Jones Lang LaSalle, Inc.		1,100		107
Kimco Realty Corp. REIT		10,000		314
Liberty Property Trust REIT		3,400		135
Macerich Co. (The) REIT		3,000		256
Mallinckrodt PLC (a)		900		55
Merck & Co., Inc.		24,900		1,434
Mylan N.V. (a)		3,700		160
Perrigo Co., PLC		1,300		118
Pfizer, Inc.		54,300		1,912
ProLogis, Inc. REIT		12,600		618
Public Storage REIT		3,400		869
Realogy Holdings Corp. (a)		3,400		99
Realty Income Corp. REIT		6,000		416
Regency Centers Corp. REIT		2,300		193
Simon Property Group, Inc. REIT		7,600		1,648
SL Green Realty Corp. REIT		2,300		245
Ventas, Inc. REIT		8,200		597
VEREIT, Inc. REIT		20,600		209
Vornado Realty Trust REIT		4,200		421
Welltower, Inc. REIT		8,600		655
Weyerhaeuser Co. REIT		18,800		560
Zoetis, Inc.		4,100		195
				23,482
Total Common Stocks (Cost $41,577)				40,122

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

	No. of Rights		Value (000)
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)
Fixed Income Securities (17.1%)
Corporate Bond (0.5%)
United States (0.5%)
Deutsche Bank AG Series 0002 0.00%, 3/17/17 (e) (Cost $839)	$	7,600		1,174
Sovereign (2.9%)
Argentina (1.5%)
Argentine Republic Government International Bond, 7.50%, 4/22/26 (e)		3,120		3,381
Greece (1.4%)
Hellenic Republic Government Bond, 3.00%, 2/24/23 - 2/24/42 (f)	EUR	4,340		3,130
Total Sovereign (Cost $6,269)				6,511
U.S. Treasury Security (13.7%)
United States (13.7%)
U.S. Treasury Inflation Indexed Bond, 0.63%, 1/15/26 (Cost $29,740)	$	29,124		30,691
Total Fixed Income Securities (Cost $36,848)				38,376
	Notional Amount (000)
Call Options Purchased (0.3%)
China (0.3%)
USD/CNH October 2016 @ CNH 6.75, Citibank NA		16,650		199
USD/CNH October 2016 @ CNH 6.75, Goldman Sachs International		12,850		154
USD/CNH October 2016 @ CNH 6.75, JPMorgan Chase Bank NA		27,270		327
Total Call Options Purchased (Cost $1,094)				680
	Shares
Short-Term Investments (68.4%)
Investment Company (63.7%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $143,436)		143,436,240		143,436

	Face Amount (000)		Value (000)
Sovereign (1.5%)
Argentina (1.5%)
Letras del Banco Central de la Republica Argentina, 25.00%, 1/11/17 - 1/25/17	ARS	46,821	$	2,722
26.25%, 1/11/17 - 1/18/17		12,430		726
Total Sovereign (Cost $3,529)				3,448
U.S. Treasury Security (3.2%)
U.S. Treasury Bill, 0.34%, 10/20/16 (g)(h) (Cost $7,113)	$	7,120		7,115
Total Short-Term Investments (Cost $154,078)				153,999
Total Investments (103.6%) (Cost $233,598) (i)(j)(k)				233,178
Liabilities in Excess of Other Assets (–3.5%)				(7,937	)
Total Written Options Outstanding (–0.1%) (Premiums received $584)				(154	)
Net Assets (100.0%)			$	225,087

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  Security has been deemed illiquid at June 30, 2016.

(d)  At June 30, 2016, the Portfolio held fair valued securities valued at approximately $3,000, representing less than 0.05% 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)  144A security — Certain conditions for public sale may exist. Unless otherwise noted, these securities are deemed to be liquid.

(f)  Multi-step — Coupon rate changes in predetermined increments to maturity. Rate disclosed is as of June 30, 2016. Maturity date disclosed is the ultimate maturity date.

(g)  Rate shown is the yield to maturity at June 30, 2016.

(h)  All or a portion of the security was pledged to cover margin requirements for swap agreements.

(i)  Securities are available for collateral in connection with open call options written, foreign currency forward exchange contracts, futures contracts and swap agreements.

(j)  The approximate fair value and percentage of net assets, $16,637,000 and 7.4%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(k)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $2,780,000 and the aggregate gross unrealized depreciation is approximately $3,200,000 resulting in net unrealized depreciation of approximately $420,000.

@  Value is less than $500.

REIT  Real Estate Investment Trust.

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Call Options Written:

The Portfolio had the following call options written open at June 30, 2016:

Counterparty	Notional Amount (000)		Description	Strike Price		Expiration Date	Value (000)
Citibank NA		16,650	USD/CNH (Premiums received $171)	CNH	7.25	Oct-16	$	(45	)
Goldman Sachs International		12,850	USD/CNH (Premiums received $132)		7.25	Oct-16		(35	)
JPMorgan Chase Bank NA		27,270	USD/CNH (Premiums received $281)		7.25	Oct-16		(74	)
							$	(154	)

Foreign Currency Forward Exchange Contracts:

The Portfolio had the following foreign currency forward exchange contracts open at June 30, 2016:

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
Bank of America NA	CHF	7,304	$	7,564	7/21/16	$	77
Bank of America NA	EUR	497	$	563	7/21/16		11
Bank of America NA	EUR	975	$	1,083	7/21/16		(—	@)
Bank of America NA	JPY	34,276	$	329	7/21/16		(3	)
Bank of America NA	JPY	66,623	$	650	7/21/16		4
Bank of America NA	$	1,595	EUR	1,448	7/21/16		12
Bank of America NA	$	270	GBP	203	7/21/16		(—	@)
Bank of America NA	$	20,962	SEK	176,403	7/21/16		(99	)
Bank of Montreal	CAD	18	$	14	7/21/16		(—	@)
Bank of Montreal	NZD	39	$	27	7/21/16		(1	)
Bank of Montreal	$	189	CAD	245	7/21/16		—	@
Bank of Montreal	$	188	CAD	245	7/21/16		2
Bank of Montreal	$	188	CAD	246	7/21/16		2
Bank of Montreal	$	986	EUR	883	7/21/16		(5	)
Bank of Montreal	$	267	GBP	190	7/21/16		(14	)
Bank of Montreal	$	831	JPY	86,266	7/21/16		4
Bank of Montreal	$	1,166	JPY	119,688	7/21/16		(7	)
Bank of New York Mellon	CHF	2,732	$	2,829	7/21/16		28
Bank of New York Mellon	$	267	GBP	202	7/21/16		2
Bank of New York Mellon	$	1,297	SEK	10,918	7/21/16		(6	)
Barclays Bank PLC	AUD	38,325	$	27,971	7/21/16		(594	)
Barclays Bank PLC	EUR	3,532	$	3,927	7/21/16		5
Barclays Bank PLC	$	779	AUD	1,061	7/21/16		12
Barclays Bank PLC	$	2,300	EUR	2,061	7/21/16		(12	)
Barclays Bank PLC	$	4,514	EUR	4,074	7/21/16		10
BNP Paribas SA	$	114	CHF	110	7/21/16		(1	)
BNP Paribas SA	$	113	CHF	110	7/21/16		(—	@)
BNP Paribas SA	$	113	CHF	111	7/21/16		—	@
Citibank NA	CHF	9,050	$	9,423	7/21/16		146
Citibank NA	CHF	2,155	$	2,241	7/21/16		33
Citibank NA	EUR	3,532	$	3,990	7/21/16		69
Citibank NA	EUR	509	$	565	7/21/16		(—	@)
Citibank NA	JPY	31,071	$	301	7/21/16		—	@
Citibank NA	SEK	10,699	$	1,259	7/21/16		(7	)
Citibank NA	THB	84,980	$	2,410	7/21/16		(7	)
Citibank NA	$	4,086	CHF	3,912	7/21/16		(76	)
Citibank NA	$	270	DKK	1,816	7/21/16		1
Citibank NA	$	278	GBP	202	7/21/16		(9	)
Citibank NA	$	236	JPY	24,540	7/21/16		1
Citibank NA	$	13,294	SEK	111,878	7/21/16		(62	)
Citibank NA	$	9,524	SEK	78,414	7/21/16		(250	)
Citibank NA	$	2,286	SEK	18,839	7/21/16		(58	)
Citibank NA	$	762	THB	26,936	7/21/16		4
Citibank NA	$	2,291	THB	80,807	7/21/16		8

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Foreign Currency Forward Exchange Contracts (cont'd):

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
Commonwealth Bank of Australia	$	476	AUD	638	7/21/16	$	—	@
Commonwealth Bank of Australia	$	472	AUD	638	7/21/16		4
Commonwealth Bank of Australia	$	2,721	AUD	3,659	7/21/16		6
Credit Suisse International	EUR	2,043	$	2,263	7/21/16		(6	)
Credit Suisse International	GBP	1,603	$	2,141	7/21/16		6
Credit Suisse International	MXN	694	$	36	7/21/16		(2	)
Credit Suisse International	NZD	4,763	$	3,320	7/21/16		(78	)
Credit Suisse International	THB	23,301	$	659	7/21/16		(4	)
Credit Suisse International	$	471	AUD	640	7/21/16		6
Credit Suisse International	$	1,294	CHF	1,264	7/21/16		2
Credit Suisse International	$	373	GBP	281	7/21/16		2
Credit Suisse International	$	355	MYR	1,450	7/21/16		5
Credit Suisse International	$	358	MYR	1,455	7/21/16		2
Credit Suisse International	$	53	NZD	75	7/21/16		—	@
Credit Suisse International	$	793	NZD	1,134	7/21/16		16
Credit Suisse International	$	290	SGD	391	7/21/16		—	@
Credit Suisse International	$	287	SGD	391	7/21/16		3
Credit Suisse International	$	290	SGD	392	7/21/16		2
Credit Suisse International	$	253	THB	8,921	7/21/16		1
Credit Suisse International	$	253	THB	8,921	7/21/16		1
Credit Suisse International	$	254	THB	8,948	7/21/16		1
Goldman Sachs International	CHF	548	$	567	7/21/16		6
Goldman Sachs International	DKK	3,356	$	504	7/21/16		3
Goldman Sachs International	EUR	2,093	$	2,358	7/21/16		34
Goldman Sachs International	EUR	1,753	$	1,951	7/21/16		4
Goldman Sachs International	JPY	121,612	$	1,178	7/21/16		(—	@)
Goldman Sachs International	RUB	51,707	$	804	7/21/16		(2	)
Goldman Sachs International	$	684	EUR	613	7/21/16		(4	)
Goldman Sachs International	$	641	EUR	566	7/21/16		(12	)
Goldman Sachs International	$	52	GBP	37	7/21/16		(3	)
Goldman Sachs International	$	507	HKD	3,931	7/21/16		—	@
Goldman Sachs International	$	507	HKD	3,931	7/21/16		—	@
Goldman Sachs International	$	508	HKD	3,943	7/21/16		—	@
Goldman Sachs International	$	4,445	JPY	461,269	7/21/16		24
Goldman Sachs International	$	1,169	JPY	119,330	7/21/16		(13	)
Goldman Sachs International	$	1,176	JPY	119,330	7/21/16		(20	)
Goldman Sachs International	$	53	NZD	75	7/21/16		1
Goldman Sachs International	$	53	NZD	75	7/21/16		1
Goldman Sachs International	$	188	NZD	264	7/21/16		1
Goldman Sachs International	$	8,346	RUB	555,426	7/21/16		303
Goldman Sachs International	$	335	RUB	21,910	7/21/16		6
Goldman Sachs International	$	334	RUB	21,910	7/21/16		8
Goldman Sachs International	$	338	RUB	21,975	7/21/16		4
JPMorgan Chase Bank NA	AUD	2,262	$	1,651	7/21/16		(35	)
JPMorgan Chase Bank NA	CHF	6,839	$	7,082	7/21/16		71
JPMorgan Chase Bank NA	EUR	681	$	751	7/21/16		(5	)
JPMorgan Chase Bank NA	MXN	194	$	10	7/21/16		(—	@)
JPMorgan Chase Bank NA	$	4,058	CHF	3,912	7/21/16		(48	)
JPMorgan Chase Bank NA	$	1,619	EUR	1,448	7/21/16		(11	)
JPMorgan Chase Bank NA	$	364	JPY	37,778	7/21/16		2
JPMorgan Chase Bank NA	$	2,319	KRW	2,710,772	7/21/16		34
JPMorgan Chase Bank NA	$	353	MYR	1,450	7/21/16		6
JPMorgan Chase Bank NA	$	2,404	NZD	3,403	7/21/16		24
JPMorgan Chase Bank NA	$	2,808	SEK	23,631	7/21/16		(13	)
State Street Bank and Trust Co.	$	2,354	AUD	3,183	7/21/16		19
State Street Bank and Trust Co.	$	1,608	EUR	1,452	7/21/16		4
UBS AG	AUD	74	$	54	7/21/16		(1	)
UBS AG	CHF	4,853	$	5,026	7/21/16		51
UBS AG	DKK	2,673	$	401	7/21/16		2

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Foreign Currency Forward Exchange Contracts (cont'd):

Counterparty	Contracts to Deliver (000)		In Exchange For (000)		Delivery Date	Unrealized Appreciation (Depreciation) (000)
UBS AG	GBP	534	$	705	7/21/16	$	(7	)
UBS AG	KRW	3,614,363	$	3,066	7/21/16		(72	)
UBS AG	$	1,640	GBP	1,165	7/21/16		(88	)
UBS AG	$	765	KRW	903,591	7/21/16		20
Citibank NA	CNH	113,488	$	17,065	9/22/16		89
Citibank NA	$	8,172	CNH	53,832	9/22/16		(120	)
Citibank NA	$	1,560	CNH	10,277	9/22/16		(22	)
JPMorgan Chase Bank NA	CNH	113,078	$	17,011	9/22/16		96
JPMorgan Chase Bank NA	CNH	223,162	$	34,102	9/22/16		721
JPMorgan Chase Bank NA	CNH	7,493	$	1,147	9/22/16		26
JPMorgan Chase Bank NA	$	1,655	CNH	10,786	9/22/16		(42	)
JPMorgan Chase Bank NA	$	33,665	CNH	220,161	9/22/16		(733	)
JPMorgan Chase Bank NA	$	16,471	CNH	108,332	9/22/16		(267	)
JPMorgan Chase Bank NA	$	8,156	CNH	53,832	9/22/16		(104	)
Citibank NA	CNH	92,402	$	14,015	3/16/17		329
Citibank NA	$	13,857	CNH	92,402	3/16/17		(171	)
Citibank NA	CNH	50,609	$	7,455	5/11/17		(16	)
Citibank NA	CNH	50,761	$	7,473	5/11/17		(21	)
Citibank NA	CNH	192,040	$	28,637	5/11/17		286
Citibank NA	$	2,385	CNH	16,009	5/11/17		(22	)
Citibank NA	$	1,389	CNH	9,427	5/11/17		3
Citibank NA	$	1,812	CNH	12,199	5/11/17		(12	)
JPMorgan Chase Bank NA	CNH	50,609	$	7,493	5/11/17		22
						$	(477	)

Futures Contracts:

The Portfolio had the following futures contracts open at June 30, 2016:

	Number of Contracts		Value (000)			Expiration Date	Unrealized Appreciation (Depreciation) (000)
Long:
Euro Stoxx 50 Index (Germany)		224	$	7,097		Sep-16	$	70
MSCI Emerging Market E Mini (United States)		69		2,880		Sep-16		(9	)
NIKKEI 225 Index (Japan)		56		4,268		Sep-16		(230	)
S&P 500 E Mini Index (United States)		99		10,346		Sep-16		40
U.S. Treasury 10 yr. Note (United States)		299		39,762		Sep-16		956
Short:
Brent Crude Futures (United Kingdom)		36		(1,790	)	Jul-16		(30	)
Copper Futures (United States)		42		(2,305	)	Sep-16		(26	)
German Euro Bund (Germany)		436		(80,861	)	Sep-16		(1,585	)
U.S. Treasury Long Bond (United States)		36		(6,204	)	Sep-16		(349	)
							$	(1,163	)

Interest Rate Swap Agreements:

The Portfolio had the following interest rate swap agreements open at June 30, 2016:

Swap Counterparty	Floating Rate Index	Pay/Receive Floating Rate	Fixed Rate			Termination Date	Notional Amount (000)		Unrealized Appreciation (Depreciation) (000)
Barclays Bank PLC	3 Month STIBOR	Receive		1.34	%	10/12/25	SEK	16,671	$	(148	)
Barclays Bank PLC	3 Month STIBOR	Receive		1.37		10/14/25		19,441		(179	)
BNP Paribas SA	3 Month STIBOR	Receive		1.34		10/12/25		17,791		(157	)
Citibank NA	3 Month STIBOR	Receive		1.28		10/6/25		43,521		(356	)
Citibank NA	3 Month STIBOR	Receive		1.34		10/12/25		22,195		(197	)
Citibank NA	3 Month STIBOR	Receive		1.39		10/13/25		28,121		(266	)

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

Interest Rate Swap Agreements (cont'd):

Swap Counterparty	Floating Rate Index	Pay/Receive Floating Rate	Fixed Rate		Termination Date	Notional Amount (000)		Unrealized Appreciation (Depreciation) (000)
Citibank NA	3 Month STIBOR	Receive		1.37	10/14/25		16,007	$	(147	)
Goldman Sachs International	3 Month STIBOR	Receive		1.39	10/13/25		6,512		(61	)
JPMorgan Chase Bank NA	3 Month STIBOR	Receive		1.33	10/8/25		8,560		(75	)
JPMorgan Chase Bank NA	3 Month STIBOR	Receive		1.38	10/13/25		3,425		(32	)
JPMorgan Chase Bank NA	6 Month BBSW	Pay		2.26	6/14/26	AUD	32,077		172
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.29	3/7/21	$	13,380		(241	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.73	3/11/26		5,600		(203	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.80	3/14/26		12,670		(549	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Pay		1.61	4/13/26		41,700		1,293
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.62	5/13/26		14,430		(327	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.49	6/16/26		17,840		(157	)
Morgan Stanley & Co., LLC*	3 Month LIBOR	Receive		1.50	6/16/26		17,840		(167	)
								$	(1,797	)

Total Return Swap Agreements:

The Portfolio had the following total return swap agreements open at June 30, 2016:

Swap Counterparty	Index	Notional Amount (000)		Floating Rate	Pay/Receive Total Return of Referenced Index	Maturity Date	Upfront Payment (Received) (000)			Unrealized Appreciation (Depreciation) (000)
Bank of America NA	U.S. Apartment REITs††		$12,395	3 Month USD LIBOR minus 0.24%	Pay	4/20/17	$	—		$	(507	)
Bank of America NA	U.S. Apartment REITs††		1,000	3 Month USD LIBOR minus 0.24%	Pay	4/20/17		—			(17	)
Citibank NA	U.S. Media Index††		15,601	3 Month USD LIBOR minus 0.15%	Pay	2/8/17		—			(736	)
Goldman Sachs International	USD Liquid High Yield Index		11,450	3 Month USD LIBOR plus 0.64%	Receive	12/23/16		—			239
Goldman Sachs International	U.S. Consumer Staples Index††		4,703	3 Month USD LIBOR minus 0.15%	Pay	3/2/17		(17	)		(217	)
Goldman Sachs International	Global Aerospace Index††		10,417	3 Month USD LIBOR minus 0.25%	Pay	4/6/17		—			(148	)
Goldman Sachs International	Global Aerospace Index††		9,910	3 Month USD LIBOR minus 0.25%	Pay	4/6/17		—			43
Goldman Sachs International	Global Aerospace Index††		4,869	3 Month USD LIBOR minus 0.25%	Pay	4/6/17		—			(73	)
Goldman Sachs International	Iron Ore Index††		1,625	3 Month USD LIBOR minus 0.65%	Pay	5/15/17		—			(174	)
JPMorgan Chase Bank NA	Chinese Internets††		4,587	3 Month USD LIBOR minus 0.01%	Pay	5/10/17		—			(220	)
										$	(1,810	)

††  See tables below for details of the equity basket holdings underlying the swap.

The following table represents the equity basket holdings underlying the total

return swap with U.S. Apartment REITs as of June 30, 2016.
Security Description	Index Weight
U.S. Apartment REITs
Apartment Investment & Management Co.		6.76	%
AvalonBay Communities, Inc.		24.00
Camden Property Trust		7.45
Equity Residential		24.39

Security Description	Index Weight
Essex Property Trust, Inc.		14.59	%
Independence Realty Trust, Inc.		0.32
Mid-America Apartment Communities, Inc.		7.81
Monogram Residential Trust, Inc.		1.29
Post Propertie,s Inc.		3.78
UDR, Inc.		9.61
		100.00	%

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

The following table represents the equity basket holdings underlying the total return swap with U.S. Media Index as of June 30, 2016.

Security Description	Index Weight
U.S. Media Index
CBS Corp.		3.86	%
Charter Communications, Inc.		7.92
Comcast Corp.		25.72
Discovery Communications, Inc.		1.06
Discovery Communications, Inc.		0.61
DISH Network Corp.		1.88
Interpublic Group of Cos, Inc. (The)		1.51
Liberty Braves Group		0.05
Liberty Braves Group		0.02
Liberty Global PLC		2.84
Liberty Global PLC		1.19
Liberty Global PLC LiLAC		0.40
Liberty Global PLC LiLAC		0.17
Liberty Media Group		0.15
Liberty Media Group		0.07
Liberty SiriusXM Group		1.00
Liberty SiriusXM Group		0.46
News Corp.		0.69
Omnicom Group, Inc.		3.17
Scripps Networks Interactive, Inc.		0.75
Sirius XM Holdings, Inc.		1.53
TEGNA, Inc.		0.80
Time Warner, Inc.		9.61
Twenty-First Century Fox, Inc.		5.29
Twenty-First Century Fox, Inc.		1.92
Viacom, Inc.		2.30
Walt Disney Co. (The)		25.03
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with U.S. Consumer Staples Index as of June 30, 2016.

Security Description	Index Weight
U.S. Consumer Staples Index
Altria Group, Inc.		6.94	%
Archer-Daniels-Midland Co.		1.31
Brown-Forman Corp.		0.52
Campbell Soup Co.		0.61
Church & Dwight Co., Inc.		0.69
Clorox Co. (The)		0.92
Coca-Cola Co. (The)		9.10
Coca-Cola European Partners PLC		0.38
Colgate-Palmolive Co.		3.37
ConAgra Foods, Inc.		1.06
Constellation Brands, Inc.		1.47
Costco Wholesale Corp.		3.52
CVS Health Corp.		5.44
Dr. Pepper Snapple Group, Inc.		0.94
Estee Lauder Cos, Inc. (The)		1.04
General Mills, Inc.		2.19
Hershey Co. (The)		0.84
Hormel Foods Corp.		0.51
JM Smucker Co. (The)		0.93
Kellogg Co.		1.07

Security Description	Index Weight
Kimberly-Clark Corp.		2.56	%
Kraft Heinz Co. (The)		2.70
Kroger Co. (The)		1.84
McCormick & Co., Inc.		0.64
Mead Johnson Nutrition Co.		0.87
Molson Coors Brewing Co.		0.94
Mondelez International, Inc.		3.71
Monster Beverage Corp.		1.23
PepsiCo, Inc.		7.92
Philip Morris International, Inc.		8.09
Procter & Gamble Co. (The)		11.82
Reynolds American, Inc.		2.29
Sysco Corp.		1.37
Tyson Foods, Inc.		1.01
Walgreens Boots Alliance, Inc.		3.72
Wal-Mart Stores, Inc.		5.88
Whole Foods Market, Inc.		0.56
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with Global Aerospace Index as of June 30, 2016.

Security Description	Index Weight
Global Aerospace Index
Airbus Group SE		19.44	%
B/E Aerospace, Inc.		2.08
Boeing Co. (The)		37.73
KLX, Inc.		0.73
Rolls-Royce Holdings PLC		7.41
Safran SA		12.23
Spirit AeroSystems Holdings, Inc.		4.67
Thales SA		3.73
TransDigm Group, Inc.		6.19
Zodiac Aerospace		5.79
		100.00	%

The following table represents the equity basket holdings underlying the total return swap with Iron Ore Index as of June 30, 2016.

Security Description	Index Weight
Iron Ore Index
African Rainbow Minerals Ltd.		0.95	%
Assore Ltd.		0.33
BHP Billiton Ltd.		39.37
Ferrexpo PLC		0.10
Fortescue Metals Group Ltd.		6.93
Kumba Iron Ore Ltd.		1.47
Rio Tinto PLC		37.46
Vale SA		13.39
		100.00	%

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Multi-Asset Portfolio

The following table represents the equity basket holdings underlying the total return swap with Chinese Internets as of June 30, 2016.

Security Description	Index Weight
Chinese Internets
Alibaba Group Holding Ltd.		35.07	%
Baidu, Inc.		9.92
Ctrip.com International Ltd.		3.29
JD.com, Inc.		5.29
Kingsoft Corp. Ltd.		0.45
NetEase, Inc.		4.49
New Oriental Education & Technology Group		1.15
Sohu.com, Inc.		0.25
TAL Education Group		0.88
Tencent Holdings Ltd.		38.04
Vipshop Holdings Ltd.		1.17
		100.00	%

@    Value is less than $500.

*    Cleared swap agreement, the broker is Morgan Stanley & Co., LLC.

BBSW  Australia's Bank Bill Swap

LIBOR  London Interbank Offered Rate

STIBOR  Stockholm Interbank Offered Rate

ARS  — Argentine Peso

AUD  — Australian Dollar

CAD  — Canadian Dollar

CHF  — Swiss Franc

CNH  — Chinese Yuan Renminbi

DKK  — Danish Krone

EUR  — Euro

GBP  — British Pound

HKD  — Hong Kong Dollar

JPY  — Japanese Yen

KRW  — South Korean Won

MXN  — Mexican Peso

MYR  — Malaysian Ringgit

NZD  — New Zealand Dollar

RUB  — Russian Ruble

SEK  — Swedish Krona

SGD  — Singapore Dollar

THB  — Thai Baht

USD  — United States Dollar

Portfolio Composition

Classification	Percentage of Total Investments
Short-Term Investments		66.0	%
Common Stocks		17.2
Fixed Income Securities		16.5
Other**		0.3
Total Investments		100.0	%***

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

***  Does not include open call options written with a value of approximately $154,000. Does not include open long/short futures contracts with an underlying face amount of approximately $155,513,000 with net unrealized depreciation of approximately $1,163,000. Does not include open foreign currency forward exchange contracts with net unrealized depreciation of approximately $477,000 and does not include open swap agreements with net unrealized depreciation of approximately $3,607,000.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Multi-Asset Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $90,162)	$	89,742
Investment in Security of Affiliated Issuer, at Value (Cost $143,436)		143,436
Total Investments in Securities, at Value (Cost $233,598)		233,178
Receivable for Variation Margin on Futures Contracts		3,966
Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		2,688
Receivable for Variation Margin on Swap Agreements		1,169
Unrealized Appreciation on Swap Agreements		454
Receivable for Swap Agreements Termination		321
Receivable for Investments Sold		305
Interest Receivable		181
Tax Reclaim Receivable		158
Dividends Receivable		54
Receivable for Portfolio Shares Sold		51
Receivable from Affiliate		23
Other Assets		87
Total Assets		242,635
Liabilities:
Payable for Investments Purchased		6,488
Unrealized Depreciation on Swap Agreements		3,710
Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		3,165
Due to Broker		1,160
Payable for Swap Agreements Termination		1,602
Bank Overdraft		488
Payable for Advisory Fees		446
Options Written, at Value (Premiums received $584)		154
Payable for Custodian Fees		134
Payable for Sub Transfer Agency Fees — Class I		38
Payable for Sub Transfer Agency Fees — Class A		4
Payable for Sub Transfer Agency Fees — Class L		4
Payable for Portfolio Shares Redeemed		42
Payable for Professional Fees		18
Premium Received on Open Swap Agreements		17
Payable for Administration Fees		16
Payable for Shareholder Services Fees — Class A		5
Payable for Distribution and Shareholder Services Fees — Class L		8
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Transfer Agency Fees — Class I		1
Payable for Transfer Agency Fees — Class A		9
Payable for Transfer Agency Fees — Class L		—	@
Payable for Transfer Agency Fees — Class C		—	@
Other Liabilities		39
Total Liabilities		17,548
Net Assets	$	225,087
Net Assets Consist Of:
Paid-in-Capital	$	317,530
Accumulated Undistributed Net Investment Income		641
Accumulated Net Realized Loss		(87,855	)
Unrealized Appreciation (Depreciation) on:
Investments		(420	)
Futures Contracts		(1,163	)
Options Written		430
Swap Agreements		(3,607	)
Foreign Currency Forward Exchange Contracts		(477	)
Foreign Currency Translations		8
Net Assets	$	225,087

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Multi-Asset Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	191,447
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		19,974,612
Net Asset Value, Offering and Redemption Price Per Share	$	9.58
CLASS A:
Net Assets	$	21,399
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,254,685
Net Asset Value, Redemption Price Per Share	$	9.49
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.53
Maximum Offering Price Per Share	$	10.02
CLASS L:
Net Assets	$	11,877
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,272,469
Net Asset Value, Offering and Redemption Price Per Share	$	9.33
CLASS C:
Net Assets	$	355
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		38,123
Net Asset Value, Offering and Redemption Price Per Share	$	9.31
CLASS IS:
Net Assets	$	9
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	$	9.59

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Multi-Asset Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $83 of Foreign Taxes Withheld)	$	800
Interest from Securities of Unaffiliated Issuers		696
Dividends from Securities of Affiliated Issuer (Note G)		262
Total Investment Income		1,758
Expenses:
Advisory Fees (Note B)		1,181
Custodian Fees (Note F)		178
Administration Fees (Note C)		111
Sub Transfer Agency Fees — Class I		83
Sub Transfer Agency Fees — Class A		4
Sub Transfer Agency Fees — Class L		6
Sub Transfer Agency Fees — Class C		—	@
Shareholder Services Fees — Class A (Note D)		33
Distribution and Shareholder Services Fees — Class L (Note D)		50
Distribution and Shareholder Services Fees — Class C (Note D)		2
Professional Fees		64
Registration Fees		34
Pricing Fees		24
Transfer Agency Fees — Class I (Note E)		2
Transfer Agency Fees — Class A (Note E)		15
Transfer Agency Fees — Class L (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Reporting Fees		13
Directors' Fees and Expenses		5
Other Expenses		15
Total Expenses		1,823
Waiver of Advisory Fees (Note B)		(138	)
Rebate from Morgan Stanley Affiliate (Note G)		(76	)
Reimbursement of Class Specific Expenses — Class I (Note B)		(49	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(3	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Net Expenses		1,555
Net Investment Income		203
Realized Gain (Loss):
Investments Sold		(8,193	)
Foreign Currency Forward Exchange Contracts		(2,249	)
Foreign Currency Transactions		232
Futures Contracts		2,292
Options Written		50
Swap Agreements		(3,524	)
Net Realized Loss		(11,392	)
Change in Unrealized Appreciation (Depreciation):
Investments		5,067
Foreign Currency Forward Exchange Contracts		(2,780	)
Foreign Currency Translations		71
Futures Contracts		(1,710	)
Swap Agreements		(4,803	)
Options Written		378
Net Change in Unrealized Appreciation (Depreciation)		(3,777	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(15,169	)
Net Decrease in Net Assets Resulting from Operations	$	(14,966	)

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Multi-Asset Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	203		$	2,749
Net Realized Loss		(11,392	)		(54,324	)
Net Change in Unrealized Appreciation (Depreciation)		(3,777	)		(7,037	)
Net Decrease in Net Assets Resulting from Operations		(14,966	)		(58,612	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(6,910	)
Class A:
Net Investment Income		—			(710	)
Class L:
Net Investment Income		—			(453	)
Class C:
Net Investment Income		—			(3	)
Class IS:
Net Investment Income		—			(—	@)
Total Distributions		—			(8,076	)
Capital Share Transactions:(1)
Class I:
Subscribed		10,155			132,370
Distributions Reinvested		—			6,894
Redeemed		(86,422	)		(297,687	)
Class A:
Subscribed		2,249			9,732
Distributions Reinvested		—			618
Redeemed		(8,546	)		(29,951	)
Class L:
Subscribed		660			4,714
Distributions Reinvested		—			453
Redeemed		(2,423	)		(27,947	)
Class C:
Subscribed		119			588	*
Distributions Reinvested		—			3	*
Redeemed		(157	)		(134	)*
Class IS:
Subscribed		—			10	**
Net Decrease in Net Assets Resulting from Capital Share Transactions		(84,365	)		(200,337	)
Total Decrease in Net Assets		(99,331	)		(267,025	)
Net Assets:
Beginning of Period		324,418			591,443
End of Period (Including Accumulated Undistributed Net Investment Income of $641 and $438)	$	225,087		$	324,418

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Multi-Asset Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,007			11,881
Shares Issued on Distributions Reinvested		—			645
Shares Redeemed		(8,607	)		(27,835	)
Net Decrease in Class I Shares Outstanding		(7,600	)		(15,309	)
Class A:
Shares Subscribed		225			875
Shares Issued on Distributions Reinvested		—			58
Shares Redeemed		(857	)		(2,810	)
Net Decrease in Class A Shares Outstanding		(632	)		(1,877	)
Class L:
Shares Subscribed		67			422
Shares Issued on Distributions Reinvested		—			43
Shares Redeemed		(247	)		(2,635	)
Net Decrease in Class L Shares Outstanding		(180	)		(2,170	)
Class C:
Shares Subscribed		12			56	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		(16	)		(14	)*
Net Increase (Decrease) in Class C Shares Outstanding		(4	)		42
Class IS:
Shares Subscribed		—			1	**

*  For the period April 30, 2015 through December 31, 2015.

**  For the period May 29, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Multi-Asset Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	10.17		$	11.55		$	11.68		$	10.30		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			0.07			(0.02	)		0.03			(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.60	)		(1.29	)		0.11			1.84			0.47
Total from Investment Operations		(0.59	)		(1.22	)		0.09			1.87			0.45
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.22	)		—			—
Net Realized Gain		—			—			(0.00	)‡		(0.49	)		(0.15	)
Total Distributions		—			(0.16	)		(0.22	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.58		$	10.17		$	11.55		$	11.68		$	10.30
Total Return++		(5.70	)%#		(10.60	)%		0.77	%		18.24	%		4.53	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	191,447		$	280,423		$	495,419		$	107,463		$	20,496
Ratio of Expenses to Average Net Assets (1)		1.05	%+*		1.05	%+		1.01	%+		1.03	%+		1.01	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.22	%+*		0.60	%+		(0.14	)%+		0.25	%+		(0.30	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.04	%		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		205	%#		355	%		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.24	%*		1.14	%		1.21	%		1.97	%		2.41	%*
Net Investment Income (Loss) to Average Net Assets		0.03	%*		0.51	%		(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.
17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Multi-Asset Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	10.09		$	11.50		$	11.63		$	10.29		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		(0.01	)		0.03			(0.05	)		0.01			(0.03	)
Net Realized and Unrealized Gain (Loss)		(0.59	)		(1.28	)		0.11			1.82			0.47
Total from Investment Operations		(0.60	)		(1.25	)		0.06			1.83			0.44
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.19	)		—			—
Net Realized Gain		—			—			(0.00	)‡		(0.49	)		(0.15	)
Total Distribution		—			(0.16	)		(0.19	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.49		$	10.09		$	11.50		$	11.63		$	10.29
Total Return++		(5.85	)%#		(11.00	)%		0.55	%		17.86	%		4.43	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21,399		$	29,123		$	54,771		$	13,437		$	103
Ratio of Expenses to Average Net Assets (1)		1.40	%+*		1.37	%+		1.30	%+		1.30	%+^^		1.26	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		(0.15	)%+*		0.27	%+		(0.43	)%+		0.07	%+		(0.55	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.04	%		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		205	%#		355	%		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.57	%*		1.47	%		1.46	%		2.24	%		2.66	%*
Net Investment Income (Loss) to Average Net Assets		(0.32	)%*		0.17	%		(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.
18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Multi-Asset Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from June 22, 2012^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			December 31, 2012
Net Asset Value, Beginning of Period	$	9.94		$	11.39		$	11.53		$	10.26		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.02	)		(0.10	)		(0.05	)		(0.06	)
Net Realized and Unrealized Gain (Loss)		(0.58	)		(1.27	)		0.10			1.81			0.47
Total from Investment Operations		(0.61	)		(1.29	)		0.00	‡		1.76			0.41
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)		(0.14	)		—			—
Net Realized Gain		—			—			(0.00	)‡		(0.49	)		(0.15	)
Total Distributions		—			(0.16	)		(0.14	)		(0.49	)		(0.15	)
Net Asset Value, End of Period	$	9.33		$	9.94		$	11.39		$	11.53		$	10.26
Total Return++		(6.04	)%#		(11.37	)%		0.02	%		17.23	%		4.13	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11,877		$	14,443		$	41,253		$	9,513		$	337
Ratio of Expenses to Average Net Assets (1)		1.86	%+*		1.85	%+		1.77	%+		1.79	%+^^		1.76	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.57	)%+*		(0.18	)%+		(0.90	)%+		(0.46	)%+		(1.05	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.06	%*		0.04	%		0.09	%		0.07	%		0.09	%*
Portfolio Turnover Rate		205	%#		355	%		264	%		223	%		167	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.02	%*		1.92	%		1.93	%		2.73	%		3.16	%*
Net Investment Loss to Average Net Assets		(0.73	)%*		(0.25	)%		(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 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.
19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Multi-Asset Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.93		$	11.09
Loss from Investment Operations:
Net Investment Loss†		(0.06	)		(0.07	)
Net Realized and Unrealized Loss		(0.56	)		(0.93	)
Total from Investment Operations		(0.62	)		(1.00	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)
Net Asset Value, End of Period	$	9.31		$	9.93
Total Return++		(6.24	)%#		(9.07	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	355		$	420
Ratios of Expenses to Average Net Assets (1)		2.15	%+*		2.17	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(1.13	)%+*		(1.07	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.03	%*
Portfolio Turnover Rate		205	%#		355	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		2.68	%*		2.59	%*
Net Investment Loss to Average Net Assets		(1.66	)%*		(1.49	)%*

^  Commencement of Offering.

†  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.
20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Multi-Asset Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from May 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.17		$	11.09
Income (Loss) from Investment Operations:
Net Investment Income†		0.01			0.01
Net Realized and Unrealized Loss		(0.59	)		(0.77	)
Total from Investment Operations		(0.58	)		(0.76	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.16	)
Net Asset Value, End of Period	$	9.59		$	10.17
Total Return++		(5.70	)%#		(6.89	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	9		$	9
Ratio of Expenses to Average Net Assets (1)		1.02	%+*		1.04	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.29	%+*		0.23	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.05	%*		0.03	%*
Portfolio Turnover Rate		205	%#		355	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		19.46	%*		17.31	%*
Net Investment Loss to Average Net Assets		(18.15	)%*		(16.04	)%*

^  Commencement of Offering.

†  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.
21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 position absolute return and controlling downside portfolio risk.

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 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (3) all other equity portfolio securities for which over-the-counter ("OTC") market quotations

are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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) 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 and swaps, are valued by an outside pricing service approved by the Directors or quotes from a broker or dealer; (7) 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

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (8) 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; (9) 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 (10) 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 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.)

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

•  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, 2016.

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
Airlines	$	—	$	2,899		$	—		$	2,899
Automobiles		—		916			—			916
Banks		—		—			—	†		—	†
Building Products		—		1,355			—			1,355
Capital Markets		—		616			—			616
Commercial Services & Supplies		—		344			—			344
Construction & Engineering		—		2,335			—			2,335
Construction Materials		—		494			—			494
Diversified Financial Services		—		851			—			851
Hotels, Restaurants & Leisure		—		709			—			709
Information Technology Services		—		1,449			—			1,449
Media		—		1,642			—			1,642
Metals & Mining		—		1			—			1
Pharmaceuticals		9,586		—			—			9,586
Professional Services		—		1,302			—			1,302
Real Estate Investment Trusts (REITs)		13,365		—	@		—			13,365
Real Estate Management & Development		531		—			—			531
Road & Rail		—		278			—			278
Semiconductors & Semiconductor Equipment		—		—			3			3

Investment Type	Level 1 Unadjusted quoted prices (000)			Level 2 Other significant observable inputs (000)			Level 3 Significant unobservable inputs (000)			Total (000)
Trading Companies & Distributors	$	—		$	197		$	—		$	197
Transportation Infrastructure		—			1,249			—			1,249
Total Common Stocks		23,482			16,637			3	†		40,122	†
Rights		—			1			—			1
Fixed Income Securities
Corporate Bond		—			1,174			—			1,174
Sovereign		—			6,511			—			6,511
U.S. Treasury Security		—			30,691			—			30,691
Total Fixed Income Securities		—			38,376			—			38,376
Call Options Purchased		—			680			—			680
Short-Term Investments
Investment Company		143,436			—			—			143,436
Sovereign		—			3,448			—			3,448
U.S. Treasury Security		—			7,115			—			7,115
Total Short-Term Investments		143,436			10,563			—			153,999
Foreign Currency Forward Exchange Contracts		—			2,688			—			2,688
Futures Contracts		1,066			—			—			1,066
Interest Rate Swap Agreements		—			1,465			—			1,465
Total Return Swap Agreements		—			282			—			282
Total Assets		167,984			70,692			3	†		238,679	†
Liabilities:
Call Options Written		—			(154	)		—			(154	)
Foreign Currency Forward Exchange Contracts		—			(3,165	)		—			(3,165	)
Futures Contracts		(2,229	)		—			—			(2,229	)
Interest Rate Swap Agreements		—			(3,262	)		—			(3,262	)
Total Return Swap Agreements		—			(2,092	)		—			(2,092	)
Total Liabilities		(2,229	)		(8,673	)		—			(10,902	)
Total	$	165,755		$	62,019		$	3	†	$	227,777	†

@  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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Stocks (000)
Beginning Balance	$	5
Purchases		—
Sales		—
Amortization of discount		—
Transfers in		—	†
Transfers out		—
Corporate actions		—
Change in unrealized appreciation (depreciation)		(2	)
Realized gains (losses)		—
Ending Balance	$	3	†
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2016	$	(2	)

†  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, 2016.

	Fair Value at June 30, 2016 (000)		Valuation Technique	Unobservable Input	Range						Selected Value			Impact to Valuation from an increase in input
Semiconductors & Semiconductor Equipment
Common Stock	$	3	Tangible Net Asset Value Method	Tangible Net Asset Value Per Share	$	0.02		$	0.02		$	0.02		Increase
				Recoverability of Certain Assets		50.0	%		50.0	%		50.0	%	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 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

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

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Semi-Annual Report — June 30, 2016

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

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.

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

27

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

If the Portfolio is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Portfolio will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap agreement and take delivery of the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap agreement less the recovery value of the referenced obligation or underlying securities comprising the referenced index. If the Portfolio is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Portfolio will either (i) receive from the seller of protection an amount equal to the notional amount of the swap agreement and deliver the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap agreement less the recovery value of the referenced obligation or underlying securities comprising the referenced index. Recovery values are estimated by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specified valuation method, are used to calculate the settlement value. The Portfolio's maximum risk of loss from counterparty risk,

either as the protection seller or as the protection buyer, is the fair value of the swap agreement.

The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments 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 paid or received by the Portfolio will be reflected as an asset or liability, respectively, in the Statement of Assets and Liabilities.

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 foreign currency, or futures contract on the underlying instrument or foreign currency, at an agreed-upon price typically in exchange for a premium received by the Portfolio. The Portfolio may write call and put options on stock indexes, futures, securities or currencies it owns or in which it may invest. Writing put options tend to increase the Portfolio's exposure to the underlying instrument. Writing call options tend to decrease the Portfolio's exposure to the underlying instruments. When the Portfolio writes a call or put option, an amount equal to the premium received is recorded as a liability. Any liability recorded is subsequently adjusted to reflect the current value of the options written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the net realized gain or loss. The Portfolio as a writer of an option has no control over whether the underlying future, security or currency may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future, security or currency underlying the written option. 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.

Transactions in written options for the six months ended June 30, 2016 were as follows:

Written Options	Notional Amount (000)			Premiums Received (000)
Options outstanding at December 31, 2015		99,460		$	701
Options closed		(42,690	)		(117	)
Options outstanding at June 30, 2016		56,770		$	584

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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure		Value (000)
Options Purchased	Investments, at Value (Options Purchased)		Currency Risk	$	680	(a)
Foreign Currency Forward Exchange Contracts	Unrealized Appreciation on Foreign Currency Forward Exchange Contracts		Currency Risk		2,688
Futures Contract	Variation Margin on Futures Contract		Equity Risk		110	(b)
Futures Contracts	Variation Margin on Futures Contracts		Interest Rate Risk		956	(b)
Swap Agreements	Unrealized Appreciation on Swap Agreements		Equity Risk		282
Swap Agreement	Unrealized Appreciation on Swap Agreement		Interest Rate Risk		172
Swap Agreement	Variation Margin on Swap Agreement		Interest Rate Risk		1,293	(b)
Total				$	6,181
	Liability Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure		Value (000)
Options Written	Options Written, at Value	Currency Risk		$	(154	)
Foreign Currency Forward Exchange Contracts	Unrealized Depreciation on Foreign Currency Forward Exchange Contracts		Currency Risk		(3,165	)
Futures Contracts	Variation Margin on Futures Contracts		Commodity Risk		(56	)(b)
Futures Contracts	Variation Margin on Futures Contracts		Equity Risk		(239	)(b)
Futures Contracts	Variation Margin on Futures Contracts		Interest Rate Risk		(1,934	)(b)
Swap Agreements	Unrealized Depreciation on Swap Agreements		Equity Risk		(2,092	)
Swap Agreements	Unrealized Depreciation on Swap Agreements		Interest Rate Risk		(1,618	)
Swap Agreements	Variation Margin on Swap Agreements		Interest Rate Risk		(1,644	)(b)
Total				$	(10,902	)

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

(b) 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

29

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

for the six months ended June 30, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Options Purchased	$	24	(c)
Currency Risk	Options Written		50
Currency Risk	Foreign Currency Forward
	Exchange Contracts		(2,249	)
Commodity Risk	Futures Contracts		(561	)
Equity Risk	Futures Contracts		7,106
Interest Rate Risk	Futures Contracts		(4,253	)
Credit Risk	Swap Agreements		(66	)
Equity Risk	Swap Agreements		(1,120	)
Interest Rate Risk	Swap Agreements		(2,338	)
	Total	$	(3,407	)
Change in Unrealized Appreciation (Depreciation)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Options Purchased	$	(892	)(c)
Currency Risk	Options Written		378
Currency Risk	Foreign Currency Forward
	Exchange Contracts		(2,780	)
Commodity Risk	Futures Contracts		(217	)
Equity Risk	Futures Contracts		(731	)
Interest Rate Risk	Futures Contracts		(762	)
Credit Risk	Swap Agreements		84
Equity Risk	Swap Agreements		(2,495	)
Interest Rate Risk	Swap Agreements		(2,392	)
	Total	$	(9,807	)

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

At June 30, 2016, 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(d)	Assets(e) (000)			Liabilities(e) (000)
Options Purchased	$	680	(a)	$	—
Options Written, at Value		—			(154	)
Foreign Currency Forward Exchange Contracts		2,688			(3,165	)
Swap Agreements		454			(3,710	)
Total	$	3,822		$	(7,029	)

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

(d) Excludes exchange traded derivatives.

(e) 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, 2016.

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(f) (000)			Net Amount (not less than $0) (000)
Bank of America NA	$	104		$	(102	)	$	—		$	2
Bank of Montreal		8			(8	)		—			0
Bank of New York Mellon		30			(6	)		—			24
Barclays Bank PLC		27			(27	)		—			0
BNP Paribas SA		—	@		(—	@)		—			0
Citibank NA		1,168			(898	)		—			270
Commonwealth Bank of Australia		10			—			—			10
Credit Suisse International		47			(47	)		—			0
Goldman Sachs International		831			(371	)		(460	)		0
JPMorgan Chase Bank NA		1,501			(1,248	)		(253	)		0
State Street Bank and Trust Co.		23			—			—			23
UBS AG		73			(73	)		—			0
Total	$	3,822		$	(2,780	)	$	(713	)	$	329

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

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Morgan Stanley Institutional Fund, Inc.

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

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(g) (000)			Net Amount (not less than $0) (000)
Bank of America NA	$	626	$	(102	)	$	(524	)	$	0
Bank of Montreal		27		(8	)		—			19
Bank of New York Mellon		6		(6	)		—			0
Barclays Bank PLC		933		(27	)		(260	)		646
BNP Paribas SA		158		(—	@)		—			158
Citibank NA		2,600		(898	)		(435	)		1,267
Credit Suisse International		90		(47	)		—			43
Goldman Sachs International		762		(371	)		—			391
JPMorgan Chase Bank NA		1,659		(1,248	)		—			411
UBS AG		168		(73	)		—			95
Total	$	7,029	$	(2,780	)	$	(1,219	)	$	3,030

@ Value is less than $500.

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

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Foreign Currency Forward Exchange Contracts:
Average monthly principal amount	$	333,253,000
Futures Contracts:
Average monthly original value	$	468,821,000
Swap Agreements:
Average monthly notional amount	$	233,421,000
Options Purchased:
Average monthly notional amount		56,770,000
Options Written:
Average monthly notional amount		56,770,000

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 investment income, if any, are declared and paid 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 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, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.70% 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 as the Directors act to discontinue all or a portion of such waivers and/or reimbursements when they deem such action is appropriate. For the

31

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

six months ended June 30, 2016, approximately $138,000 of advisory fees were waived and approximately $54,000 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.

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $227,279,000 and $293,443,000, respectively. For the six months ended June 30, 2016, purchases and sales of long-term U.S. Government securities were approximately $49,500,000 and $139,176,000, respectively.

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. 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, 2016, advisory fees paid were reduced by approximately $76,000 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	40,037	$	515,074	$	411,675	$	262	$	143,436

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with

32

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 or repatriated. 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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	8,076	$	—	$	9,800	$	217

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 swap income reclass, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Loss (000)			Paid-in- Capital (000)
$	2,940	$	(2,940	)	$	—

At December 31, 2015, 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)
$	3,531	$	—

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $72,620,000 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. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility

33

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 67.4%.

34

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 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 Broadridge. 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.

35

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

36

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

37

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

38

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

39

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

40

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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIMASAN
1559372 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Frontier Emerging Markets Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	16
Investment Advisory Agreement Approval	23
Privacy Notice	25
Director and Officer Information	28

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	994.70	$	1,016.46	$	8.38	$	8.47		1.69	%
Frontier Emerging Markets Portfolio Class A		1,000.00		992.90		1,014.87		9.96		10.07		2.01
Frontier Emerging Markets Portfolio Class L		1,000.00		989.30		1,011.44		13.35		13.50		2.70
Frontier Emerging Markets Portfolio Class C		1,000.00		989.20		1,010.74		14.05		14.20		2.84
Frontier Emerging Markets Portfolio Class IS		1,000.00		994.70		1,016.71		8.13		8.22		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Frontier Emerging Markets Portfolio

	Shares		Value (000)
Common Stocks (96.3%)
Argentina (14.2%)
Banco Macro SA ADR		371,073	$	27,541
BBVA Banco Frances SA ADR		1,019,382		21,030
Grupo Financiero Galicia SA ADR		496,670		15,168
Telecom Argentina SA ADR		584,159		10,708
YPF SA ADR		793,776		15,240
				89,687
Bangladesh (5.9%)
Beximco Pharmaceuticals Ltd.		10,694,408		11,406
GrameenPhone Ltd.		1,600,609		5,202
Olympic Industries Ltd.		4,714,250		20,760
				37,368
Brazil (3.4%)
Adecoagro SA (a)		1,000,983		10,981
MercadoLibre, Inc.		76,832		10,808
				21,789
Costa Rica (1.6%)
Pricesmart, Inc.		109,088		10,207
Egypt (5.7%)
Commercial International Bank Egypt SAE		4,180,978		18,598
Edita Food Industries SAE		5,661,892		9,568
Integrated Diagnostics Holdings PLC (b)		2,023,326		8,043
				36,209
Kenya (5.7%)
East African Breweries Ltd.		5,005,201		13,740
Safaricom Ltd.		129,745,819		22,482
				36,222
Kuwait (11.5%)
Burgan Bank SAK		6,048,955		6,518
Kuwait Projects Co., Holding KSC		8,062,022		13,370
Mezzan Holding Co. KSCC		2,863,728		10,266
National Bank of Kuwait		21,824,469		42,701
				72,855
Morocco (2.6%)
Attijariwafa Bank		467,310		16,432
Nigeria (4.2%)
Lafarge Africa PLC		23,891,753		6,014
Nigerian Breweries PLC		28,062,330		13,343
Zenith Bank PLC		126,569,996		7,111
				26,468
Pakistan (18.8%)
Habib Bank Ltd.		11,378,800		21,469
Honda Atlas Cars Pakistan Ltd.		185,700		637
K-Electric Ltd. (a)		142,865,900		10,989
Lucky Cement Ltd.		4,374,662		27,019
Maple Leaf Cement Factory Ltd.		16,954,865		17,041
Oil & Gas Development Co., Ltd.		10,575,300		14,046
Pak Elektron Ltd.		15,338,400		9,493
United Bank Ltd.		10,955,078		18,576
				119,270

	Shares		Value (000)
Panama (1.4%)
Copa Holdings SA, Class A		163,775	$	8,559
Romania (6.5%)
Banca Transilvania SA		50,269,722		25,856
BRD-Groupe Societe Generale SA		6,466,879		15,615
				41,471
Sri Lanka (1.8%)
Commercial Bank of Ceylon PLC		13,607,223		11,352
Tanzania, United Republic Of (1.9%)
National Microfinance Bank PLC		6,212,221		4,539
Tanzania Breweries Ltd.		1,190,574		7,453
				11,992
United Arab Emirates (3.0%)
Air Arabia PJSC		1,583,232		566
Aramex PJSC		4,436,304		3,919
NMC Health PLC		849,636		14,679
				19,164
United States (0.2%)
Globant SA (a)		33,779		1,329
Vietnam (7.9%)
Bank for Foreign Trade of Vietnam JSC (a)		8,406,640		17,852
Masan Group Corp. (a)		3,276,910		9,779
Vietnam Dairy Products JSC		3,490,984		22,157
				49,788
Total Common Stocks (Cost $579,410)				610,162
Participation Notes (1.9%)
Saudi Arabia (1.7%)
Bupa Arabia for Cooperative Insurance Co., Equity Linked Notes, expires 4/5/18 (a)		280,854		10,528
United Arab Emirates (0.2%)
Aramex PJSC, Equity Linked Notes, expires 3/14/19 (a)		1,131,685		1,000
Vietnam (0.0%)
Vietnam Dairy Products JSC, Equity Linked Notes, expires 10/23/17 (a)		29,959		190
Total Participation Notes (Cost $11,715)				11,718
Short-Term Investment (1.9%)
Investment Company (1.9%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $11,944)		11,943,812		11,944
Total Investments (100.1%) (Cost $603,069) (c)(d)				633,824
Liabilities in Excess of Other Assets (–0.1%)				(541	)
Net Assets (100.0%)			$	633,283

(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.

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Frontier Emerging Markets Portfolio

(c)  The approximate fair value and percentage of net assets, $466,599,000 and 73.7%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $93,630,000 and the aggregate gross unrealized depreciation is approximately $62,875,000 resulting in net unrealized appreciation of approximately $30,755,000.

ADR  American Depositary Receipt.

PJSC  Public Joint Stock Company.

Portfolio Composition

Classification	Percentage of Total Investments
Banks		42.7	%
Other*		30.8
Food Products		13.2
Construction Materials		7.9
Beverages		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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $591,125)	$	621,880
Investment in Security of Affiliated Issuer, at Value (Cost $11,944)		11,944
Total Investments in Securities, at Value (Cost $603,069)		633,824
Foreign Currency, at Value (Cost $9,978)		8,479
Receivable for Investments Sold		2,395
Dividends Receivable		851
Receivable for Portfolio Shares Sold		688
Tax Reclaim Receivable		3
Receivable from Affiliate		1
Other Assets		94
Total Assets		646,335
Liabilities:
Deferred Capital Gain Country Tax		5,993
Payable for Investments Purchased		3,241
Payable for Advisory Fees		1,979
Payable for Portfolio Shares Redeemed		1,182
Payable for Custodian Fees		386
Payable for Professional Fees		147
Payable for Administration Fees		42
Payable for Sub Transfer Agency Fees — Class I		17
Payable for Sub Transfer Agency Fees — Class A		3
Payable for Sub Transfer Agency Fees — Class L		2
Payable for Shareholder Services Fees — Class A		18
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		1
Payable for Transfer Agency Fees — Class I		8
Payable for Transfer Agency Fees — Class A		1
Payable for Transfer Agency Fees — Class L		3
Payable for Transfer Agency Fees — Class C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Other Liabilities		27
Total Liabilities		13,052
Net Assets	$	633,283
Net Assets Consist Of:
Paid-in-Capital	$	737,286
Undistributed Net Investment Income		9,438
Accumulated Net Realized Loss		(137,458	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $5,232 of Deferred Capital Gain Country Tax)		25,523
Foreign Currency Translations		(1,506	)
Net Assets	$	633,283

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	524,004
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		31,032,620
Net Asset Value, Offering and Redemption Price Per Share	$	16.89
CLASS A:
Net Assets	$	93,788
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		5,588,970
Net Asset Value, Redemption Price Per Share	$	16.78
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.93
Maximum Offering Price Per Share	$	17.71
CLASS L:
Net Assets	$	3,836
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		230,853
Net Asset Value, Offering and Redemption Price Per Share	$	16.62
CLASS C:
Net Assets	$	1,637
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		99,168
Net Asset Value, Offering and Redemption Price Per Share	$	16.51
CLASS IS:
Net Assets	$	10,018
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		593,382
Net Asset Value, Offering and Redemption Price Per Share	$	16.88

@  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, 2016 (unaudited)

Frontier Emerging Markets Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $1,613 of Foreign Taxes Withheld)	$	14,936
Dividends from Security of Affiliated Issuer (Note G)		18
Total Investment Income		14,954
Expenses:
Advisory Fees (Note B)		3,878
Custodian Fees (Note F)		762
Administration Fees (Note C)		248
Sub Transfer Agency Fees — Class I		147
Sub Transfer Agency Fees — Class A		54
Sub Transfer Agency Fees — Class L		2
Sub Transfer Agency Fees — Class C		1
Shareholder Services Fees — Class A (Note D)		103
Distribution and Shareholder Services Fees — Class L (Note D)		15
Distribution and Shareholder Services Fees — Class C (Note D)		8
Professional Fees		71
Registration Fees		51
Transfer Agency Fees — Class I (Note E)		13
Transfer Agency Fees — Class A (Note E)		2
Transfer Agency Fees — Class L (Note E)		7
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Reporting Fees		23
Directors' Fees and Expenses		8
Pricing Fees		3
Other Expenses		12
Total Expenses		5,410
Rebate from Morgan Stanley Affiliate (Note G)		(4	)
Reimbursement of Class Specific Expenses — Class L (Note B)		(2	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(—	@)
Net Expenses		5,404
Net Investment Income		9,550
Realized Loss:
Investments Sold (Net of $344 of Capital Gain Country Tax)		(44,353	)
Foreign Currency Transactions		(679	)
Net Realized Loss		(45,032	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $2,955)		34,526
Foreign Currency Translations		(1,502	)
Net Change in Unrealized Appreciation (Depreciation)		33,024
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(12,008	)
Net Decrease in Net Assets Resulting from Operations	$	(2,458	)

@  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, 2016

Frontier Emerging Markets Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	9,550		$	6,447
Net Realized Loss		(45,032	)		(49,804	)
Net Change in Unrealized Appreciation (Depreciation)		33,024			(31,051	)
Net Decrease in Net Assets Resulting from Operations		(2,458	)		(74,408	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(4,515	)
Paid-in-Capital		—			(211	)
Class A:
Net Investment Income		—			(376	)
Paid-in-Capital		—			(18	)
Class C:
Net Investment Income		—			(7	)
Paid-in-Capital		—			(—	@)
Class IS:
Net Investment Income		—			(69	)
Paid-in-Capital		—			(3	)
Total Distributions		—			(5,199	)
Capital Share Transactions:(1)
Class I:
Subscribed		122,663			378,909
Distributions Reinvested		—			3,040
Redeemed		(128,884	)		(332,045	)
Class A:
Subscribed		23,276			59,471
Distributions Reinvested		—			394
Redeemed		(11,304	)		(45,079	)
Class L:
Subscribed		—			1,339
Redeemed		(592	)		(4,069	)
Class C:
Subscribed		360			1,531	*
Distributions Reinvested		—			7	*
Redeemed		(114	)		(34	)*
Class IS:
Subscribed		2,364			43,080	**
Distributions Reinvested		—			72	**
Redeemed		(68	)		(31,422	)**
Net Increase in Net Assets Resulting from Capital Share Transactions		7,701			75,194
Redemption Fees		11			65
Total Increase (Decrease) in Net Assets		5,254			(4,348	)
Net Assets:
Beginning of Period		628,029			632,377
End of Period (Including Undistributed Net Investment Income and Distributions in Excess of Net Investment Income of $9,438 and $(112), respectively)	$	633,283		$	628,029

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Frontier Emerging Markets Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		7,478			20,657
Shares Issued on Distributions Reinvested		—			181
Shares Redeemed		(7,779	)		(18,098	)
Net Increase (Decrease) in Class I Shares Outstanding		(301	)		2,740
Class A:
Shares Subscribed		1,391			3,267
Shares Issued on Distributions Reinvested		—			24
Shares Redeemed		(683	)		(2,442	)
Net Increase in Class A Shares Outstanding		708			849
Class L:
Shares Subscribed		—			70
Shares Redeemed		(37	)		(225	)
Net Decrease in Class L Shares Outstanding		(37	)		(155	)
Class C:
Shares Subscribed		23			86	*
Shares Issued on Distributions Reinvested		—			—	@@*
Shares Redeemed		(8	)		(2	)*
Net Increase in Class C Shares Outstanding		15			84
Class IS:
Shares Subscribed		141			2,259	**
Shares Issued on Distributions Reinvested		1			4	**
Shares Redeemed		(4	)		(1,807	)**
Net Increase in Class IS Shares Outstanding		138			456

*  For the period April 30, 2015 through December 31, 2015.

**  For the period February 27, 2015 through December 31, 2015.

@  Amount is less than $500.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Frontier Emerging Markets Portfolio

	Class I
	Six Months Ended			Year Ended December 31,									Period from November 1, 2012 to			Year Ended October 31,
	June 30, 2016												December 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2012@			2011
Net Asset Value, Beginning of Period	$	16.98		$	19.15		$	18.86		$	14.24		$	14.00		$	12.75		$	15.26
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.26			0.19			0.25			0.09			(0.03	)		0.19			0.34
Net Realized and Unrealized Gain (Loss)		(0.35	)		(2.21	)		0.23			4.60			0.56			1.26			(2.65	)
Total from Investment Operations		(0.09	)		(2.02	)		0.48			4.69			0.53			1.45			(2.31	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)		(0.18	)		(0.07	)		(0.30	)		(0.22	)		(0.20	)
Paid-in-Capital		—			(0.01	)		(0.01	)		—			—			—			—
Total Distributions		—			(0.15	)		(0.19	)		(0.07	)		(0.30	)		(0.22	)		(0.20	)
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		0.01			0.02			—
Net Asset Value, End of Period	$	16.89		$	16.98		$	19.15		$	18.86		$	14.24		$	14.00		$	12.75
Total Return++		(0.53	)%#		(10.58	)%		2.66	%		32.95	%		3.94	%#		12.03	%		(15.35	)%
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	524,004		$	531,927		$	547,535		$	239,378		$	51,415		$	58,729		$	84,962
Ratio of Expenses to Average Net Assets (1)		1.69	%+*		1.72	%+		1.69	%+		1.77	%+		1.85	%+*		2.38	%+		2.03	%+
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			1.71	%+		N/A			N/A			2.38	%+		N/A
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		3.13	%+*		1.02	%+		1.23	%+		0.54	%+		(1.23	)%+*		1.47	%+		2.32	%+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%		0.00	%§*		0.01	%		0.00	%§
Portfolio Turnover Rate		17	%#		37	%		52	%		34	%		13	%#		59	%		60	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		N/A			N/A			1.72	%		1.89	%		3.31	%*		2.47	%		N/A
Net Investment Income (Loss) to Average Net Assets		N/A			N/A			1.20	%		0.42	%		(2.69	)%*		1.38	%		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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Frontier Emerging Markets Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from November 1, 2012 to December 31,			Period from September 14, 2012^ to October 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	16.90		$	19.06		$	18.78		$	14.20		$	13.97		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.23			0.11			0.18			(0.15	)		(0.03	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.35	)		(2.18	)		0.24			4.79			0.56			0.23
Total from Investment Operations		(0.12	)		(2.07	)		0.42			4.64			0.53			0.21
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)		(0.13	)		(0.06	)		(0.30	)		—
Paid-in-Capital		—			(0.01	)		(0.01	)		—			—			—
Total Distributions		—			(0.09	)		(0.14	)		(0.06	)		(0.30	)		—
Redemption Fees		0.00	‡		0.00	‡		0.00	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	16.78		$	16.90		$	19.06		$	18.78		$	14.20		$	13.97
Total Return++		(0.71	)%#		(10.90	)%		2.39	%		32.53	%		3.77	%#		1.67	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	93,788		$	82,480		$	76,839		$	23,762		$	10		$	10
Ratio of Expenses to Average Net Assets (1)		2.01	%+*		2.07	%+		2.02	%+		1.95	%+^^		2.10	%+*		2.10	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			2.04	%+		N/A			N/A			2.09	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.80	%+*		0.60	%+		0.90	%+		(0.81	)%+		(1.48	)%+*		(0.88	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.01	%		0.01	%		0.00	%§*		0.01	%*
Portfolio Turnover Rate		17	%#		37	%		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			N/A			2.05	%		N/A			3.56	%*		2.92	%*
Net Investment Income (Loss) to Average Net Assets		N/A			N/A			0.87	%		N/A			(2.94	)%*		(1.70	)%*

^  Commencement of Offering.

†  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Frontier Emerging Markets Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,									Period from November 1, 2012 to December 31,			Period from September 14, 2012^ to October 31,
Selected Per Share Data and Ratios	(unaudited)			2015			2014			2013			2012			2011
Net Asset Value, Beginning of Period	$	16.79		$	18.96		$	18.71		$	14.19		$	13.96		$	13.76
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.16			0.05			0.06			(0.16	)		(0.05	)		(0.02	)
Net Realized and Unrealized Gain (Loss)		(0.33	)		(2.22	)		0.25			4.69			0.57			0.22
Total from Investment Operations		(0.17	)		(2.17	)		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	‡		0.00	‡		—			—
Net Asset Value, End of Period	$	16.62		$	16.79		$	18.96		$	18.71		$	14.19		$	13.96
Total Return++		(1.07	)%#		(11.49	)%		1.77	%		31.81	%		3.71	%#		1.60	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	3,836		$	4,490		$	8,003		$	3,212		$	10		$	10
Ratio of Expenses to Average Net Assets (1)		2.70	%+*		2.70	%+		2.65	%+		2.53	%+^^		2.60	%+*		2.60	%+*
Ratio of Expenses to Average Net Assets Excluding Non Operating Expenses		N/A			N/A			2.67	%+		N/A			N/A			2.59	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.02	%+*		0.26	%+		0.27	%+		(0.92	)%+		(1.98	)%+*		(1.37	)%+*
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		17	%#		37	%		52	%		34	%		13	%#		59	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.82	%*		2.73	%		2.68	%		N/A			4.08	%*		3.49	%*
Net Investment Income (Loss) to Average Net Assets		1.90	%*		0.23	%		0.24	%		N/A			(3.46	)%*		(2.26	)%*

^  Commencement of Offering.

†  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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Frontier Emerging Markets Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	16.69		$	19.53
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.17			(0.16	)
Net Realized and Unrealized Loss		(0.35	)		(2.60	)
Total from Investment Operations		(0.18	)		(2.76	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.07	)
Paid-in-Capital		—			(0.01	)
Total Distributions		—			(0.08	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	16.51		$	16.69
Total Return++		(1.08	)%#		(14.10	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	1,637		$	1,400
Ratio of Expenses to Average Net Assets (1)		2.84	%+*		2.95	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.13	%+*		(1.38	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		17	%#		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		N/A			3.17	%*
Net Investment Loss to Average Net Assets		N/A			(1.60	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Frontier Emerging Markets Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from February 27, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	16.97		$	19.28
Income (Loss) from Investment Operations:
Net Investment Income†		0.28			0.26
Net Realized and Unrealized Loss		(0.37	)		(2.41	)
Total from Investment Operations		(0.09	)		(2.15	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.15	)
Paid-in-Capital		—			(0.01	)
Total Distributions		—			(0.16	)
Redemption Fees		0.00	‡		0.00	‡
Net Asset Value, End of Period	$	16.88		$	16.97
Total Return++		(0.53	)%#		(11.14	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10,018		$	7,732
Ratio of Expenses to Average Net Assets (1)		1.64	%+*		1.68	%+*
Ratio of Net Investment Income to Average Net Assets (1)		3.37	%+*		1.67	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		17	%#		37	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.64	%*		1.68	%*
Net Investment Income to Average Net Assets		3.37	%*		1.67	%*

^  Commencement of Offering.

†  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, 2016

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-nine 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 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers.

An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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, 2016

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, 2016.

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	$	—	$	3,919	$	—	$	3,919
Airlines		8,559		566		—		9,125
Automobiles		—		637		—		637
Banks		68,278		202,080		—		270,358
Beverages		7,453		27,083		—		34,536
Construction Materials		—		50,074		—		50,074
Diversified Financial Services		—		13,370		—		13,370
Diversified Telecommunication Services		10,708		—		—		10,708
Electric Utilities		—		10,989		—		10,989
Electrical Equipment		—		9,493		—		9,493
Food & Staples Retailing		10,207		—		—		10,207
Food Products		10,981		72,530		—		83,511
Health Care Providers & Services		—		22,722		—		22,722
Internet Software & Services		10,808		—		—		10,808
Oil, Gas & Consumable Fuels		15,240		14,046		—		29,286
Pharmaceuticals		—		11,406		—		11,406
Software		1,329		—		—		1,329
Wireless Telecommunication Services		—		27,684		—		27,684
Total Common Stocks		143,563		466,599		—		610,162
Participation Notes		—		11,718		—		11,718
Short-Term Investment
Investment Company		11,944		—		—		11,944
Total Assets	$	155,507	$	478,317	$	—	$	633,824

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 securities of companies based in the U.S. 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 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 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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 as 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, 2016, approximately $2,000 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.

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $117,420,000 and $105,743,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	16,114	$	83,532	$	87,702	$	18	$	11,944

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:						2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)		Ordinary Income (000)		Long-Term Capital Gain (000)		Paid-in- Capital (000)
$	4,967	$	—	$	232	$	5,473	$	—	$	250

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 and foreign taxes paid on capital gains, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in- Capital (000)
$	(1,285	)	$	1,285	$	—

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short term capital losses of approximately $42,023,000 and long-term capital losses of approximately $20,978,000 that do not have an expiration date.

In addition, at December 31, 2015, 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
$	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.

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, 2015, the Portfolio deferred to January 1, 2016 for U.S. Federal income tax purposes the following losses:

Post-October Currency and Specified Ordinary Losses (000)		Post-October Capital Losses (000)
$	104	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 55.6%.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 Broadridge. 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 and total expense ratio were higher than but close to its peer group averages, while 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 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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

26

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIFEMSAN
1559359 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Quality Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	7
Statements of Changes in Net Assets	8
Financial Highlights	10
Notes to Financial Statements	15
Investment Advisory Agreement Approval	21
Privacy Notice	23
Director and Officer Information	26

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,046.40	$	1,019.99	$	4.99	$	4.92		0.98	%
Global Quality Portfolio Class A		1,000.00		1,044.70		1,018.35		6.66		6.57		1.31
Global Quality Portfolio Class L		1,000.00		1,041.30		1,015.91		9.14		9.02		1.80
Global Quality Portfolio Class C		1,000.00		1,040.70		1,014.42		10.66		10.52		2.10
Global Quality Portfolio Class IS		1,000.00		1,046.40		1,020.14		4.83		4.77		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Quality Portfolio

	Shares		Value (000)
Common Stocks (97.4%)
France (7.4%)
L'Oreal SA		3,657	$	700
Pernod Ricard SA		1,855		207
Sanofi		1,576		132
				1,039
Germany (3.6%)
Bayer AG (Registered)		2,446		246
SAP SE		3,483		260
				506
Japan (1.9%)
Japan Tobacco, Inc.		6,700		268
Netherlands (1.8%)
Priceline Group, Inc. (The) (a)		107		134
RELX N.V.		6,869		120
				254
Switzerland (10.0%)
Nestle SA (Registered)		5,124		396
Novartis AG (Registered)		7,477		615
Roche Holding AG (Genusschein)		1,508		398
				1,409
United Kingdom (22.3%)
ARM Holdings PLC		13,169		199
British American Tobacco PLC		9,449		615
Experian PLC		4,417		84
GlaxoSmithKline PLC		15,489		333
Prudential PLC		15,601		266
Reckitt Benckiser Group PLC		8,718		877
RELX PLC		9,982		184
Unilever PLC		12,194		585
				3,143
United States (50.4%)
Accenture PLC, Class A		4,823		546
Alphabet, Inc., Class A (a)		866		609
Altria Group, Inc.		7,123		491
Automatic Data Processing, Inc.		3,743		344
Coca-Cola Co.		2,296		104
Danaher Corp.		2,699		273
International Flavors & Fragrances, Inc.		1,013		128
Intuit, Inc.		771		86
Johnson & Johnson		4,071		494
Microsoft Corp.		14,403		737
Mondelez International, Inc., Class A		1,583		72
Moody's Corp.		730		68
Nielsen Holdings PLC		7,382		384
NIKE, Inc., Class B		7,262		401
Philip Morris International, Inc.		1,909		194
Reynolds American, Inc.		11,398		615
Time Warner, Inc.		2,688		198
Twenty-First Century Fox, Inc., Class A		7,739		209
Twenty-First Century Fox, Inc., Class B		11,578		316

	Shares		Value (000)
Visa, Inc., Class A		5,870	$	435
Walt Disney Co. (The)		4,103		401
				7,105
Total Common Stocks (Cost $12,463)				13,724
Short-Term Investment (1.5%)
Investment Company (1.5%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $212)		212,145		212
Total Investments (98.9%) (Cost $12,675) (b)(c)				13,936
Other Assets in Excess of Liabilities (1.1%)				156
Net Assets (100.0%)			$	14,092

(a)  Non-income producing security.

(b)  The approximate fair value and percentage of net assets, $6,485,000 and 46.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(c)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $1,512,000 and the aggregate gross unrealized depreciation is approximately $251,000 resulting in net unrealized appreciation of approximately $1,261,000.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		25.4	%
Pharmaceuticals		15.9
Tobacco		15.7
Media		10.2
Information Technology Services		9.5
Personal Products		9.2
Software		7.8
Household Products		6.3
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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $12,463)	$	13,724
Investment in Security of Affiliated Issuer, at Value (Cost $212)		212
Total Investments in Securities, at Value (Cost $12,675)		13,936
Receivable for Investments Sold		755
Tax Reclaim Receivable		48
Dividends Receivable		26
Due from Adviser		12
Receivable from Affiliate		—	@
Other Assets		70
Total Assets		14,847
Liabilities:
Payable for Portfolio Shares Redeemed		689
Payable for Professional Fees		27
Payable for Custodian Fees		19
Payable for Investments Purchased		10
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class L		2
Payable for Distribution and Shareholder Services Fees — Class C		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 Transfer Agency Fees — Class IS		—	@
Payable for Administration Fees		1
Payable for Sub Transfer Agency Fees — Class I		—	@
Payable for Sub Transfer Agency Fees — Class A		—	@
Payable for Sub Transfer Agency Fees — Class L		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Other Liabilities		6
Total Liabilities		755
Net Assets	$	14,092
Net Assets Consist Of:
Paid-in-Capital	$	12,517
Accumulated Undistributed Net Investment Income		129
Accumulated Net Realized Gain		189
Unrealized Appreciation (Depreciation) on:
Investments		1,261
Foreign Currency Translations		(4	)
Net Assets	$	14,092

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Quality Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	8,408
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		703,752
Net Asset Value, Offering and Redemption Price Per Share	$	11.95
CLASS A:
Net Assets	$	2,334
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		196,043
Net Asset Value, Redemption Price Per Share	$	11.91
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.66
Maximum Offering Price Per Share	$	12.57
CLASS L:
Net Assets	$	2,490
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		210,372
Net Asset Value, Offering and Redemption Price Per Share	$	11.84
CLASS C:
Net Assets	$	848
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		72,128
Net Asset Value, Offering and Redemption Price Per Share	$	11.75
CLASS IS:
Net Assets	$	12
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	$	11.95

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Quality Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $13 of Foreign Taxes Withheld)	$	210
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		210
Expenses:
Advisory Fees (Note B)		57
Professional Fees		43
Registration Fees		25
Custodian Fees (Note F)		18
Shareholder Services Fees — Class A (Note D)		3
Distribution and Shareholder Services Fees — Class L (Note D)		10
Distribution and Shareholder Services Fees — Class C (Note D)		4
Administration Fees (Note C)		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)		1
Transfer Agency Fees — Class IS (Note E)		1
Shareholder Reporting Fees		4
Pricing Fees		3
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class L		—	@
Sub Transfer Agency Fees — Class C		—	@
Directors' Fees and Expenses		1
Other Expenses		6
Total Expenses		185
Waiver of Advisory Fees (Note B)		(57	)
Expenses Reimbursed by Adviser (Note B)		(38	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		88
Net Investment Income		122
Realized Gain (Loss):
Investments Sold		137
Foreign Currency Transactions		(2	)
Net Realized Gain		135
Change in Unrealized Appreciation (Depreciation):
Investments		332
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		332
Net Realized Gain and Change in Unrealized Appreciation (Depreciation)		467
Net Increase in Net Assets Resulting from Operations	$	589

@  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, 2016

Global Quality Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	122		$	215
Net Realized Gain		135			614
Net Change in Unrealized Appreciation (Depreciation)		332			250
Net Increase in Net Assets Resulting from Operations		589			1,079
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(172	)
Net Realized Gain		—			(324	)
Class A:
Net Investment Income		—			(39	)
Net Realized Gain		—			(95	)
Class L:
Net Investment Income		—			(19	)
Net Realized Gain		—			(84	)
Class C:
Net Investment Income		—			(6	)
Net Realized Gain		—			(19	)
Class IS:
Net Investment Income		—			(—	@)
Net Realized Gain		—			(—	@)
Total Distributions		—			(758	)
Capital Share Transactions:(1)
Class I:
Subscribed		938			6,500
Distributions Reinvested		—			392
Redeemed		(1,438	)		(13,182	)
Class A:
Subscribed		50			715
Distributions Reinvested		—			129
Redeemed		(1,046	)		(2,004	)
Class L:
Subscribed		13			281
Distributions Reinvested		—			99
Redeemed		(464	)		(281	)
Class C:
Subscribed		166			661	*
Distributions Reinvested		—			25	*
Redeemed		—			(16	)*
Net Decrease in Net Assets Resulting from Capital Share Transactions		(1,781	)		(6,681	)
Total Decrease in Net Assets		(1,192	)		(6,360	)
Net Assets:
Beginning of Period		15,284			21,644
End of Period (Including Accumulated Undistributed Net Investment Income of $129 and $7)	$	14,092		$	15,284

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Global Quality Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Year Ended December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		82			551
Shares Issued on Distributions Reinvested		—			34
Shares Redeemed		(125	)		(1,124	)
Net Decrease in Class I Shares Outstanding		(43	)		(539	)
Class A:
Shares Subscribed		4			61
Shares Issued on Distributions Reinvested		—			11
Shares Redeemed		(93	)		(170	)
Net Decrease in Class A Shares Outstanding		(89	)		(98	)
Class L:
Shares Subscribed		1			25
Shares Issued on Distributions Reinvested		—			8
Shares Redeemed		(41	)		(24	)
Net Increase (Decrease) in Class L Shares Outstanding		(40	)		9
Class C:
Shares Subscribed		15			56	*
Shares Issued on Distributions Reinvested		—			2	*
Shares Redeemed		—			(1	)*
Net Increase in Class C Shares Outstanding		15			57

*  For the period April 30, 2015 through December 31, 2015.

@  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, 2016

Financial Highlights

Global Quality Portfolio

	Class I
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from August 30, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	11.43		$	11.34		$	11.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.11			0.15			0.17			(0.00	)‡
Net Realized and Unrealized Gain		0.41			0.46			0.13			1.28
Total from Investment Operations		0.52			0.61			0.30			1.28
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.13	)		—
Net Realized Gain		—			(0.34	)		(0.11	)		—
Total Distributions		—			(0.52	)		(0.24	)		—
Net Asset Value, End of Period	$	11.95		$	11.43		$	11.34		$	11.28
Total Return++		4.64	%#		5.27	%		2.66	%		12.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	8,408		$	8,531		$	14,579		$	7,440
Ratio of Expenses to Average Net Assets (1)		0.98	%+*		0.97	%+		1.11	%+^^		1.19	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.96	%+*		1.26	%+		1.49	%+		(0.12	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		19	%#		61	%		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.31	%*		2.21	%*		2.34	%		4.86	%*
Net Investment Income (Loss) to Average Net Assets		0.63	%*		0.02	%*		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.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Quality Portfolio

	Class A
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from August 30, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	11.40		$	11.32		$	11.27		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.09			0.11			0.12			(0.02	)
Net Realized and Unrealized Gain		0.42			0.45			0.14			1.29
Total from Investment Operations		0.51			0.56			0.26			1.27
Distributions from and/or in Excess of:
Net Investment Income		—			(0.14	)		(0.10	)		—
Net Realized Gain		—			(0.34	)		(0.11	)		—
Total Distributions		—			(0.48	)		(0.21	)		—
Net Asset Value, End of Period	$	11.91		$	11.40		$	11.32		$	11.27
Total Return++		4.47	%#		4.91	%		2.34	%		12.70	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,334		$	3,246		$	4,331		$	1,612
Ratio of Expenses to Average Net Assets (1)		1.31	%+*		1.30	%+		1.40	%+^^		1.54	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.54	%+*		0.98	%+		1.03	%+		(0.45	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		19	%#		61	%		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.65	%*		2.52	%		2.62	%		5.00	%*
Net Investment Income (Loss) to Average Net Assets		0.20	%*		(0.24	)%		(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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Quality Portfolio

	Class L
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from August 30, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	11.37		$	11.29		$	11.25		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.07			0.05			0.06			(0.03	)
Net Realized and Unrealized Gain		0.40			0.45			0.14			1.28
Total from Investment Operations		0.47			0.50			0.20			1.25
Distributions from and/or in Excess of:
Net Investment Income		—			(0.08	)		(0.05	)		—
Net Realized Gain		—			(0.34	)		(0.11	)		—
Total Distributions		—			(0.42	)		(0.16	)		—
Net Asset Value, End of Period	$	11.84		$	11.37		$	11.29		$	11.25
Total Return++		4.13	%#		4.49	%		1.74	%		12.50	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	2,490		$	2,848		$	2,723		$	962
Ratio of Expenses to Average Net Assets (1)		1.80	%+*		1.81	%+		1.93	%+^^		2.04	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		1.16	%+*		0.46	%+		0.55	%+		(0.80	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.01	%*
Portfolio Turnover Rate		19	%#		61	%		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.14	%*		3.06	%		3.15	%		6.27	%*
Net Investment Loss to Average Net Assets		(0.18	)%*		(0.79	)%		(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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Quality Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	11.30		$	11.77
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.05			(0.03	)
Net Realized and Unrealized Gain		0.40			0.02
Total from Investment Operations		0.45			(0.01	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)
Net Realized Gain		—			(0.34	)
Total Distributions		—			(0.46	)
Net Asset Value, End of Period	$	11.75		$	11.30
Total Return++		4.07	%#		(0.13	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	848		$	648
Ratios of Expenses to Average Net Assets (1)		2.10	%+*		2.10	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.87	%+*		(0.39	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§*
Portfolio Turnover Rate		19	%#		61	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		3.58	%*		3.80	%*
Net Investment Loss to Average Net Assets		(0.61	)%*		(2.09	)%*

^  Commencement of Offering.

†  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."

§  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, 2016

Financial Highlights

Global Quality Portfolio

	Class IS
	Six Months Ended June 30, 2016			Year Ended December 31,						Period from September 13, 2013^ to
Selected Per Share Data and Ratios	(unaudited)			2015			2014			December 31, 2013
Net Asset Value, Beginning of Period	$	11.43		$	11.34		$	11.28		$	10.28
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.11			0.16			0.17			(0.00	)‡
Net Realized and Unrealized Gain		0.41			0.45			0.13			1.00
Total from Investment Operations		0.52			0.61			0.30			1.00
Distributions from and/or in Excess of:
Net Investment Income		—			(0.18	)		(0.13	)		—
Net Realized Gain		—			(0.34	)		(0.11	)		—
Total Distributions		—			(0.52	)		(0.24	)		—
Net Asset Value, End of Period	$	11.95		$	11.43		$	11.34		$	11.28
Total Return++		4.64	%#		5.38	%		2.67	%		9.73	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12		$	11		$	11		$	11
Ratio of Expenses to Average Net Assets (1)		0.95	%+*		0.95	%+		1.10	%+^^		1.15	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		2.01	%+*		1.31	%+		1.51	%+		(0.10	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.00	%§		0.00	%§		0.00	%§*
Portfolio Turnover Rate		19	%#		61	%		31	%		8	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		16.89	%*		16.35	%		19.72	%		9.57	%*
Net Investment Loss to Average Net Assets		(13.93	)%*		(14.09	)%		(17.11	)%		(8.52	)%*

^  Commencement of Offering.

†  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.
14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 seeks long-term capital appreciation.

The Portfolio offers five classes of shares — Class I, Class A, Class L, Class C 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) 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked

prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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 Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	104	$	207	$	—	$	311
Chemicals		128		—		—		128
Diversified Financial Services		68		—		—		68
Food Products		72		396		—		468
Healthcare Equipment & Supplies		273		—		—		273
Household Products		—		877		—		877
Information Technology Services		1,325		—		—		1,325
Insurance		—		266		—		266
Internet & Catalog Retail		134		—		—		134
Internet Software & Services		609		—		—		609
Media		1,124		304		—		1,428
Personal Products		—		1,285		—		1,285
Pharmaceuticals		494		1,724		—		2,218
Professional Services		384		84		—		468
Semiconductors & Semiconductor Equipment		—		199		—		199
Software		823		260		—		1,083
Textiles, Apparel & Luxury Goods		401		—		—		401
Tobacco		1,300		883		—		2,183
Total Common Stocks		7,239		6,485		—		13,724
Short-Term Investment
Investment Company		212		—		—		212
Total Assets	$	7,451	$	6,485	$	—	$	13,936

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.  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 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, 2016, 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 1.00% 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 as 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, 2016, approximately $57,000 of advisory fees were waived and approximately $40,000 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Sub-Advisers 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $2,674,000 and $4,245,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	309	$	2,246	$	2,343	$	—	@	$	212

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the ACT (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six month ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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, 2015, 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 2015 and 2014 was as follows:

2015 Distributions Paid From:				2014 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)		Ordinary Income (000)		Long-Term Capital Gain (000)
$	237	$	522	$	339	$	73

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, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Undistributed Net Investment Income (000)		Accumulated Undistributed Net Realized Gain (000)			Paid-in- Capital (000)
$	3	$	(2	)	$	(1	)

At December 31, 2015, 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	$	214

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 64.5%.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 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 Broadridge. In addition to the management fee, the Board also reviewed the Portfolio's total expense ratio. The Board noted that while the contractual management fee was higher than but close to its peer group average, its 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.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGQSAN
1557942 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Leaders Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	8
Statements of Changes in Net Assets	9
Financial Highlights	11
Notes to Financial Statements	15
Investment Advisory Agreement Approval	22
Privacy Notice	24
Director and Officer Information	27

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		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	$	1,070.90	$	1,019.39	$	5.66	$	5.52		1.10	%
Emerging Markets Leaders Portfolio Class A		1,000.00		1,067.90		1,017.21		7.92		7.72		1.54
Emerging Markets Leaders Portfolio Class C		1,000.00		1,064.80		1,013.48		11.76		11.46		2.29
Emerging Markets Leaders Portfolio Class IS		1,000.00		1,070.90		1,019.44		5.61		5.47		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Emerging Markets Leaders Portfolio

	Shares		Value (000)
Common Stocks (85.2%)
Belgium (5.4%)
Anheuser-Busch InBev N.V.		15,365	$	2,020
China (8.6%)
Tencent Holdings Ltd. (a)		88,900		2,025
Yum! Brands, Inc.		14,435		1,197
				3,222
Czech Republic (1.0%)
Komercni Banka AS		9,823		368
Hong Kong (13.1%)
AIA Group Ltd.		391,600		2,360
Samsonite International SA		915,300		2,537
				4,897
Indonesia (7.3%)
Bank Mandiri Persero Tbk PT		1,472,600		1,067
Matahari Department Store Tbk PT		457,000		694
Sumber Alfaria Trijaya Tbk PT		21,343,691		973
				2,734
Korea, Republic of (7.4%)
CJ CGV Co., Ltd.		5,814		523
Hanssem Co. Ltd.		6,326		873
Orion Corp.		1,314		1,075
Osstem Implant Co., Ltd. (b)		4,385		298
				2,769
Mexico (7.7%)
Fomento Economico Mexicano SAB de CV ADR		18,198		1,683
Grupo Financiero Banorte SAB de CV Series O		213,043		1,191
				2,874
Peru (3.9%)
Credicorp Ltd.		9,499		1,466
Philippines (1.8%)
BDO Unibank, Inc.		280,730		670
Poland (3.7%)
Jeronimo Martins SGPS SA		87,977		1,386
South Africa (12.1%)
Famous Brands Ltd.		184,569		1,592
Life Healthcare Group Holdings Ltd.		509,006		1,254
Naspers Ltd., Class N		4,728		724
SABMiller PLC		16,386		955
				4,525
Taiwan (3.3%)
Poya International Co., Ltd.		82,000		911
Voltronic Power Technology Corp.		23,000		320
				1,231
Thailand (4.3%)
DKSH Holding AG		24,319		1,592
Turkey (1.6%)
Ulker Biskuvi Sanayi AS		81,840		599

	Shares		Value (000)
United Kingdom (4.0%)
British American Tobacco PLC		22,620	$	1,472
Total Common Stocks (Cost $30,486)				31,825
Participation Notes (10.3%)
India (10.3%)
Apollo Hospitals Enterprise Ltd., Equity Linked Notes, expires 5/4/18 (b)		19,064		372
Bank of Baroda, Equity Linked Notes, expires 12/16/16 (b)		106,646		246
Bank of Baroda, Equity Linked Notes, expires 12/16/16 (b)		15,348		35
Colgate-Palmolive India Ltd., Equity Linked Notes, expires 7/18/19 (b)		76,276		1,037
Ipca Laboratories Ltd., Equity Linked Notes, expires 2/3/17 (b)		94,482		687
Marico Ltd., Equity Linked Notes, expires 1/9/20 (b)		114,628		449
Marico Ltd., Equity Linked Notes, expires 6/10/20 (b)		74,036		290
Shriram Transport Finance Co., Ltd., Equity Linked Notes, expires 10/31/16 (b)		40,287		720
Total Participation Notes (Cost $3,678)				3,836
Short-Term Investment (4.3%)
Investment Company (4.3%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $1,605)		1,604,797		1,605
Total Investments (99.8%) (Cost $35,769) (c)(d)				37,266
Other Assets in Excess of Liabilities (0.2%)				84
Net Assets (100.0%)			$	37,350

(a)  Security trades on the Hong Kong exchange.

(b)  Non-income producing security.

(c)  The approximate fair value and percentage of net assets, $26,288,000 and 70.4%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $2,611,000 and the aggregate gross unrealized depreciation is approximately $1,114,000 resulting in net unrealized appreciation of approximately $1,497,000.

ADR  American Depositary Receipt.

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Leaders Portfolio

Portfolio Composition

Classification	Percentage of Total Investments
Other*		41.6	%
Banks		13.5
Beverages		12.5
Hotels, Restaurants & Leisure		7.5
Textiles, Apparel & Luxury Goods		6.8
Insurance		6.3
Food & Staples Retailing		6.3
Internet Software & Services		5.5
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.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $34,164)	$	35,661
Investment in Security of Affiliated Issuer, at Value (Cost $1,605)		1,605
Total Investments in Securities, at Value (Cost $35,769)		37,266
Foreign Currency, at Value (Cost $17)		17
Receivable for Portfolio Shares Sold		95
Dividends Receivable		60
Tax Reclaim Receivable		22
Receivable from Affiliate		—	@
Other Assets		50
Total Assets		37,510
Liabilities:
Payable for Investments Purchased		59
Payable for Advisory Fees		32
Payable for Professional Fees		30
Deferred Capital Gain Country Tax		14
Payable for Custodian Fees		13
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 C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Sub Transfer Agency Fees — Class C		—	@
Other Liabilities		10
Total Liabilities		160
Net Assets	$	37,350
Net Assets Consist Of:
Paid-in-Capital	$	37,801
Distributions in Excess of Net Investment Income		(77	)
Accumulated Net Realized Loss		(1,871	)
Unrealized Appreciation (Depreciation) on:
Investments		1,497
Foreign Currency Translations		(—	@)
Net Assets	$	37,350

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	24,686
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		2,440,422
Net Asset Value, Offering and Redemption Price Per Share	$	10.12
CLASS A:
Net Assets	$	308
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		30,631
Net Asset Value, Redemption Price Per Share	$	10.07
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.56
Maximum Offering Price Per Share	$	10.63
CLASS C:
Net Assets	$	169
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,806
Net Asset Value, Offering and Redemption Price Per Share	$	10.03
CLASS IS:
Net Assets	$	12,187
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,204,260
Net Asset Value, Offering and Redemption Price Per Share	$	10.12

@  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, 2016 (unaudited)

Emerging Markets Leaders Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $27 of Foreign Taxes Withheld)	$	311
Dividends from Securities of Affiliated Issuer (Note G)		3
Total Investment Income		314
Expenses:
Advisory Fees (Note B)		137
Professional Fees		48
Registration Fees		22
Custodian Fees (Note F)		13
Administration Fees (Note C)		12
Shareholder Reporting Fees		5
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Offering Costs		3
Pricing Fees		2
Directors' Fees and Expenses		1
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		1
Sub Transfer Agency Fees — Class I		—	@
Sub Transfer Agency Fees — Class A		—	@
Sub Transfer Agency Fees — Class C		—	@
Other Expenses		9
Total Expenses		257
Waiver of Advisory Fees (Note B)		(85	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(1	)
Net Expenses		168
Net Investment Income		146
Realized Loss:
Investments Sold		(1,258	)
Foreign Currency Transactions		(1	)
Net Realized Loss		(1,259	)
Change in Unrealized Appreciation (Depreciation):
Investments		3,471
Foreign Currency Translations		(—	@)
Net Change in Unrealized Appreciation (Depreciation)		3,471
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		2,212
Net Increase in Net Assets Resulting from Operations	$	2,358

@  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, 2016

Emerging Markets Leaders Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Period from January 5, 2015^ to December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	146		$	181
Net Realized Loss		(1,259	)		(633	)
Net Change in Unrealized Appreciation (Depreciation)		3,471			(1,974	)
Net Increase (Decrease) in Net Assets Resulting from Operations		2,358			(2,426	)
Distributions from and/or in Excess of:
Class I:
Net Investment Income		—			(174	)
Class A:
Net Investment Income		—			(2	)
Class C:
Net Investment Income		—			(1	)
Class IS:
Net Investment Income		—			(206	)
Total Distributions		—			(383	)
Capital Share Transactions:(1)
Class I:
Subscribed		10,441			14,859
Distributions Reinvested		—			38
Redeemed		(473	)		(583	)
Class A:
Subscribed		140			195
Distributions Reinvested		—			1
Redeemed		(32	)		(7	)
Class C:
Subscribed		60			110	*
Distributions Reinvested		—			1	*
Class IS:
Subscribed		—			17,575
Distributions Reinvested		—			206
Redeemed		(4,730	)		—
Net Increase in Net Assets Resulting from Capital Share Transactions		5,406			32,395
Total Increase in Net Assets		7,764			29,586
Net Assets:
Beginning of Period		29,586			—
End of Period (Including Distributions in Excess of Net Investment Income of $(77) and $(223))	$	37,350		$	29,586

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Emerging Markets Leaders Portfolio

Statements of Changes in Net Assets (cont'd)	Six Months Ended June 30, 2016 (unaudited) (000)			Period from January 5, 2015^ to December 31, 2015 (000)
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		1,075			1,472
Shares Issued on Distributions Reinvested		—			4
Shares Redeemed		(51	)		(60	)
Net Increase in Class I Shares Outstanding		1,024			1,416
Class A:
Shares Subscribed		14			20
Shares Issued on Distributions Reinvested		—			—	@@
Shares Redeemed		(3	)		(1	)
Net Increase in Class A Shares Outstanding		11			19
Class C:
Shares Subscribed		6			11	*
Shares Issued on Distributions Reinvested		—			—	@@*
Net Increase in Class C Shares Outstanding		6			11
Class IS:
Shares Subscribed		—			1,663
Shares Issued on Distributions Reinvested		—			22
Shares Redeemed		(480	)		—
Net Increase (Decrease) in Class IS Shares Outstanding		(480	)		1,685

^  Date of Reorganization.

*  For the period April 30, 2015 through December 31, 2015.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Leaders Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from January 5, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.45		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.05			0.06
Net Realized and Unrealized Gain (Loss)		0.62			(0.49	)
Total from Investment Operations		0.67			(0.43	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)
Net Asset Value, End of Period	$	10.12		$	9.45
Total Return++		7.09	%#		(4.26	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	24,686		$	13,379
Ratio of Expenses to Average Net Assets (1)		1.10	%+*		1.14	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.07	%+*		0.65	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		27	%#		36	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		1.67	%*		2.80	%*
Net Investment Income (Loss) to Average Net Assets		0.50	%*		(1.01	)%*

^  Date of Reorganization (close of business).

†  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, 2016

Financial Highlights

Emerging Markets Leaders Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from January 5, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.43		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.03			0.02
Net Realized and Unrealized Gain (Loss)		0.61			(0.48	)
Total from Investment Operations		0.64			(0.46	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.11	)
Net Asset Value, End of Period	$	10.07		$	9.43
Total Return++		6.79	%#		(4.61	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	308		$	182
Ratio of Expenses to Average Net Assets (1)		1.54	%+*		1.54	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.70	%+*		0.21	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		27	%#		36	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		2.73	%*		5.89	%*
Net Investment Loss to Average Net Assets		(0.49	)%*		(4.14	)%*

^  Date or Reorganization (close of business).

†  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, 2016

Financial Highlights

Emerging Markets Leaders Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from April 30, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.42		$	10.61
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.00	)‡		(0.06	)
Net Realized and Unrealized Gain (Loss)		0.61			(1.07	)
Total from Investment Operations		0.61			(1.13	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.06	)
Net Asset Value, End of Period	$	10.03		$	9.42
Total Return++		6.48	%#		(10.61	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	169		$	100
Ratios of Expenses to Average Net Assets (1)		2.29	%+*		2.30	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.03	)%+*		(0.85	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.00	%§*
Portfolio Turnover Rate		27	%#		36	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		4.02	%*		5.73	%*
Net Investment Loss to Average Net Assets		(1.76	)%*		(4.28	)%*

^  Commencement of Offering.

†  Per share amount is based on average shares outstanding.

‡  Amount is less than $0.0005 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.
13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Leaders Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from January 5, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	9.45		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.04			0.07
Net Realized and Unrealized Gain (Loss)		0.63			(0.50	)
Total from Investment Operations		0.67			(0.43	)
Distributions from and/or in Excess of:
Net Investment Income		—			(0.12	)
Net Asset Value, End of Period	$	10.12		$	9.45
Total Return++		7.09	%#		(4.25	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	12,187		$	15,925
Ratio of Expenses to Average Net Assets (1)		1.09	%+*		1.12	%+*^^
Ratio of Net Investment Income to Average Net Assets (1)		0.85	%+*		0.75	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.01	%*
Portfolio Turnover Rate		27	%#		36	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		1.68	%*		2.65	%*
Net Investment Income (Loss) to Average Net Assets		0.26	%*		(0.78	)%*

^  Date of Reorganization (close of business).

†  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 30, 2015, the Adviser has agreed to limit the ratio of expenses to average net assets to the maximum ratio of 1.10% for Class IS shares. Prior to September 30, 2015, the maximum ratio was 1.15% for Class IS 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, 2016

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-nine 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 seeks long-term capital appreciation.

Effective June 30, 2016, Morgan Stanley Investment Management Limited is no longer a Sub-Adviser to the Portfolio.

The Portfolio offers four classes of shares — Class I, Class A, Class C and Class IS.

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"), at the close of business on January 5, 2015, the Portfolio acquired substantially all of the assets and liabilities of the Private Fund in exchange for shares of the Portfolio (the "Reorganization"). For financial reporting purposes, the net assets received and shares issued by the Portfolio were recorded at fair value. The investment income and realized and unrealized gain/loss presented in the Statement of Operations represent the revenue and earnings of the Portfolio subsequent to the Reorganization. The partners of the Private Fund were issued 1,104,016 shares of beneficial interest in the Portfolio at a net asset value of $10.00, in exchange for their collective interest in the Private Fund, totaling $11,040,160 in net assets. 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.

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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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") or Morgan Stanley Investment Management Limited ("MSIM Limited") and Morgan Stanley

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

Investment Management Company ("MSIM Company") (together, the "Sub-Advisers"), each a whole owned subsidiary of Morgan Stanley, 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; (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 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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	2,657	$	2,105	$	—	$	4,762
Beverages		1,683		2,975		—		4,658
Electrical Equipment		—		320		—		320
Food & Staples Retailing		—		2,359		—		2,359
Food Products		—		1,674		—		1,674
Health Care Equipment & Supplies		—		298		—		298
Health Care Providers & Services		—		1,254		—		1,254
Hotels, Restaurants & Leisure		1,197		1,592		—		2,789
Household Durables		—		873		—		873

Investment Type	Level 1 Unadjusted quoted prices (000)		Level 2 Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Insurance	$	—	$	2,360	$	—	$	2,360
Internet Software & Services		—		2,025		—		2,025
Media		—		1,247		—		1,247
Multi-line Retail		—		1,605		—		1,605
Professional Services		—		1,592		—		1,592
Textiles, Apparel & Luxury Goods		—		2,537		—		2,537
Tobacco		—		1,472		—		1,472
Total Common Stocks		5,537		26,288		—		31,825
Participation Notes		—		3,836		—		3,836
Short-Term Investment
Investment Company		1,605		—		—		1,605
Total Assets	$	7,142	$	30,124	$	—	$	37,266

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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,

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.  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 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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

recorded on the ex-dividend date. Dividends from net investment income, if any, are declared and paid 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/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	%

For the six months ended June 30, 2016, the advisory fee rate (net of waivers/rebate) was equivalent to an annual effective rate of 0.33% 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 1.10% 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 as 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, 2016, approximately $85,000 of advisory fees were waived and approximately $3,000 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 Sub-Advisers 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 six months ended June 30, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $12,510,000 and $7,890,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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 period ended June 30, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	1,066	$	17,738	$	17,199	$	3	$	1,605

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an

affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 Statement of Changes in Net Assets due to short-term capital gains being treated as

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

ordinary income for tax purposes. The tax character of distributions paid during fiscal year 2015 was as follows:

2015 Distributions Paid From:
Ordinary Income (000)		Long-Term Capital Gain (000)
$	383	$	—

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 Portfolios' components of net assets at December 31, 2015:

Distributions in Excess of Net Investment Income (000)			Accumulated Net Realized Loss (000)		Paid-in-Capital (000)
$	(21	)	$	21	$	—

At December 31, 2015, 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)
$	32	$	—

At December 31, 2015, the Portfolio had available for Federal income tax purposes unused short-term capital losses of approximately $606,000 and long-term capital losses of approximately $6,000 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. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary

emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio had 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 67.1%.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 Broadridge Financial Solutions, Inc. ("Broadridge").

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 Broadridge, 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, 2015, 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 for the period since the end of June 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 Broadridge. 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.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

23

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

24

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

25

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 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, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the BoardW. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMLSAN
1558891 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Emerging Markets Small Cap Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	6
Statement of Operations	7
Statements of Changes in Net Assets	8
Financial Highlights	9
Notes to Financial Statements	13
Privacy Notice	20
Director and Officer Information	23

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

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 Small Cap 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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Emerging Markets Small Cap Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs including redemption fees; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Emerging Markets Small Cap Portfolio Class I	$	1,000.00	$	1,037.00	$	1,016.86	$	8.15	$	8.07		1.61	%
Emerging Markets Small Cap Portfolio Class A		1,000.00		1,035.00		1,014.92		10.12		10.02		2.00
Emerging Markets Small Cap Portfolio Class C		1,000.00		1,030.20		1,011.19		13.88		13.75		2.75
Emerging Markets Small Cap Portfolio Class IS		1,000.00		1,037.00		1,016.91		8.10		8.02		1.60

*  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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Emerging Markets Small Cap Portfolio

	Shares		Value (000)
Common Stocks (85.3%)
Argentina (2.9%)
Banco Macro SA ADR		4,597	$	341
BBVA Banco Frances SA ADR		12,815		265
				606
Bangladesh (1.9%)
Brac Bank Ltd.		167,528		113
Olympic Industries Ltd.		63,768		281
				394
Brazil (5.3%)
Adecoagro SA (a)		20,420		224
Raia Drogasil SA		28,566		561
Ser Educacional SA (b)		90,408		351
				1,136
China (16.5%)
Bitauto Holdings Ltd. ADR (a)(c)		12,800		345
Canvest Environmental Protection Group Co., Ltd. (a)(d)		1,023,000		462
CT Environmental Group Ltd. (d)		1,282,000		375
Dawnrays Pharmaceutical Holdings Ltd. (d)		388,000		297
Fu Shou Yuan International Group Ltd. (d)		595,000		421
New Oriental Education & Technology Group, Inc. ADR		5,330		223
TAL Education Group ADR (a)		8,700		540
Wisdom Sports Group (a)(c)(d)		1,035,000		316
Yestar International Holdings Co., Ltd. (c)(d)		1,195,000		541
				3,520
Egypt (2.5%)
Credit Agricole Egypt SAE		79,501		197
Edita Food Industries SAE GDR		22,222		160
Integrated Diagnostics Holdings PLC (b)		40,527		161
				518
Indonesia (4.1%)
Jasa Marga Persero Tbk PT		891,900		357
Matahari Department Store Tbk PT		341,300		518
				875
Kenya (1.4%)
East African Breweries Ltd.		111,000		305
Korea, Republic of (10.3%)
Boryung Pharmaceutical Co., Ltd.		7,487		437
Daewon Pharmaceutical Co., Ltd.		24,243		414
Fila Korea Ltd.		2,534		200
Hansae Co., Ltd.		4,557		149
Hyundai Development Co-Engineering & Construction		6,178		214
LIG Nex1 Co., Ltd.		3,565		304
Loen Entertainment, Inc. (a)		4,136		264
Nasmedia Co., Ltd.		5,041		213
				2,195

	Shares		Value (000)
Mexico (5.1%)
Alsea SAB de CV		52,519	$	200
Banregio Grupo Financiero SAB de CV		92,951		536
Grupo Aeroportuario del Centro Norte SAB de CV		59,673		356
				1,092
Pakistan (3.0%)
Habib Bank Ltd.		171,400		323
Maple Leaf Cement Factory Ltd.		320,000		322
				645
Philippines (3.3%)
Puregold Price Club, Inc.		425,200		381
Xurpas, Inc.		917,000		326
				707
Poland (2.9%)
CCC SA		4,902		199
KRUK SA		4,578		235
LPP SA		148		190
				624
Romania (2.4%)
Banca Transilvania SA		509,306		262
BRD-Groupe Societe Generale SA		105,652		255
				517
South Africa (4.9%)
AVI Ltd.		65,014		366
Famous Brands Ltd.		26,504		229
Life Healthcare Group Holdings Ltd.		185,067		456
				1,051
Taiwan (10.5%)
Cub Elecparts, Inc.		32,000		363
Eclat Textile Co., Ltd.		47,735		461
Gourmet Master Co., Ltd.		33,000		291
Grape King Bio Ltd.		52,000		339
Mercuries Life Insurance Co. Ltd.		526,000		235
PChome Online, Inc.		30,000		332
Poya International Co., Ltd.		20,000		222
				2,243
Thailand (6.2%)
Carabao Group PCL (Foreign)		212,600		320
Mega Lifesciences PCL (Foreign)		657,100		311
Minor International PCL (Foreign)		301,200		346
Robinson Department Store PCL (Foreign)		177,400		343
				1,320
Turkey (2.1%)
Tat Gida Sanayi AS		115,822		220
Tofas Turk Otomobil Fabrikasi AS		27,082		224
				444
Total Common Stocks (Cost $16,715)				18,192

The accompanying notes are an integral part of the financial statements.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments (cont'd)

Emerging Markets Small Cap Portfolio

	Shares		Value (000)
Participation Notes (10.7%)
India (9.1%)
Bharat Financial Inclusion Ltd., Equity Linked Notes, expires 11/5/18 (a)		55,133	$	609
Credit Analysis & Research Ltd., Equity Linked Notes, expires 4/18/19 (a)		15,805		234
LIC Housing Finance Ltd., Equity Linked Notes, expires 12/29/17 (a)		41,150		303
Natco Pharma Ltd., Equity Linked Notes, expires 12/29/17 (a)		36,163		312
Redington India Ltd., Equity Linked Notes, expires 12/29/17 (a)		173,188		266
Voltas Ltd., Equity Linked Notes, expires 11/21/19 (a)		43,746		210
				1,934
Vietnam (1.6%)
Bank for Foreign Trade of Vietnam JSC, Equity Linked Notes, expires 12/17/18 (a)		162,590		345
Total Participation Notes (Cost $2,185)				2,279
Investment Company (2.4%)
India (2.4%)
iShares MSCI India Small-Cap ETF (Cost $496)		15,341		510
Short-Term Investments (6.0%)
Securities held as Collateral on Loaned Securities (4.4%)
Investment Company (4.4%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $930)		930,331		930
Investment Company (1.6%)
Morgan Stanley Institutional Liquidity Funds — Government Portfolio — Institutional Class (See Note G) (Cost $335)		334,745		335
Total Short-Term Investments (Cost $1,265)				1,265
Total Investments (104.4%) (Cost $20,661) Including $1,053 of Securities Loaned (e)(f)				22,246
Liabilities in Excess of Other Assets (–4.4%)				(932	)
Net Assets (100.0%)			$	21,314

(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, 2016.

(d)  Security trades on the Hong Kong exchange.

(e)  The approximate fair value and percentage of net assets, $14,250,000 and 66.9%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(f)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $2,434,000 and the aggregate gross unrealized depreciation is approximately $849,000 resulting in net unrealized appreciation of approximately $1,585,000.

ADR  American Depositary Receipt.

ETF  Exchange Traded Fund.

GDR  Global Depositary Receipt.

Portfolio Composition*

Classification	Percentage of Total Investments
Other**		52.0	%
Banks		12.4
Diversified Consumer Services		7.2
Pharmaceuticals		6.8
Food Products		5.9
Textiles, Apparel & Luxury Goods		5.6
Multi-line Retail		5.1
Hotels, Restaurants & Leisure		5.0
Total Investments		100.0	%

*  Percentages indicated are based upon total investments (excluding Securities held as Collateral on Loaned Securities) as of June 30, 2016.

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

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Small Cap Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value(1) (Cost $19,396)	$	20,981
Investment in Security of Affiliated Issuer, at Value (Cost $1,265)		1,265
Total Investments in Securities, at Value (Cost $20,661)		22,246
Foreign Currency, at Value (Cost $23)		23
Prepaid Offering Costs		69
Dividends Receivable		12
Receivable from Affiliate		—	@
Other Assets		19
Total Assets		22,369
Liabilities:
Collateral on Securities Loaned, at Value		930
Payable for Custodian Fees		47
Payable for Professional Fees		32
Payable for Offering Costs		25
Deferred Capital Gain Country Tax		7
Payable for Advisory Fees		4
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 C		—	@
Payable for Transfer Agency Fees — Class IS		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Other Liabilities		9
Total Liabilities		1,055
Net Assets	$	21,314
Net Assets Consist Of:
Paid-in-Capital	$	19,998
Undistributed Net Investment Income		47
Net Realized Loss		(309	)
Unrealized Appreciation (Depreciation) on:
Investments (Net of $7 of Deferred Capital Gain Country Tax)		1,578
Foreign Currency Translations		—	@
Net Assets	$	21,314
CLASS I:
Net Assets	$	21,281
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,997,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.66
CLASS A:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Redemption Price Per Share	$	10.64
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.59
Maximum Offering Price Per Share	$	11.23
CLASS C:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.59
CLASS IS:
Net Assets	$	11
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.66
(1) Including: Securities on Loan, at Value:	$	1,053

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Emerging Markets Small Cap Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $23 of Foreign Taxes Withheld)	$	207
Income from Securities Loaned — Net		7
Dividends from Securities of Affiliated Issuer (Note G)		1
Total Investment Income		215
Expenses:
Advisory Fees (Note B)		125
Offering Costs		75
Professional Fees		51
Custodian Fees (Note F)		46
Administration Fees (Note C)		8
Shareholder Reporting Fees		7
Registration Fees		4
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Pricing Fees		3
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Directors' Fees and Expenses		—	@
Other Expenses		3
Total Expenses		326
Waiver of Advisory Fees (Note B)		(125	)
Expenses Reimbursed by Adviser (Note B)		(37	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		161
Net Investment Income		54
Realized Loss:
Investments Sold		(303	)
Foreign Currency Transactions		(6	)
Net Realized Loss		(309	)
Change in Unrealized Appreciation (Depreciation):
Investments (Net of Increase in Deferred Capital Gain Country Tax of $7)		1,003
Foreign Currency Translations		—	@
Net Change in Unrealized Appreciation (Depreciation)		1,003
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		694
Net Increase in Net Assets Resulting from Operations	$	748

@  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, 2016

Emerging Markets Small Cap Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Period from December 15, 2015^ to December 31, 2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	54		$	9
Net Realized Loss		(309	)		(18	)
Net Change in Unrealized Appreciation (Depreciation)		1,003			575
Net Increase in Net Assets Resulting from Operations		748			566
Capital Share Transactions:(1)
Class I:
Subscribed		—			19,970
Class A:
Subscribed		—			10
Class C:
Subscribed		—			10
Class IS:
Subscribed		—			10
Net Increase in Net Assets Resulting from Capital Share Transactions		—			20,000
Total Increase in Net Assets		748			20,566
Net Assets:
Beginning of Period		20,566			—
End of Period (Including Undistributed Net Investment Income and Accumulated Net Investment Loss of $47 and $(7), respectively)	$	21,314		$	20,566
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		—			1,997
Class A:
Shares Subscribed		—			1
Class C:
Shares Subscribed		—			1
Class IS:
Shares Subscribed		—			1

^  Commencement of Operations.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 15, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.28		$	10.00
Income from Investment Operations:
Net Investment Income†		0.03			0.01
Net Realized and Unrealized Gain		0.35			0.27
Total from Investment Operations		0.38			0.28
Net Asset Value, End of Period	$	10.66		$	10.28
Total Return++		3.70	%#		2.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	21,281		$	20,536
Ratio of Expenses to Average Net Assets (1)		1.61	%+*		1.58	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.54	%+*		1.01	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.03	%*
Portfolio Turnover Rate		20	%#		5	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		3.23	%*		7.62	%*
Net Investment Loss to Average Net Assets		(1.08	)%*		(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 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.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 15, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.28		$	10.00
Income from Investment Operations:
Net Investment Income†		0.01			0.00	‡
Net Realized and Unrealized Gain		0.35			0.28
Total from Investment Operations		0.36			0.28
Net Asset Value, End of Period	$	10.64		$	10.28
Total Return++		3.50	%#		2.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (1)		2.00	%+*		1.97	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.15	%+*		0.62	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.03	%*
Portfolio Turnover Rate		20	%#		5	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		19.14	%*		21.45	%*
Net Investment Loss to Average Net Assets		(16.99	)%*		(18.86	)%*

^  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."

§  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, 2016

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 15, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.28		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.03	)		(0.00	)‡
Net Realized and Unrealized Gain		0.34			0.28
Total from Investment Operations		0.31			0.28
Net Asset Value, End of Period	$	10.59		$	10.28
Total Return++		3.02	%#		2.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (1)		2.75	%+*		2.73	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.61	)%+*		(0.14	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.02	%*
Portfolio Turnover Rate		20	%#		5	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		19.92	%*		22.20	%*
Net Investment Loss to Average Net Assets		(17.78	)%*		(19.61	)%*

^  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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Emerging Markets Small Cap Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 15, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.28		$	10.00
Income from Investment Operations:
Net Investment Income†		0.03			0.01
Net Realized and Unrealized Gain		0.35			0.27
Total from Investment Operations		0.38			0.28
Net Asset Value, End of Period	$	10.66		$	10.28
Total Return++		3.70	%#		2.80	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	11		$	10
Ratio of Expenses to Average Net Assets (1)		1.60	%+*		1.58	%+*
Ratio of Net Investment Income to Average Net Assets (1)		0.54	%+*		1.01	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.02	%*
Portfolio Turnover Rate		20	%#		5	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		18.57	%*		21.20	%*
Net Investment Loss to Average Net Assets		(16.43	)%*		(18.61	)%*

^  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 Small Cap Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio offers four classes of shares — Class I, Class A, Class C 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid

and asked prices obtained from one or more reputable brokers or dealers. 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.

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	—	$	304	$	—	$	304
Auto Components		—		363		—		363
Automobiles		—		224		—		224
Banks		1,142		1,150		—		2,292
Beverages		—		625		—		625
Commercial Services & Supplies		—		541		—		541
Construction & Engineering		—		214		—		214
Construction Materials		—		322		—		322
Consumer Finance		—		235		—		235
Diversified Consumer Services		1,114		421		—		1,535
Food & Staples Retailing		561		381		—		942
Food Products		224		1,027		—		1,251
Health Care Providers & Services		—		617		—		617
Hotels, Restaurants & Leisure		200		866		—		1,066
Independent Power Producers & Energy Traders		—		462		—		462
Insurance		—		235		—		235
Internet Software & Services		345		332		—		677
Media		—		793		—		793
Multi-line Retail		—		1,083		—		1,083
Personal Products		—		339		—		339
Pharmaceuticals		—		1,459		—		1,459
Software		—		326		—		326
Textiles, Apparel & Luxury Goods		—		1,199		—		1,199
Transportation Infrastructure		356		357		—		713
Water Utilities		—		375		—		375
Total Common Stocks		3,942		14,250		—		18,192
Participation Notes		—		2,279		—		2,279
Investment Company		510		—		—		510
Short-Term Investments
Investment Company		1,265		—		—		1,265
Total Assets	$	5,717	$	16,529	$	—	$	22,246

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, 2016, securities with a total value of approximately $912,000 transferred from Level 2 to Level 1. Securities that were valued using other significant observable inputs at December 31, 2015 were valued using unadjusted quoted prices at June 30, 2016. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the

close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

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 securities of companies based in the U.S. 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 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.  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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

The following table presents financial instruments that are subject to enforceable netting arrangements as of June 30, 2016.

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)
$	1,053	(a)	$	—	$	(1,053	)(b)(c)	$	0

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

(b) The Portfolio received cash collateral of approximately $930,000 which was subsequently invested in a Morgan Stanley Institutional Liquidity Funds as reported in the Portfolio of Investments. In addition, the Portfolio received non-cash collateral of approximately $250,000 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.

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

The Portfolio has adopted the disclosure provisions of FASB Accounting Standards Update No. 2014-11 ("ASU No. 2014-11"), "Transfers & Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures".

ASU No. 2014-11 is intended to provide increased transparency about the types of collateral pledged in securities lending transactions and other similar transactions that are accounted for as secured borrowing.

The following table displays a breakdown of transactions accounted for as secured borrowings, the gross obligations by class of collateral pledged, and the remaining contractual maturity of those transactions as of June 30, 2016.

	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous (000)		<30 days (000)		Between 30 & 90 days (000)		>90 days (000)		Total (000)
Securities Lending Transactions
Common Stocks	$	930	$	—	$	—	$	—	$	930
Total Borrowings	$	930	$	—	$	—	$	—	$	930
Gross amount of recognized liabilities for securities lending transactions									$	930

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 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 an annual rate of 1.25% of the average 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,

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

interest and other extraordinary expenses (including litigation), will not exceed 1.65% for Class I shares, 2.00% for Class A shares, 2.75% for Class C shares and 1.60% 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 as 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, 2016, approximately $125,000 of advisory fees were waived and approximately $40,000 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 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 six months ended June 30, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $4,250,000 and $4,001,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	841	$	4,146	$	3,722	$	1	$	1,265

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

The tax character of distributions paid may differ from the character of distributions shown in the Statement of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during fiscal 2015.

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, 2015:

Accumulated Net Investment Loss (000)			Net Realized Gain (000)		Paid-in- Capital (000)
$	(16	)	$	18	$	(2	)

At December 31, 2015, the Portfolio had no distributable earnings on a tax basis.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

23

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIEMSCSAN
1559380 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Asia Opportunity
Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	6
Statements of Changes in Net Assets	7
Financial Highlights	8
Notes to Financial Statements	12
Privacy Notice	20
Director and Officer Information	23

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Porfolio, 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, 2016

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Asia 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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Asia Opportunity Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs, including redemptions fees; and (2) ongoing costs, which may include 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, 2016 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 1/1/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Asia Opportunity Portfolio Class I	$	1,000.00	$	1,016.00	$	1,019.49	$	5.41	$	5.42		1.08	%
Asia Opportunity Portfolio Class A		1,000.00		1,015.00		1,017.70		7.21		7.22		1.44
Asia Opportunity Portfolio Class C		1,000.00		1,011.00		1,013.97		10.95		10.97		2.19
Asia Opportunity Portfolio Class IS		1,000.00		1,016.00		1,019.69		5.21		5.22		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 182/366 (to reflect the most recent one-half year period).

**  Annualized.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Asia Opportunity Portfolio

	Shares		Value (000)
Common Stocks (81.6%)
China (46.8%)
58.com, Inc. ADR (a)		2,604	$	120
Autohome, Inc. ADR (a)		916		18
China Resources Beer Holdings Company Ltd. (b)		124,000		272
Ctrip.com International Ltd. ADR (a)		3,914		161
Foshan Haitian Flavouring & Food Co., Ltd., Class A		61,200		281
Inner Mongolia Yili Industrial Group Co., Ltd., Class A		49,200		124
Jiangsu Hengrui Medicine Co., Ltd., Class A		39,760		240
Kweichow Moutai Co., Ltd., Class A		5,800		255
Phoenix Healthcare Group Co., Ltd. (b)		122,500		170
Shenzhou International Group Holdings Ltd. (b)		23,000		111
TAL Education Group ADR (a)		9,320		578
Tencent Holdings Ltd. (b)		21,500		490
				2,820
Hong Kong (4.8%)
AIA Group Ltd.		48,200		290
India (4.9%)
HDFC Bank Ltd. ADR		4,450		295
Korea, Republic of (14.0%)
Amorepacific Corp.		713		269
Loen Entertainment, Inc. (a)		1,692		108
Medy-Tox, Inc.		692		261
Osstem Implant Co., Ltd. (a)		2,135		145
ViroMed Co., Ltd. (a)		472		58
				841
Philippines (2.0%)
Universal Robina Corp.		27,490		122
Taiwan (3.0%)
Taiwan Semiconductor Manufacturing Co., Ltd.		35,000		177
United States (6.1%)
Cognizant Technology Solutions Corp., Class A (a)		6,445		369
Total Common Stocks (Cost $4,762)				4,914
Participation Notes (11.7%)
China (10.7%)
Jiangsu Yanghe Brewery, Class A, Equity Linked Notes, expires 1/23/17 (a)		27,441		298
Midea Group Co., Ltd., Class A, Equity Linked Notes, expires 1/6/20 (a)		49,050		176
Suofeiya Home Collection Co., Ltd, Equity Linked Notes, expires 4/25/17 (a)		20,000		169
				643
India (1.0%)
Monsanto India Ltd., Equity Linked Notes, expires 12/29/17 (a)		1,569		61
Total Participation Notes (Cost $613)				704

	Notional Amount (000)		Value (000)
Call Options Purchased (0.0%)
Foreign Currency Options (0.0%)
USD/CNY December 2016 @ CNY 7.60, Royal Bank of Scotland		607	$	1
USD/CNY February 2017 @ CNY 8.70, Royal Bank of Scotland		102		—	@
Total Call Options Purchased (Cost $4)				1
	Shares
Short-Term Investment (5.0%)
Investment Company (5.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $300)		299,991		300
Total Investments (98.3%) (Cost $5,679) (c)(d)				5,919
Other Assets in Excess of Liabilities (1.7%)				103
Net Assets (100.0%)			$	6,022

(a)  Non-income producing security.

(b)  Security trades on the Hong Kong exchange.

(c)  The approximate fair value and percentage of net assets, $3,373,000 and 56.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in Note A-1 within the Notes to the Financial Statements.

(d)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $442,000 and the aggregate gross unrealized depreciation is approximately $202,000 resulting in net unrealized appreciation of approximately $240,000.

@  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*		35.1	%
Beverages		13.9
Internet Software & Services		10.6
Diversified Consumer Services		9.8
Food Products		8.9
Information Technology Services		6.2
Biotechnology		5.4
Short-Term Investment		5.1
Banks		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Asia Opportunity Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,379)	$	5,619
Investment in Security of Affiliated Issuer, at Value (Cost $300)		300
Total Investments in Securities, at Value (Cost $5,679)		5,919
Prepaid Offering Costs		75
Receivable for Investments Sold		59
Due from Adviser		57
Dividends Receivable		7
Interest Receivable		—	@
Receivable from Affiliate		—	@
Other Assets		18
Total Assets		6,135
Liabilities:
Payable for Offering Costs		34
Bank Overdraft		25
Payable for Professional Fees		21
Payable for Investments Purchased		19
Payable for Custodian Fees		5
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		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		9
Total Liabilities		113
Net Assets	$	6,022
Net Assets Consist Of:
Paid-in-Capital	$	5,900
Accumulated Net Investment Income		14
Net Realized Loss		(132	)
Unrealized Appreciation (Depreciation) on:
Investments		240
Foreign Currency Translations		—	@
Net Assets	$	6,022
CLASS I:
Net Assets	$	5,677
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		557,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.19
CLASS A:
Net Assets	$	325
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		31,884
Net Asset Value, Redemption Price Per Share	$	10.18
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.56
Maximum Offering Price Per Share	$	10.74
CLASS C:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.14
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	10.19

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Asia Opportunity Portfolio

Statement of Operations	Six Months Ended June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $3 of Foreign Taxes Withheld)	$	36
Dividends from Securiies of Affiliated Issuer (Note G)		1
Interest from Securities of Unaffiliated Issuers		—	@
Total Investment Income		37
Expenses:
Offering Costs		75
Professional Fees		44
Advisory Fees (Note B)		22
Shareholder Reporting Fees		7
Custodian Fees (Note F)		6
Registration Fees		4
Transfer Agency Fees — Class I (Note E)		1
Transfer Agency Fees — Class A (Note E)		1
Transfer Agency Fees — Class C (Note E)		1
Transfer Agency Fees — Class IS (Note E)		1
Administration Fees (Note C)		2
Pricing Fees		2
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Directors' Fees and Expenses		—	@
Other Expenses		7
Total Expenses		173
Expenses Reimbursed by Adviser (Note B)		(117	)
Waiver of Advisory Fees (Note B)		(22	)
Reimbursement of Class Specific Expenses — Class A (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class C (Note B)		(1	)
Reimbursement of Class Specific Expenses — Class IS (Note B)		(1	)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		31
Net Investment Income		6
Realized Gain (Loss):
Investments Sold		(133	)
Foreign Currency Transactions		1
Net Realized Loss		(132	)
Change in Unrealized Appreciation (Depreciation):
Investments		233
Foreign Currency Translations		(2	)
Net Change in Unrealized Appreciation (Depreciation)		231
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		99
Net Increase in Net Assets Resulting from Operations	$	105

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Asia Opportunity Portfolio

Statements of Changes in Net Assets	Six Months Ended June 30, 2016 (unaudited) (000)			Period from December 29, 2015^ to December 31,2015 (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income (Loss)	$	6		$	(—	@)
Net Realized Gain (Loss)		(132	)		8
Net Change in Unrealized Appreciation (Depreciation)		231			9
Net Increase in Net Assets Resulting from Operations		105			17
Capital Share Transactions:(1)
Class I:
Subscribed		—			5,570
Class A:
Subscribed		300			10
Class C:
Subscribed		—			10
Class IS:
Subscribed		—			10
Net Increase in Net Assets Resulting from Capital Share Transactions		300			5,600
Total Increase in Net Assets		405			5,617
Net Assets:
Beginning of Period		5,617			—
End of Period (Including Accumulated Undistributed Net Investment Income of $14 and $8)	$	6,022		$	5,617
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		—			557
Class A:
Shares Subscribed		31			1
Class C:
Shares Subscribed		—			1
Class IS:
Shares Subscribed		—			1

@  Amount is less than $500.

^  Commencement of Operations.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Asia Opportunity Portfolio

	Class I
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.00	)‡
Net Realized and Unrealized Gain		0.15			0.03
Total from Investment Operations		0.16			0.03
Net Asset Value, End of Period	$	10.19		$	10.03
Total Return++		1.60	%#		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,677		$	5,587
Ratio of Expenses to Average Net Assets (1)		1.08	%+*		1.03	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.26	%+*		(0.71	)%*+
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.04	%*
Portfolio Turnover Rate		20	%#		0	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		6.19	%*		125.50	%*
Net Investment Loss to Average Net Assets		(4.85	)%*		(125.18	)%*

^  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.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Asia Opportunity Portfolio

	Class A
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.03			(0.00	)‡
Net Realized and Unrealized Gain		0.12			0.03
Total from Investment Operations		0.15			0.03
Net Asset Value, End of Period	$	10.18		$	10.03
Total Return++		1.50	%#		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	325		$	10
Ratio of Expenses to Average Net Assets (1)		1.44	%+*		1.40	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.57	%+*		(1.09	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.05	%*
Portfolio Turnover Rate		20	%#		0	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		8.00	%*		139.50	%*
Net Investment Loss to Average Net Assets		(5.99	)%*		(139.19	)%*

^  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 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."

#  Not Annualized.

*  Annualized.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Asia Opportunity Portfolio

	Class C
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Loss†		(0.04	)		(0.00	)‡
Net Realized and Unrealized Gain		0.15			0.03
Total from Investment Operations		0.11			0.03
Net Asset Value, End of Period	$	10.14		$	10.03
Total Return++		1.10	%#		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10		$	10
Ratio of Expenses to Average Net Assets (1)		2.19	%+*		2.17	%+*
Ratio of Net Investment Loss to Average Net Assets (1)		(0.85	)%+*		(1.84	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*		0.03	%*
Portfolio Turnover Rate		20	%#		0	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		26.40	%*		140.25	%*
Net Investment Loss to Average Net Assets		(25.06	)%*		(139.92	)%*

^  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."

#  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, 2016

Financial Highlights

Asia Opportunity Portfolio

	Class IS
Selected Per Share Data and Ratios	Six Months Ended June 30, 2016 (unaudited)			Period from December 29, 2015^ to December 31, 2015
Net Asset Value, Beginning of Period	$	10.03		$	10.00
Income (Loss) from Investment Operations:
Net Investment Income (Loss)†		0.01			(0.00	)‡
Net Realized and Unrealized Gain		0.15			0.03
Total from Investment Operations		0.16			0.03
Net Asset Value, End of Period	$	10.19		$	10.03
Total Return++		1.60	%#		0.30	%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10		$	10
Ratio of Expenses to Average Net Assets (1)		1.04	%+*		1.02	%+*
Ratio of Net Investment Income (Loss) to Average Net Assets (1)		0.30	%+*		(0.69	)%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.00	%§*		0.03	%*
Portfolio Turnover Rate		20	%#		0	%
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		25.06	%*		139.25	%*
Net Investment Loss to Average Net Assets		(23.72	)%*		(138.92	)%*

^  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, 2016

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-nine 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 Asia Opportunity Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio offers four classes of shares — Class I, Class A, Class C 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and

asked prices obtained from one or more reputable brokers or dealers. 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 and swaps 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

12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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	$	295	$	—	$	—	$	295
Beverages		—		527		—		527
Biotechnology		—		319		—		319
Diversified Consumer Services		578		—		—		578
Food Products		—		527		—		527
Health Care Equipment & Supplies		—		145		—		145
Health Care Providers & Services		—		170		—		170
Information Technology Services		369		—		—		369
Insurance		—		290		—		290
Internet & Catalog Retail		161		—		—		161
Internet Software & Services		138		490		—		628
Media		—		108		—		108
Personal Products		—		269		—		269
Pharmaceuticals		—		240		—		240
Semiconductors & Semiconductor Equipment		—		177		—		177
Textiles, Apparel & Luxury Goods		—		111		—		111
Total Common Stocks		1,541		3,373		—		4,914
Participation Notes		—		704		—		704
Call Options Purchased		—		1		—		1
Short-Term Investment
Investment Company		300		—		—		300
Total Assets	$	1,841	$	4,078	$	—	$	5,919

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, 2016, the Portfolio did not have any investments transfer between investment levels. At June 30, 2016, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification.

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

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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 foreign currency, or futures contract on the underlying instrument or foreign currency, 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

	Asset Derivatives Statement of Assets and Liabilities Location	Primary Risk Exposure	Value (000)
Options Purchased	Investments, at Value (Call Options Purchased)	Currency Risk	$	1	(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, 2016 in accordance with ASC 815.

Realized Gain (Loss)
Primary Risk Exposure	Derivative Type	Value (000)
Currency Risk	Investments (Options Purchased)	$	(1	)(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 (Options Purchased)	$	(3	)(c)

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

At June 30, 2016, 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)
Options Purchased	$	1	(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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	1	$	—	$	—	$	1

For the six months ended June 30, 2016, the approximate average monthly amount outstanding for each derivative type is as follows:

Options Purchased:
Average monthly notional amount	418,000

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.  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 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 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 and 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	%

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

For the six months ended June 30, 2016, 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 1.10% for Class I shares, 1.45% for Class A shares, 2.20% for Class C shares and 1.05% 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 as 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, 2016, approximately $22,000 of advisory fees were waived and approximately $120,000 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 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 six months ended June 30, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $1,188,000 and $1,051,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the six months ended June 30, 2016.

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. 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, 2016, 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, 2016 is as follows:

Value December 31, 2015 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)		Value June 30, 2016 (000)
$	4,820	$	1,197	$	5,717	$	1	$	300

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the six months ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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 Statement of Changes

in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. There were no distributions paid during fiscal 2015.

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, resulted in the following reclassifications among the components of net assets at December 31, 2015:

Accumulated Undistributed Net Investment Income (000)		Accumulated Net Realized Gain (000)			Paid-in- Capital (000)
$	8	$	(8	)	$	—

At December 31, 2015, 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	$	—

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

23

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIASOPPSAN
1559366 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Concentrated Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	7
Statement of Changes in Net Assets	8
Financial Highlights	9
Notes to Financial Statements	13
Investment Advisory Agreement Approval	18
Privacy Notice	20
Director and Officer Information	23

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Concentrated Portfolio (the "Portfolio") performed during the period beginning May 27, 2016 (when the Portfolio launched) and ended June 30, 2016.

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Global Concentrated Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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 5/27/16-6/30/16.

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 5/27/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Global Concentrated Portfolio Class I^	$	1,000.00	$	976.00	$	1,003.41	$	0.81	$	0.82		0.97	%
Global Concentrated Portfolio Class A^		1,000.00		976.00		1,003.11		1.11		1.13		1.33
Global Concentrated Portfolio Class C^		1,000.00		975.00		1,002.48		1.73		1.76		2.07
Global Concentrated Portfolio Class IS^		1,000.00		976.00		1,003.44		0.79		0.80		0.94

*  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 31/366 (to reflect actual days in the period).

**  Annualized.

^  The Portfolio commenced operations on 5/27/16.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Concentrated Portfolio

	Shares		Value (000)
Common Stocks (94.6%)
Canada (2.5%)
Agnico-Eagle Mines Ltd.		2,536	$	135
China (4.7%)
Tencent Holdings Ltd. ADR		11,064		254
Japan (8.2%)
Nippon Telegraph & Telephone Corp. ADR		9,489		447
Switzerland (1.5%)
UBS Group AG (Registered) (Registered) (a)		6,466		84
Taiwan (7.8%)
Taiwan Semiconductor Manufacturing Co. Ltd. ADR		16,041		421
United Kingdom (4.7%)
Shire PLC ADR		1,387		255
United States (65.2%)
AerCap Holdings N.V. (a)		3,370		113
Allergan PLC (a)		1,779		411
Alphabet, Inc., Class A (a)		350		246
AmTrust Financial Services, Inc.		7,627		187
Comcast Corp., Class A		3,900		254
CVS Health Corp.		4,978		477
Emerson Electric Co.		4,921		257
Franklin Resources, Inc.		5,410		181
Illinois Tool Works, Inc.		1,523		159
National Oilwell Varco, Inc.		3,698		124
QUALCOMM, Inc.		2,800		150
Ryanair Holdings PLC ADR		5,609		390
Schlumberger Ltd.		4,785		378
Synchrony Financial (a)		8,426		213
				3,540
Total Common Stocks (Cost $5,260)				5,136

	Shares		Value (000)
Short-Term Investment (2.9%)
Investment Company (2.9%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $158)		157,537	$	158
Total Investments (97.5%) (Cost $5,418) (b)				5,294
Other Assets in Excess of Liabilities (2.5%)				137
Net Assets (100.0%)			$	5,431

(a)  Non-income producing security.

(b)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $107,000 and the aggregate gross unrealized depreciation is approximately $231,000 resulting in net unrealized depreciation of approximately $124,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		32.7	%
Semiconductors & Semiconductor Equipment		10.8
Energy Equipment & Services		9.5
Internet Software & Services		9.4
Food & Staples Retailing		9.0
Diversified Telecommunication Services		8.4
Pharmaceuticals		7.8
Airlines		7.4
Capital Markets		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Concentrated Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,260)	$	5,136
Investment in Security of Affiliated Issuer, at Value (Cost $158)		158
Total Investments in Securities, at Value (Cost $5,418)		5,294
Receivable for Portfolio Shares Sold		115
Prepaid Offering Costs		89
Receivable for Investments Sold		39
Dividends Receivable		15
Due from Adviser		15
Receivable from Affiliate		—	@
Other Assets		6
Total Assets		5,573
Liabilities:
Payable for Offering Costs		92
Payable for Investments Purchased		45
Payable for Custodian Fees		2
Payable for Professional Fees		1
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		2
Total Liabilities		142
Net Assets	$	5,431
Net Assets Consist Of:
Paid-in-Capital	$	5,551
Undistributed Net Investment Income		11
Net Realized Loss		(7	)
Unrealized Appreciation (Depreciation) on:
Investments		(124	)
Net Assets	$	5,431

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Concentrated Portfolio

Statement of Assets and Liabilities (cont'd)	June 30, 2016 (000)
CLASS I:
Net Assets	$	5,002
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		512,417
Net Asset Value, Offering and Redemption Price Per Share	$	9.76
CLASS A:
Net Assets	$	157
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		16,172
Net Asset Value, Redemption Price Per Share	$	9.76
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.54
Maximum Offering Price Per Share	$	10.30
CLASS C:
Net Assets	$	262
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		26,867
Net Asset Value, Offering and Redemption Price Per Share	$	9.75
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	9.76

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Concentrated Portfolio

Statement of Operations	Period from May 27, 2016^ to June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $3 of Foreign Taxes Withheld)	$	15
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		15
Expenses:
Offering Costs		8
Professional Fees		7
Advisory Fees (Note B)		3
Custodian Fees (Note F)		2
Shareholder Reporting Fees		1
Transfer Agency Fees — Class I (Note E)		—	@
Transfer Agency Fees — Class A (Note E)		—	@
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		—	@
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		—	@
Pricing Fees		—	@
Other Expenses		1
Total Expenses		22
Expenses Reimbursed by Adviser (Note B)		(15	)
Waiver of Advisory Fees (Note B)		(3	)
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)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		4
Net Investment Income		11
Realized Loss:
Investments Sold		(7	)
Change in Unrealized Appreciation (Depreciation):
Investments		(124	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(131	)
Net Decrease in Net Assets Resulting from Operations	$	(120	)

^  Commencement of Operations.

@  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, 2016

Global Concentrated Portfolio

Statement of Changes in Net Assets	Period from May 27, 2016^ to June 30, 2016 (unaudited) (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	11
Net Realized Loss		(7	)
Net Change in Unrealized Appreciation (Depreciation)		(124	)
Net Decrease in Net Assets Resulting from Operations		(120	)
Capital Share Transactions:(1)
Class I:
Subscribed		5,122
Redeemed		(2	)
Class A:
Subscribed		161
Class C:
Subscribed		260
Class IS:
Subscribed		10
Net Increase in Net Assets Resulting from Capital Share Transactions		5,551
Total Increase in Net Assets		5,431
Net Assets:
Beginning of Period		—
End of Period (Including Undistributed Net Investment Income of $11)	$	5,431
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		512
Shares Redeemed		(—	@@)
Net Increase in Class I Shares Outstanding		512
Class A:
Shares Subscribed		16
Class C:
Shares Subscribed		27
Class IS:
Shares Subscribed		1

^  Commencement of Operations.

@@  Amount is less than 500 shares.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Concentrated Portfolio

	Class I
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.26	)
Total from Investment Operations		(0.24	)
Net Asset Value, End of Period	$	9.76
Total Return++		(2.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,002
Ratio of Expenses to Average Net Assets (1)		0.97	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.41	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.09	%*
Net Investment Loss to Average Net Assets		(1.71	)%*

^  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.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Concentrated Portfolio

	Class A
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.04
Net Realized and Unrealized Loss		(0.28	)
Total from Investment Operations		(0.24	)
Net Asset Value, End of Period	$	9.76
Total Return++		(2.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	157
Ratio of Expenses to Average Net Assets (1)		1.33	%+*
Ratio of Net Investment Income to Average Net Assets (1)		4.54	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		6.86	%*
Net Investment Loss to Average Net Assets		(0.99	)%*

^  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.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Concentrated Portfolio

	Class C
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.05
Net Realized and Unrealized Loss		(0.30	)
Total from Investment Operations		(0.25	)
Distributions from and/or in Excess of:
Net Asset Value, End of Period	$	9.75
Total Return++		(2.50	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	262
Ratio of Expenses to Average Net Assets (1)		2.07	%+*
Ratio of Net Investment Income to Average Net Assets (1)		5.93	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		8.12	%*
Net Investment Loss to Average Net Assets		(0.12	)%*

^  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 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, 2016

Financial Highlights

Global Concentrated Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.26	)
Total from Investment Operations		(0.24	)
Net Asset Value, End of Period	$	9.76
Total Return++		(2.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10
Ratio of Expenses to Average Net Assets (1)		0.94	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.38	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		19.04	%*
Net Investment Loss to Average Net Assets		(15.72	)%*

^  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 Concentrated Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio commenced operations on May 27, 2016, and offers four classes of shares — Class I, Class A, Class C 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the

relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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) 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 (5) 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

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016.

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
Airlines	$	390	$	—	$	—	$	390
Biotechnology		255		—		—		255
Capital Markets		265		—		—		265
Consumer Finance		213		—		—		213
Diversified Telecommunication Services		447		—		—		447
Electrical Equipment		257		—		—		257
Energy Equipment & Services		502		—		—		502

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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	$	477	$	—	$	—	$	477
Insurance		187		—		—		187
Internet Software & Services		500		—		—		500
Machinery		159		—		—		159
Media		254		—		—		254
Metals & Mining		135		—		—		135
Pharmaceuticals		411		—		—		411
Semiconductors & Semiconductor Equipment		571		—		—		571
Trading Companies & Distributors		113		—		—		113
Total Common Stocks		5,136		—		—		5,136
Short-Term Investment
Investment Company		158		—		—		158
Total Assets	$	5,294	$	—	$	—	$	5,294

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, 2016, the Portfolio did not have any investments transfer between investment levels.

3.  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.

4.  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 annually. Net realized capital gains, if any, are distributed at least annually.

5.  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 and 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	%

For the period ended June 30, 2016, 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 1.00% for Class I shares, 1.35% for Class A 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 as 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, 2016, approximately $3,000 of advisory fees were waived and approximately $15,000 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 "Distribu-

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

tor"), 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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $5,480,000 and $213,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2016.

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 period ended June 30, 2016, 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 period ended June 30, 2016 is as follows:

Value May 27, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	—	$	5,291	$	5,133	$	—	@	$	158

@ Amount is less than $500.

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the period ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 that 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 Statement 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.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 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 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 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 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 would be competitive with its peer group average and the anticipated total expense ratio would be acceptable.

Economies of Scale

The Board considered the growth prospects of the Portfolio and the structure of the proposed management fee schedule, which includes breakpoints 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.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

23

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCNPSAN
1559351 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

Global Core Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	7
Statement of Changes in Net Assets	8
Financial Highlights	9
Notes to Financial Statements	13
Investment Advisory Agreement Approval	18
Privacy Notice	20
Director and Officer Information	23

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in Global Core Portfolio (the "Portfolio") performed during the period beginning May 27, 2016 (when the Portfolio launched) and ended June 30, 2016.

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

Global Core Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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 5/27/16-6/30/16.

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 5/27/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
Global Core Portfolio Class I^	$	1,000.00	$	973.00	$	1,003.41	$	0.81	$	0.82		0.97	%
Global Core Portfolio Class A^		1,000.00		972.00		1,003.11		1.11		1.13		1.33
Global Core Portfolio Class C^		1,000.00		972.00		1,002.48		1.73		1.76		2.07
Global Core Portfolio Class IS^		1,000.00		973.00		1,003.44		0.79		0.80		0.94

*  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 31/366 (to reflect the actual days in the period).

**  Annualized.

^  The Portfolio commenced operations on 05/27/2016.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

Global Core Portfolio

	Shares		Value (000)
Common Stocks (95.4%)
Canada (1.2%)
Agnico-Eagle Mines Ltd.		1,207	$	65
China (2.7%)
Tencent Holdings Ltd. ADR		6,494		149
Japan (7.5%)
Nippon Telegraph & Telephone Corp. ADR		5,379		253
ORIX Corp. ADR		1,156		74
Sumitomo Mitsui Financial Group, Inc. ADR		2,165		12
Toyota Motor Corp. ADR		739		74
				413
Switzerland (1.9%)
UBS Group AG (Registered) (a)		8,291		107
Taiwan (5.4%)
Taiwan Semiconductor Manufacturing Co. Ltd. ADR		11,413		299
United Kingdom (11.4%)
British American Tobacco PLC ADR		822		107
BT Group PLC ADR		8,462		236
Lloyds Banking Group PLC ADR		6,862		20
Shire PLC ADR		1,446		266
				629
United States (65.3%)
AerCap Holdings N.V. (a)		3,658		123
Allergan PLC (a)		1,337		309
Allied World Assurance Co. Holdings AG		3,059		107
Alphabet, Inc., Class A (a)		238		167
Amgen, Inc.		862		131
AmTrust Financial Services, Inc.		2,733		67
Apple, Inc.		2,066		198
Comcast Corp., Class A		3,944		257
CVS Health Corp.		3,850		369
Danaher Corp.		580		59
Emerson Electric Co.		3,192		166
Franklin Resources, Inc.		4,410		147
Illinois Tool Works, Inc.		1,339		139
Invesco Ltd.		1,026		26
JPMorgan Chase & Co.		895		56
Mastercard, Inc., Class A		971		86
National Oilwell Varco, Inc.		2,627		88
Newell Brands, Inc.		2,321		113
Northrop Grumman Corp.		943		210
Phillips 66		1,284		102
QUALCOMM, Inc.		1,245		67
Ryanair Holdings PLC ADR		3,500		243
Schlumberger Ltd.		2,453		194
Synchrony Financial (a)		1,833		46
United Parcel Service, Inc., Class B		304		33
Verizon Communications, Inc.		1,751		98
				3,601
Total Common Stocks (Cost $5,416)				5,263

	Shares		Value (000)
Short-Term Investment (4.0%)
Investment Company (4.0%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (See Note G) (Cost $218)		217,877	$	218
Total Investments (99.4%) (Cost $5,634) (b)				5,481
Other Assets in Excess of Liabilities (0.6%)				32
Net Assets (100.0%)			$	5,513

(a)  Non-income producing security.

(b)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $92,000 and the aggregate gross unrealized depreciation is approximately $245,000 resulting in net unrealized depreciation of approximately $153,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		47.0	%
Diversified Telecommunication Services		10.7
Biotechnology		7.2
Food & Staples Retailing		6.7
Semiconductors & Semiconductor Equipment		6.7
Internet Software & Services		5.8
Pharmaceuticals		5.6
Energy Equipment & Services		5.2
Capital Markets		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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Core Portfolio

Statement of Assets and Liabilities	Period from May 27, 2016^ to June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,416)	$	5,263
Investment in Security of Affiliated Issuer, at Value (Cost $218)		218
Total Investments in Securities, at Value (Cost $5,634)		5,481
Cash		—	@
Receivable for Portfolio Shares Sold		159
Prepaid Offering Costs		89
Due from Adviser		15
Dividends Receivable		10
Receivable from Affiliate		—	@
Other Assets		6
Total Assets		5,760
Liabilities:
Payable for Investments Purchased		127
Payable for Offering Costs		92
Payable for Portfolio Shares Redeemed		24
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 C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		2
Total Liabilities		247
Net Assets	$	5,513
Net Assets Consist Of:
Paid-in-Capital	$	5,662
Accumulated Net Investment Income		8
Accumulated Net Realized Loss		(4	)
Unrealized Appreciation (Depreciation) on:
Investments		(153	)
Net Assets	$	5,513

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Core Portfolio

Statement of Assets and Liabilities (cont'd)	Period from May 27, 2016^ to June 30, 2016 (000)
CLASS I:
Net Assets	$	5,009
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		514,919
Net Asset Value, Offering and Redemption Price Per Share	$	9.73
CLASS A:
Net Assets	$	416
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		42,828
Net Asset Value, Redemption Price Per Share	$	9.72
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.54
Maximum Offering Price Per Share	$	10.26
CLASS C:
Net Assets	$	78
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		8,064
Net Asset Value, Offering and Redemption Price Per Share	$	9.72
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	9.73

^  Commencement of Operations.

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Global Core Portfolio

Statement of Operations	Period from May 27, 2016^ to June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	12
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		12
Expenses:
Offering Costs		8
Professional Fees		7
Advisory Fees (Note B)		3
Custodian Fees (Note F)		2
Shareholder Reporting Fees		1
Transfer Agency Fees — Class I (Note E)		—	@
Transfer Agency Fees — Class A (Note E)		—	@
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		—	@
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		—	@
Pricing Fees		—	@
Other Expenses		1
Total Expenses		22
Waiver of Advisory Fees (Note B)		(3	)
Expenses Reimbursed by Adviser (Note B)		(15	)
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)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		4
Net Investment Income		8
Realized Loss:
Investments Sold		(4	)
Change in Unrealized Appreciation (Depreciation):
Investments		(153	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(157	)
Net Decrease in Net Assets Resulting from Operations	$	(149	)

^  Commencement of Operations.

@  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, 2016

Global Core Portfolio

Statement of Changes in Net Assets	Period from May 27, 2016^ to June 30, 2016 (unaudited) (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	8
Net Realized Loss		(4	)
Net Change in Unrealized Appreciation (Depreciation)		(153	)
Net Decrease in Net Assets Resulting from Operations		(149	)
Capital Share Transactions:(1)
Class I:
Subscribed		5,145
Class A:
Subscribed		451
Redeemed		(24	)
Class C:
Subscribed		80
Class IS:
Subscribed		10
Net Increase in Net Assets Resulting from Capital Share Transactions		5,662
Total Increase in Net Assets		5,513
Net Assets:
Beginning of Period		—
End of Period (Including Undistributed Net Investment Income of $8)	$	5,513
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		515
Class A:
Shares Subscribed		45
Shares Redeemed		(2	)
Net Increase in Class A Shares Outstanding		43
Class C:
Shares Subscribed		8
Class IS:
Shares Subscribed		1

^  Commencement of Operations.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Core Portfolio

	Class I
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.28	)
Total from Investment Operations		(0.27	)
Net Asset Value, End of Period	$	9.73
Total Return++		(2.70	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,009
Ratio of Expenses to Average Net Assets (1)		0.97	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.68	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		2	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.02	%*
Net Investment Loss to Average Net Assets		(2.37	)%*

^  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 fund code not found 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.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Core Portfolio

	Class A
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.02
Net Realized and Unrealized Loss		(0.30	)
Total from Investment Operations		(0.28	)
Net Asset Value, End of Period	$	9.72
Total Return++		(2.80	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	416
Ratio of Expenses to Average Net Assets (1)		1.33	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.63	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%*
Portfolio Turnover Rate		2	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		5.85	%*
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 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.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Core Portfolio

	Class C
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.03
Net Realized and Unrealized Loss		(0.31	)
Total from Investment Operations		(0.28	)
Net Asset Value, End of Period	$	9.72
Total Return++		(2.80	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	78
Ratio of Expenses to Average Net Assets (1)		2.07	%+*
Ratio of Net Investment Income to Average Net Assets (1)		3.45	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.03	%*
Portfolio Turnover Rate		2	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		10.15	%*
Net Investment Loss to Average Net Assets		(4.63	)%*

^  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.
11

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

Global Core Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.28	)
Total from Investment Operations		(0.27	)
Net Asset Value, End of Period	$	9.73
Total Return++		(2.70	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10
Ratio of Expenses to Average Net Assets (1)		0.94	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.68	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		2	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		19.02	%*
Net Investment Loss to Average Net Assets		(16.40	)%*

^  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.
12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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-nine 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 Core Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio commenced operations on May 27, 2016, and offers four classes of shares — Class I, Class A, Class C 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), and if there were no sales on a given day and if there is no official exchange closing price for that 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 the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. 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) 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 (5) 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

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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, 2016.

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	$	210	$	—	$	—	$	210
Air Freight & Logistics		33		—		—		33
Airlines		243		—		—		243
Automobiles		74		—		—		74
Banks		88		—		—		88
Biotechnology		397		—		—		397
Capital Markets		280		—		—		280
Consumer Finance		46		—		—		46
Diversified Financial Services		74		—		—		74
Diversified Telecommunication Services		587		—		—		587
Electrical Equipment		166		—		—		166
Energy Equipment & Services		282		—		—		282
Food & Staples Retailing		369		—		—		369
Healthcare Equipment & Supplies		59		—		—		59
Household Durables		113		—		—		113
Information Technology Services		86		—		—		86
Insurance		174		—		—		174
Internet Software & Services		316		—		—		316
Machinery		139		—		—		139
Media		257		—		—		257
Metals & Mining		65		—		—		65

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

Investment Type	Level 1 Unadjusted quoted prices (000)		Other significant observable inputs (000)		Level 3 Significant unobservable inputs (000)		Total (000)
Common Stocks (cont'd)
Oil, Gas & Consumable Fuels	$	102	$	—	$	—	$	102
Pharmaceuticals		309		—		—		309
Semiconductors & Semiconductor Equipment		366		—		—		366
Tech Hardware, Storage & Peripherals		198		—		—		198
Tobacco		107		—		—		107
Trading Companies & Distributors		123		—		—		123
Total Common Stocks		5,263		—		—		5,263
Short-Term Investment
Investment Company		218		—		—		218
Total Assets	$	5,481	$	—	$	—	$	5,481

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, 2016, the Portfolio did not have any investments transfer between investment levels.

3.  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.

4.  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 annually. Net realized capital gains, if any, are distributed at least annually.

5.  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 and 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	%

For the period ended June 30, 2016, 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 1.00% for Class I shares, 1.35% for Class A 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 as 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, 2016, approximately $3,000 of advisory fees were waived and approximately $15,000 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

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

"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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $5,531,000 and $112,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2016.

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 period ended June 30, 2016, 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 period ended June 30, 2016 is as follows:

Value May 27, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	—	$	5,397	$	5,179	$	—	@	$	218

@ Amount is less than $500.

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the period ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 that 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 Statement 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.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 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 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 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 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 would be competitive with its peer group average and anticipated total expense ratio would be acceptable.

Economies of Scale

The Board considered the growth prospects of the Portfolio and the structure of the proposed management fee schedule, which includes breakpoints 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.

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

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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 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.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information."

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

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Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

22

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

23

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIGCPSAN
1560368 EXP. 08.31.17

INVESTMENT MANAGEMENT

Morgan Stanley Institutional Fund, Inc.

US Core
Portfolio

Semi-Annual Report

June 30, 2016

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Table of Contents

Shareholders' Letter	2
Expense Example	3
Portfolio of Investments	4
Statement of Assets and Liabilities	5
Statement of Operations	6
Statement of Changes in Net Assets	7
Financial Highlights	8
Notes to Financial Statements	12
Investment Advisory Agreement Approval	17
Privacy Notice	19
Director and Officer Information	22

This report is authorized for distribution only when preceded or accompanied by a prospectus or summary prospectus of the applicable Portfolio of 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 information about the Portfolio, 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, 2016

Shareholders' Letter (unaudited)

Dear Shareholders,

We are pleased to provide this Semi-Annual report, in which you will learn how your investment in US Core Portfolio (the "Portfolio") performed during the period beginning May 27, 2016 (when the Portfolio launched) and ended June 30, 2016.

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 2016

2

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Expense Example (unaudited)

US Core Portfolio

As a shareholder of the Portfolio, you incur two types of costs: (1) transactional costs; and (2) ongoing costs, which may include 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 5/27/16-6/30/16.

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 5/27/16		Actual Ending Account Value 6/30/16		Hypothetical Ending Account Value		Actual Expenses Paid During Period*		Hypothetical Expenses Paid During Period*		Net Expense Ratio During Period**
US Core Portfolio Class I^	$	1,000.00	$	996.00	$	1,003.58	$	0.65	$	0.65		0.77	%
US Core Portfolio Class A^		1,000.00		995.00		1,003.28		0.95		0.96		1.13
US Core Portfolio Class C^		1,000.00		995.00		1,002.63		1.60		1.60		1.89
US Core Portfolio Class IS^		1,000.00		996.00		1,003.61		0.63		0.63		0.74

*  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 31/366 (to reflect actual days in the period).

**  Annualized.

^  The Portfolio Commenced operations on May 27, 2016.

3

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

Portfolio of Investments

US Core Portfolio

	Shares		Value (000)
Common Stocks (96.3%)
Aerospace & Defense (5.5%)
Northrop Grumman Corp.		1,296	$	288
Air Freight & Logistics (1.7%)
United Parcel Service, Inc., Class B		806		87
Airlines (3.0%)
Southwest Airlines Co.		3,963		155
Banks (0.9%)
JPMorgan Chase & Co.		771		48
Biotechnology (2.8%)
Amgen, Inc.		965		147
Capital Markets (5.1%)
BlackRock, Inc.		231		79
Franklin Resources, Inc.		4,101		137
Invesco Ltd.		1,840		47
				263
Consumer Finance (2.0%)
Synchrony Financial (a)		4,158		105
Diversified Telecommunication Services (5.9%)
Verizon Communications, Inc.		5,511		308
Electrical Equipment (3.6%)
Emerson Electric Co.		3,559		186
Energy Equipment & Services (7.4%)
National Oilwell Varco, Inc.		4,759		160
Schlumberger Ltd.		2,837		225
				385
Food & Staples Retailing (6.7%)
CVS Health Corp.		3,660		350
Health Care Equipment & Supplies (1.9%)
Danaher Corp.		969		98
Health Care Providers & Services (1.8%)
Cigna Corp.		751		96
Hotels, Restaurants & Leisure (3.4%)
Starbucks Corp.		3,061		175
Household Durables (2.7%)
Newell Brands, Inc.		2,845		138
Information Technology Services (0.4%)
Mastercard, Inc., Class A		257		23
Insurance (3.4%)
Allied World Assurance Co. Holdings AG		1,511		53
AmTrust Financial Services, Inc.		5,011		123
				176
Internet Software & Services (6.8%)
Alphabet, Inc., Class A (a)		500		352
Machinery (4.9%)
Illinois Tool Works, Inc.		2,422		252
Media (6.4%)
Comcast Corp., Class A		5,098		332
Metals & Mining (2.1%)
Agnico-Eagle Mines Ltd. (Canada)		2,079		111

	Shares		Value (000)
Pharmaceuticals (5.8%)
Allergan PLC (a)		1,306	$	302
Semiconductors & Semiconductor Equipment (7.8%)
QUALCOMM, Inc.		2,669		143
Taiwan Semiconductor Manufacturing Co. Ltd. ADR (Taiwan)		9,984		262
				405
Tech Hardware, Storage & Peripherals (4.3%)
Apple, Inc.		2,357		225
Total Common Stocks (Cost $5,033)				5,007
Short-Term Investment (1.6%)
Investment Company (1.6%)
Morgan Stanley Institutional Liquidity Funds — Treasury Securities Portfolio — Institutional Class (Cost $85)		85,421		85
Total Investments (97.9%) (Cost $5,118) (b)				5,092
Other Assets in Excess of Liabilities (2.1%)				108
Net Assets (100.0%)			$	5,200

(a)  Non-income producing security.

(b)  At June 30, 2016, the aggregate cost for Federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $109,000 and the aggregate gross unrealized depreciation is approximately $135,000 resulting in net unrealized depreciation of approximately $26,000.

ADR  American Depositary Receipt.

Portfolio Composition

Classification	Percentage of Total Investments
Other*		41.3	%
Semiconductors & Semiconductor Equipment		8.0
Energy Equipment & Services		7.6
Internet Software & Services		6.9
Food & Staples Retailing		6.9
Media		6.5
Diversified Telecommunication Services		6.0
Pharmaceuticals		5.9
Aerospace & Defense		5.7
Capital Markets		5.2
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.
4

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

US Core Portfolio

Statement of Assets and Liabilities	June 30, 2016 (000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $5,033)	$	5,007
Investment in Security of Affiliated Issuer, at Value (Cost $85)		85
Total Investments in Securities, at Value (Cost $5,118)		5,092
Cash		—	@
Prepaid Offering Costs		89
Receivable for Portfolio Shares Sold		83
Due from Adviser		15
Dividends Receivable		10
Receivable from Affiliate		—	@
Other Assets		6
Total Assets		5,295
Liabilities:
Payable for Offering Costs		92
Payable for Custodian Fees		1
Payable for Professional Fees		1
Payable for Transfer Agency Fees — Class I		—	@
Payable for Transfer Agency Fees — Class A		—	@
Payable for Transfer Agency Fees — Class C		—	@
Payable for Shareholder Services Fees — Class A		—	@
Payable for Distribution and Shareholder Services Fees — Class C		—	@
Payable for Administration Fees		—	@
Other Liabilities		1
Total Liabilities		95
Net Assets	$	5,200
Net Assets Consist Of:
Paid-in-Capital	$	5,220
Net Investment Income		10
Net Realized Loss		(4	)
Unrealized Appreciation (Depreciation) on:
Investments		(26	)
Net Assets	$	5,200
CLASS I:
Net Assets	$	5,012
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		503,244
Net Asset Value, Offering and Redemption Price Per Share	$	9.96
CLASS A:
Net Assets	$	104
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		10,506
Net Asset Value, Redemption Price Per Share	$	9.95
Maximum Sales Load		5.25	%
Maximum Sales Charge	$	0.55
Maximum Offering Price Per Share	$	10.50
CLASS C:
Net Assets	$	74
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		7,454
Net Asset Value, Offering and Redemption Price Per Share	$	9.95
CLASS IS:
Net Assets	$	10
Shares Outstanding $0.001 par value shares of beneficial interest (unlimited shares authorized) (not in 000's)		1,000
Net Asset Value, Offering and Redemption Price Per Share	$	9.96

@  Amount is less than $500.

The accompanying notes are an integral part of the financial statements.
5

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016 (unaudited)

US Core Portfolio

Statement of Operations	Period from May 27, 2016^ to June 30, 2016 (000)
Investment Income:
Dividends from Securities of Unaffiliated Issuers (Net of $2 of Foreign Taxes Withheld)	$	13
Dividends from Security of Affiliated Issuer (Note G)		—	@
Total Investment Income		13
Expenses:
Offering Costs		8
Professional Fees		7
Advisory Fees (Note B)		3
Custodian Fees (Note F)		1
Shareholder Reporting Fees		1
Transfer Agency Fees — Class I (Note E)		—	@
Transfer Agency Fees — Class A (Note E)		—	@
Transfer Agency Fees — Class C (Note E)		—	@
Transfer Agency Fees — Class IS (Note E)		—	@
Shareholder Services Fees — Class A (Note D)		—	@
Distribution and Shareholder Services Fees — Class C (Note D)		—	@
Administration Fees (Note C)		—	@
Pricing Fees		—	@
Other Expenses		—	@
Total Expenses		20
Expenses Reimbursed by Adviser (Note B)		(14	)
Waiver of Advisory Fees (Note B)		(3	)
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)		(—	@)
Rebate from Morgan Stanley Affiliate (Note G)		(—	@)
Net Expenses		3
Net Investment Income		10
Realized Loss:
Investments Sold		(4	)
Change in Unrealized Appreciation (Depreciation):
Investments		(26	)
Net Realized Loss and Change in Unrealized Appreciation (Depreciation)		(30	)
Net Decrease in Net Assets Resulting from Operations	$	(20	)

^  Commencement of Operations.

@  Amount is less than $500.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

US Core Portfolio

Statement of Changes in Net Assets	Period from May 27, 2016^ to June 30, 2016 (unaudited) (000)
Increase (Decrease) in Net Assets:
Operations:
Net Investment Income	$	10
Net Realized Loss		(4	)
Net Change in Unrealized Appreciation (Depreciation)		(26	)
Net Decrease in Net Assets Resulting from Operations		(20	)
Capital Share Transactions:(1)
Class I:
Subscribed		5,032
Class A:
Subscribed		104
Class C:
Subscribed		74
Class IS:
Subscribed		10
Net Increase in Net Assets Resulting from Capital Share Transactions		5,220
Total Increase in Net Assets		5,200
Net Assets:
Beginning of Period		—
End of Period (Including Net Investment Income of $10)	$	5,200
(1)   Capital Share Transactions:
Class I:
Shares Subscribed		503
Class A:
Shares Subscribed		11
Class C:
Shares Subscribed		7
Class IS:
Shares Subscribed		1

^  Commencement of Operations.

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

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

US Core Portfolio

	Class I
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
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	$	9.96
Total Return++		(0.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	5,012
Ratio of Expenses to Average Net Assets (1)		0.77	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.28	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		4.74	%*
Net Investment Loss to Average Net Assets		(1.69	)%*

^  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.
8

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

US Core Portfolio

	Class A
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.04
Net Realized and Unrealized Loss		(0.09	)
Total from Investment Operations		(0.05	)
Net Asset Value, End of Period	$	9.95
Total Return++		(0.50	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	104
Ratio of Expenses to Average Net Assets (1)		1.13	%+*
Ratio of Net Investment Income to Average Net Assets (1)		4.20	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.02	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expenses to Average Net Assets		8.42	%*
Net Investment Loss to Average Net Assets		(3.09	)%*

^  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.
9

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

US Core Portfolio

	Class C
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
Income (Loss) from Investment Operations:
Net Investment Income†		0.01
Net Realized and Unrealized Loss		(0.06	)
Total from Investment Operations		(0.05	)
Net Asset Value, End of Period	$	9.95
Total Return++		(0.50	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	74
Ratio of Expenses to Average Net Assets (1)		1.89	%+*
Ratio of Net Investment Income to Average Net Assets (1)		1.22	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation:
Expense to Average Net Assets		19.45	%*
Net Investment Loss to Average Net Assets		(16.34	)%*

^  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.
10

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Financial Highlights

US Core Portfolio

	Class IS
Selected Per Share Data and Ratios	Period from May 27, 2016^ to June 30, 2016 (unaudited)
Net Asset Value, Beginning of Period	$	10.00
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	$	9.96
Total Return++		(0.40	)%#
Ratios and Supplemental Data:
Net Assets, End of Period (Thousands)	$	10
Ratio of Expenses to Average Net Assets (1)		0.74	%+*
Ratio of Net Investment Income to Average Net Assets (1)		2.29	%+*
Ratio of Rebate from Morgan Stanley Affiliates to Average Net Assets		0.01	%*
Portfolio Turnover Rate		4	%#
(1) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expense Limitation
Expenses to Average Net Assets		18.59	%*
Net Investment Loss to Average Net Assets		(15.56	)%*

^  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, 2016

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-nine 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 US Core Portfolio. The Portfolio seeks long-term capital appreciation.

The Portfolio commenced operations on May 27, 2016, and offers four classes of shares — Class I, Class A, Class C 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), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges; (2) all other equity portfolio securities for which over-the-counter ("OTC") market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the

relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. 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) 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 (5) 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

12

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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.

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, 2016.

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	$	288	$	—	$	—	$	288
Air Freight & Logistics		87		—		—		87
Airlines		155		—		—		155
Banks		48		—		—		48
Biotechnology		147		—		—		147
Capital Markets		263		—		—		263
Consumer Finance		105		—		—		105
Diversified Telecommunication Services		308		—		—		308
Electrical Equipment		186		—		—		186

13

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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)
Energy Equipment & Services	$	385	$	—	$	—	$	385
Food & Staples Retailing		350		—		—		350
Healthcare Equipment & Supplies		98		—		—		98
Health Care Providers & Services		96		—		—		96
Hotels, Restaurants & Leisure		175		—		—		175
Household Durables		138		—		—		138
Information Technology Services		23		—		—		23
Insurance		176		—		—		176
Internet Software & Services		352		—		—		352
Machinery		252		—		—		252
Media		332		—		—		332
Metals & Mining		111		—		—		111
Pharmaceuticals		302		—		—		302
Semiconductors & Semiconductor Equipment		405		—		—		405
Tech Hardware, Storage & Peripherals		225		—		—		225
Total Common Stocks		5,007		—		—		5,007
Short-Term Investment
Investment Company		85		—		—		85
Total Assets	$	5,092	$	—	$	—	$	5,092

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, 2016, the Portfolio did not have any investments transfer between investment levels.

3.  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.

4.  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 annually. Net realized capital gains, if any, are distributed at least annually.

5.  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 and 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
	0.60	%		0.55	%		0.50	%

For the period ended June 30, 2016, 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 0.80% for Class I shares, 1.15% for Class A shares, 1.90% for Class C shares and 0.75% 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 as 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, 2016, approximately $3,000 of advisory fees were waived and approximately $14,000 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.

14

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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, 2016, purchases and sales of investment securities for the Portfolio, other than long-term U.S. Government securities and short-term investments, were approximately $5,212,000 and $176,000, respectively. There were no purchases and sales of long-term U.S. Government securities for the period ended June 30, 2016.

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 investments in the Liquidity Funds. For the six months ended June 30, 2016, 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 period ended June 30, 2016 is as follows:

Value May 27, 2016 (000)		Purchases at Cost (000)		Sales (000)		Dividend Income (000)			Value June 30, 2016 (000)
$	—	$	5,102	$	5,017	$	—	@	$	85

@ Amount is less than $500.

The Portfolio is permitted to purchase and sell securities ("cross-trade") from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the "Rule"). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the period ended June 30, 2016, the Portfolio did not engage in any cross-trade transactions.

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.

15

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 that 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 Statement 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.

I. Credit Facility: As of April 4, 2016, the Fund and other Morgan Stanley funds participate in a $150,000,000 committed, unsecured revolving line of credit facility (the "facility") with State Street. This facility is to be used for temporary emergency purposes or funding of shareholder redemption requests. The interest rate on borrowings is based on the federal funds rate or one month libor rate plus a spread. The facility also has a commitment fee of 0.25% per annum based on the unused portion of the facility. During the period ended June 30, 2016, the Fund did not have any borrowings under the facility.

J. Other: At June 30, 2016, the Portfolio did not have record owners of 10% or greater.

16

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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 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 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 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 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 breakpoints 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.

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

17

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

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

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 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 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.

18

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited)

MORGAN STANLEY INVESTMENT MANAGEMENT INC.
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our privacy policy annually. This policy applies to current and former individual investors in funds managed or sponsored by Morgan Stanley Investment Management Inc. ("MSIM") as well as current and former individual clients of MSIM. This policy is not applicable to partnerships, corporations, trusts or other non-individual clients or investors. Please note that we may amend this policy at any time, and will inform you of any changes as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Notice describes what non-public personal information we collect about you, why 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 to affiliated companies in the Morgan Stanley family of companies ("other Morgan Stanley companies"). It also discloses how you may limit use of certain shared information for marketing purposes by other Morgan Stanley branded companies. Throughout this policy, we refer to the non-public information that personally identifies you or your accounts as "personal information.''

1.  WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

We obtain personal information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•  We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through subscription documents, 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.

•  If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." Please consult the Terms of Use of these sites for more details.

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

We may disclose personal information we collect about you to other Morgan Stanley companies and to non-affiliated third parties.

a. Information We Disclose to Other Morgan Stanley Companies.

We may disclose personal information to other Morgan Stanley companies for a variety of reasons, including to manage your account(s) effectively, to service and process your transactions, to let you know about products and services offered by us and other Morgan Stanley companies, to manage our business, and as otherwise required or permitted by law. Offers for products and services from other Morgan Stanley companies are developed under conditions designed to safeguard your personal information.

19

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

b. Information We Disclose to Non-affiliated Third Parties.

We do not disclose personal information that we collect about you to non-affiliated third parties except to those who provide marketing services on our behalf, to financial institutions with whom we have joint marketing agreements, and as otherwise required or permitted by law. For example, we may disclose personal information to nonaffiliated third parties for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with a non-affiliated third party, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information 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 to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

4.  HOW CAN YOU LIMIT THE SHARING OF CERTAIN TYPES OF PERSONAL INFORMATION WITH OTHER MORGAN STANLEY COMPANIES?

We offer you choices as to whether we share with other Morgan Stanley companies the personal information that was collected to determine your eligibility for products and services you request ("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 other Morgan Stanley companies ("opt-out"), we may still share personal information, including eligibility information, with those companies in circumstances excluded from the opt-out under applicable law, such as to process transactions or to service your account.

5.  HOW CAN YOU LIMIT THE USE OF CERTAIN TYPES OF PERSONAL INFORMATION BY OTHER MORGAN STANLEY COMPANIES FOR MARKETING?

By following the opt-out instructions in Section 6 below, you may limit other Morgan Stanley branded 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 Other Morgan Stanley Companies from using personal information about you that we may share with them for marketing their products and services to you, Other Morgan Stanley Companies may use your personal information that they obtain from us to market to you in circumstances permitted by law, such as if the Other Morgan Stanley Company has its own relationship with you.

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

If you wish to limit our sharing of eligibility information about you with other Morgan Stanley companies or other Morgan Stanley 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

20

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Privacy Notice (unaudited) (cont'd)

Your written 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 if 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.

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 have a joint account, your direction for us not to share this information with other Morgan Stanley companies and for those other Morgan Stanley companies not to use your personal information for marketing will be applied to all account holders on that 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 Morgan Stanley products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

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

If, at any time in the future, an affiliated company becomes a non-affiliated 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 non-affiliated 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 non-affiliated 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 affiliated companies and non-affiliated third parties other than in certain limited circumstances. Except as permitted by law, we will not share personal information we collect about you with non-affiliated third parties or other Morgan Stanley companies unless you provide us with your written consent to share such information ("opt-in").

If you wish to receive offers for investment products and services offered by or through other Morgan Stanley companies, please notify us in writing at the following address:

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

Your authorization should include your name, address, telephone number and account number(s) to which the opt-in applies and should not be sent with any other correspondence. In order to process your authorization, we require that the authorization be provided by you directly and not through a third party.

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 information with our affiliates to comply with California privacy laws that apply to us.

21

Morgan Stanley Institutional Fund, Inc.

Semi-Annual Report — June 30, 2016

Director and Officer Information (unaudited)

Directors

Frank L. Bowman
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, Chair of the Board
W. Allen Reed
Fergus Reid

Officers

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 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 or summary prospectus of the applicable Portfolio of Morgan Stanley Institutional Fund, Inc., which describes in detail the 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.

22

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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

© 2016 Morgan Stanley. Morgan Stanley Distribution, Inc.

IFIUSCPSAN
1562294 EXP. 08.31.17

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 17, 2016

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 17, 2016

/s/ Francis Smith

Francis Smith

Principal Financial Officer

August 17, 2016